According to the Federal Decree-Law No. (26) of 2020, amendments have been brought into some provisions of Federal Law No. (2) of 2015 including the ownership of commercial companies. The amendment has made substantial structural changes in the formation of limited liability companies in UAE wherein 51% ownership rights to UAE nationals have been removed completely.
The recent amendment brought into Commercial Company Laws (CCL) enables expatriates to set up commercial and trading companies in UAE mainland without the requirement of a UAE national holding 51% of the company shares. Each Emirate is empowered to identify the categories of commercial activities to be fall under the positive list wherein 100% ownership rights are allowed.
Abu Dhabi and Dubai have already published their positive list wherein the northern emirates are yet to release the list of activities.
The new features
- No local UAE national requirement - As per the new amendment in the law, each Emirate shall publish a separate list of commercial and trading activities that can be fully owned and operated by the expatriate.
- Removal of a local service agent- The new amendment to the law has also removed the requirement of having a local Service agent, for both branch and a foreign company. This step will indeed help businesses to reduce administrative and operations costs.
- Nationality of board member- With the new enactment, the requirement of maintaining UAE nationals in the position of chairman, or board of directors is no longer required.
- File civil suit - The new amendments allows the expatriate shareholders to institute cases in respective court to claim the damages due to loss or omissions incurred by the company through third party customers, clients. Including the director(s) of the company.
- Other changes – Besides these changes, the new amendment allows electronic voting at general meetings. The department of economic development approval for amending articles of association is no longer a requirement, unless the Memorandum of association sets out the need for a higher threshold. General meetings of a limited liability company are allowed with a majority of 50 percent and an extended notice period of 21 days instead of 15 days in the previous law for holding such general meetings.
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