The Federal Decree Law No. 2 of 2015 and its amendments will be abolished on January 2, 2022, and replaced by Federal Decree-Law No. 32 of 2021 on Commercial Companies in the UAE. Beginning on January 2, 2022, all companies will have a year to update their articles of association to be in compliance with the new laws.

About the new legislation for commercial companies

New legislation issued by His Highness Sheikh Khalifa bin Zayed Al Nahyan, keeps pace with the UAE’s developmental aspirations. And is an unprecedented step forward in building the most competitive economy in the world.

It ensures a dynamic and advanced investment environment that enables investors to implement vital projects for the economy, increase the attraction of foreign companies and attract foreign investments to the country’s vital economic sectors.

Moreover, fifty one articles were replaced. Three new articles were added and one article was deleted, with a total of fifty five updates.

Most prominent provisions and amendments to the law, allowing the establishment of companies for the purposes of acquisition or merger and Special Purpose Vehicles.

You can take legal advice from our law firm in the UAE.

What does the new legislation include?

• Allow branches of foreign companies licensed in the country to transform into a commercial company.

• Notifying Creditors of Liquidation period reduced to thirty days.

• Allowing companies to transform into a public joint stock company and sell its shares or offer new shares in a public subscription. without being restricted to a certain percentage, by following the price-building mechanism of the security.

• Allow companies to divide and create legal rules governing division operations, thus contributing to diversifying the company’s activities and fields of work and increasing its projects and growth opportunities.

• Find financing solutions for companies through the issuance of other types of shares.

• Appointment of the Supervisory Board.

• A shareholder holding ten percent (10%) of the share capital of the Limited Liability Company has the right to request a General Assembly to convene.

• The notice period to convene the general assembly is amended to at least twenty one (21) days.

FAQ about Commercial Companies in the UAE

1-What is legal reserve in UAE?

LLC statutory reserves: The statutory reserves, which are derived from net profits, have been lowered from 10% to 5%, which is surely a change that companies will like.

2-Can a foreign company do business in UAE?

A foreign firm is permitted to open a branch office or “representative” office in the UAE. The opening of a new business or distinct legal entity does not result from the registration of a branch or representative office of a foreign firm.

3-Who regulates companies in UAE?

In the “on-shore” UAE, there are two regulatory bodies: the Emirates Securities and Commodities Authority (ESCA), which oversees markets, listed companies, and securities brokers; and the Central Bank of the UAE, which oversees banks, finance companies, payment service providers, and insurance firms.

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