Companies incorporated under provisions of Company law in a specific form may be changed to another type, after satisfying the legal requirements under Company Law. (Company Law, Part Nine, Chapters 1 & 2, Arts. 273-280, Part Ten, Chapters 1 & 2, Arts. 281-312)
The change is made by a decision or resolution adopted in accordance with the procedures stated in the amendment of the company's Memorandum and Articles of Association. Moreover, the company must complete the incorporation formalities stipulated by DED (Dubai Economic Department) for the new company, and the change of the company type must be recorded in the Commercial Register with the valuation statement. Therefore, a statement concerning the assets and liabilities of the company and the estimated value must be attached to the decision to change the type of company.
The assets and liabilities held by the company before the transformation will be transferred to the new company. The joint partners cannot be released from liability for the company's previous debts without the consent of the creditors. This consent will be presumed if a written objection is not made by the creditors within a specific period of 3 months from the date of their formal notification of the decision to transform the company. The above mentioned notification is published twice in the local press by the Municipal Authority concerned, indicating the change of the company legal form and requesting parties whose rights could be affected to object.
Each of the partners in the transformation of a public joint stock company/ a partnership limited with shares/ Limited Liability Company shall have the right to acquire an equal number of shares in the new company as they had previously held in the old company.
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.