Chester 01244 405555

Grosvenor Court
Foregate Street Chester
Cheshire CH1 1HG
DX: 19990 Chester

Shrewsbury 01743 443 043

Lakeside House
Oxon Business Park
Shrewsbury SY3 5HJ
DX: 148563 Shrewsbury 14

Manchester 0844 800 8346

Office Number 129
Manchester Business Park
3000 Aviator Way
Manchester M22 5TG

Send us a message
Our Offices

Opening up the Market in the United Arab Emirates – Financial Reporting and Corporate Governance

26th June, 2015

Unlike in the UK, any limited liability company registered under the Company Commercial Law does not have a requirement to file any accounts until the company is closed down or liquidated.

Even if an overseas company has a branch within the UAE, there is no filing requirement of branch accounts, although such a branch would need to comply with its own native jurisdictional law.

An LLC, under the Commercial Company Law, is required to keep certain records at its head quarters including records of the names, nationalities and professions of the shareholders and the number and value of shares owned by each of them. Any actions involving movement of shares must be recorded and records kept.

There is a general obligation for LLCs to display the name of their company at the premises from which they operate and the licence number should be given together with the name of the company on any letterhead and invoices.

Any name of an LLC must include the phrase “Limited Liability Company”.

Contracts entered into by an LLC will be signed by a manager, director or authorised signatory, or, In some instances, under company seal.

A number of key documents in relation to each company, such as the Memorandum of Association or any form of Power of Attorney, need to be signed before a notary public.

Change in the constitutional documents will require new documents to be notarised before presenting them to the Department of Economic Development to give effect to the changes.

There are minimum capital requirements in relation to limited liability companies depending on the activity of the company and this will dictate the minimum capital requirements.

As a general rule, shares can be transferred within an LLC to one of the other shareholders and also to a non-shareholder; however, there is a general principle within the Commercial Company Law giving rights of pre-emption to existing shareholders.

[It is interesting to note that although there is an accepted provision in relation to the protection of minority shareholders in the free zone, there is no express provision under UAE Law.]

Board members within a UAE LLC are referred to as managers and great emphasis is put on the general manager of the entity.

The general manager will have his name on the trade licence, will have full power to carry out management activities within the company and have a right to bind the company in relation to third parties.

It is possible to have up to five managers and if this is the case, then the Memorandum of Association tends to provide for a managers’ panel or board of managers.

There is also a concept of a supervisory board, which is constituted under Commercial Company Law where the number of shareholders exceeds seven. In this instance, a supervisory board will be formed with at least three of the shareholders as members.

That board has the power to examine the company’s books, take stock of cash or goods within the company and requires the managers or general manager at any time to submit reports. The supervisory board does not have an accountability role.

At shareholders’ meetings, the general principle under UAE Law is that 50% of the voting rights based upon paid up shares is considered a quorum. However, there is no concept of special resolution requiring, for instance, 75% of votes under UAE Law.

For more information please contact Stuart Haynes on  [email protected] or telephone 01743 453687.

 

 

You might also be interested in...

Opening up the Market in the United Arab Emirates

10th September, 2018

This is the first in a series of  6 articles with regards to establishing a business in the... Read More »

What to do if you receive a statutory demand…

9th August, 2018

We have been approached by a number of clients who have received a statutory demand, either personally or to their company, and they have asked us what to do about it. One business was contacted by a company demanding payment of a debt owed under a contract for TV advertising in a shopping mall.  We presume – but... Read More »

Farming solicitor Ben Brassington joins top law firm in Shrewsbury

3rd August, 2018

Agriculture and Estates specialist Ben Brassington has strengthened the services offered by Top 200 legal firm Aaron & Partners LLP A dairy farmer with more than 18 years’ experience as a Partner in his family’s farming business has been appointed by a top legal firm in Shrewsbury. Ben Brassington, who has also been working for several years as... Read More »

Contact Us