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The Commercial Companies Law (Federal Law No. 2 of 2015, "CCL") has been amended by Federal Decree Law No. 26 of 2020.
The Commercial Companies Law (Federal Law No. 2 of 2015, "CCL") has been amended by Federal Decree Law No. 26 of 2020.
True
The 49-51 rule, which previously required a majority Emirati shareholder in companies and branches of foreign companies in the UAE, has been abolished.
The 49-51 rule, which previously required a majority Emirati shareholder in companies and branches of foreign companies in the UAE, has been abolished.
True
The Decree Law introduces a committee that will decide on activities with strategic importance for the UAE as well as licensing requirements for companies engaging in such activities.
The Decree Law introduces a committee that will decide on activities with strategic importance for the UAE as well as licensing requirements for companies engaging in such activities.
True
The Decree Law requires a specific percentage of Emirati participation in the capital or management of companies engaged in activities with strategic importance for the UAE.
The Decree Law requires a specific percentage of Emirati participation in the capital or management of companies engaged in activities with strategic importance for the UAE.
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The Decree Law has abolished Federal Decree Law No. 19 of 2018 on Foreign Direct Investment.
The Decree Law has abolished Federal Decree Law No. 19 of 2018 on Foreign Direct Investment.
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There is no longer a general requirement for an Emirati shareholder in a limited liability company (LLC).
There is no longer a general requirement for an Emirati shareholder in a limited liability company (LLC).
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The Decree Law has abolished the requirement for a local service agent for a branch of a foreign company in the UAE.
The Decree Law has abolished the requirement for a local service agent for a branch of a foreign company in the UAE.
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The Decree Law allows for one-person LLCs to be established by foreign investors.
The Decree Law allows for one-person LLCs to be established by foreign investors.
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A partner holding at least 10% of the LLC's share capital can now request the convention of the general assembly meeting.
A partner holding at least 10% of the LLC's share capital can now request the convention of the general assembly meeting.
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The timeframe for an invitation to a general assembly meeting has been shortened from 15 days to 21 days.
The timeframe for an invitation to a general assembly meeting has been shortened from 15 days to 21 days.
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The quorum for the first meeting of the general assembly has been reduced from 75% to 50%.
The quorum for the first meeting of the general assembly has been reduced from 75% to 50%.
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The Decree Law allows for the attendance and voting during a general assembly meeting by modern technological means (virtual general assembly).
The Decree Law allows for the attendance and voting during a general assembly meeting by modern technological means (virtual general assembly).
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The Decree Law allows for a shareholder to seek a court order for an (emergency) capital increase.
The Decree Law allows for a shareholder to seek a court order for an (emergency) capital increase.
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The changes introduced by the Decree Law will come into effect on January 2, 2021.
The changes introduced by the Decree Law will come into effect on January 2, 2021.
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Companies will have a transition period of one year to adjust their Memorandums of Association to comply with the new provisions of the Decree Law.
Companies will have a transition period of one year to adjust their Memorandums of Association to comply with the new provisions of the Decree Law.
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Study Notes
The UAE government made a significant modification to the Commercial Companies Law through the implementation of Federal Decree Law No. 26 of 2020. This landmark amendment plays a crucial role in improving the overall business landscape in the Emirates and is strategically designed to attract greater foreign investment. One of the most notable features of this legislative change is the removal of the requirement for a majority Emirati shareholder or service agent. As a result, this enables the establishment of entirely foreign-owned companies, which can lead to robust participation from international investors and entrepreneurs.
This shift offers global business leaders the opportunity to maintain full operational control over their ventures within the UAE, potentially stimulating a surge of innovation and fostering a competitive market environment. Additionally, the elimination of the previously mandated 49-51 shareholding structure serves to further enhance the business-friendly climate in the UAE. By doing so, it effectively bolsters foreign direct investment flows, contributing significantly to the nation's ongoing efforts at economic diversification, which is vital for reducing reliance on oil revenue and promoting sustainable growth across various sectors.
Emirati Participation
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- The Decree Law abolished the general requirement for Emirati majority participation in companies and branches of foreign companies, which marks a significant shift in the regulatory landscape of business operations within the UAE. This change is intended to foster a more competitive and accessible environment for foreign investors, thereby enhancing economic diversification by encouraging international partnerships and investments in various sectors.
- A new committee now decides on activities of strategic importance for the UAE, as well as the associated licensing requirements. This committee is responsible for evaluating the significance of different sectors and projects to the national economy, ensuring that any strategic alignments with governmental priorities are maintained. It provides a structured approach to identifying which activities require a specific regulatory framework and oversight to ensure compliance with national interests.
- A specific percentage of Emirati participation, either in capital or management, might be required for certain strategically important activities to ensure that national interests are preserved while still permitting foreign investment. This requirement serves to maintain a balance between attracting foreign capital and promoting local talent, thereby supporting the development of the Emirati economy.
Limited Liability Companies (LLCs)
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The Decree Law introduced a major change to Article 71 of the CCL
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A one-person LLC can now be established by a foreign investor
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The threshold for requesting a general assembly meeting was reduced from 25% to 10% of share capital.
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The timeframe for general assembly invitations increased from 15 to 21 days
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Modern technological means can be used for general assembly votes, meetings
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The quorum required for a general assembly meeting was lowered from 75% to 50%
Implementation
- Changes will take effect on January 2, 2021, except for the abolition of the Emirati majority participation requirement, which is effective 6 months after publication in the official gazette.
- A one-year transition period was granted for companies to adjust their Memoranda of Association (MoAs) to comply with the new provisions
- The possibility was introduced to request a court order to increase share capital to prevent dissolution or cover debts.
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Description
Test your knowledge on the UAE's amended Commercial Companies Law, specifically Federal Decree Law No. 26 of 2020. This quiz covers changes regarding Emirati participation, the establishment of LLCs, and key updates to company regulations. Understand how these amendments affect foreign investors and business operations in the UAE.
