In continuation of Part I, please read below the second and final part of our article.

Part I

3. Are other amendments possible under the new CCL?

Although other provisions of the new CCL do not necessarily have to be implemented, they might be advantageous for a minority shareholder or useful to ease the exercise of shareholders' rights and, thus, could be worth to be included in the MoA and AoA.

Change of Manager

Under the old law, a unanimous vote of the shareholders was required for the dismissal of the manager, provided the MoA and AoA did not stipulate otherwise. According to the new CCL, the manager may be dismissed by (simple) majority vote unless the MoA and AoA provides for a higher majority. Therefore, in order to protect the minority shareholder it may be appropriate to specify a sufficient majority of votes in the MoA and AoA.

Number of Managers

The maximum number of managers appointed in the MoA and AoA is no longer limited to five but may be freely chosen.

Holding a General Assembly

The shareholders may agree on a reduction of the previously applicable twenty-one-day notice period for holding a general assembly.

To facilitate communication among the shareholders, the MoA and AoA could now stipulate that the invitation for a general assembly may not (only) be sent by registered mail - as set out in the old CCL - but (also) by other means, such as eMail.

Moreover, the new law introduces the possibility for shareholders not only to appoint other shareholders as proxies to attend the general assembly in their stead but also third parties.

Pledge of Shares

Finally, it is possible to lay down rules relating to the pledge of shares in the LLC's MoA and AoA.

Catch-All Clause

Given that the new CCL is a very young piece of legislation - whose interpretation and actual implementation remains to be seen - it may be appropriate to include a catch-all clause in favour of the legal requirements of the new CCL in the MoA and AoA.

4. What are the consequences of a late implementation of the new CCL?

Failing to comply with the new regulations until 30.06.2016 will result in a daily fine of AED 2,000 and the company being automatically deemed to be dissolved. This could mean that the company is no longer permitted to conduct business. In addition, the new CCL imposes fines ranging from AED 10,000 to AED 100,000 in case of violating its provisions.

In general, it is to be noted that the catalogue of punishable offences relating to a breach of the CCL has been considerably tightened.

Therefore, we explicitly recommend amending any existing MoA and AoA and any further agreements with regard to shareholders or managers in such way that they comply with the new CCL.

For the sake of good order, we would like to draw attention to the fact that the aspects stated in this circular are only a selection of necessary and possible amendments based on our current interpretation of the new CCL and that they are not suitable to replace an individual advice.


Do you have any questions?

Should you have further queries, we are glad to assist you anytime, whether in a personal meeting, over the phone or by eMail correspondence.

ANDERS LEGAL CONSULTANCY
Sama Tower, Office 806
Sheikh Zayed Road
PO Box 333 558
Dubai

United Arab Emirates

Phone: +971 4 327 5888
eMail: info@anders.ae
www.anders.ae
www.dubaicompanyformation.ae

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.