Federal Decree-Law No. 26 of 2020, this Decree has been issued, introducing significant amendments to Federal Law No. 2 of 2015 on Commercial Companies (the CCL). Decree is reported to have introduced 51 amendments to the UAE Companies Law. United Arab Emirates corporate law regulates the governance, finance and power of corporations in the United Arab Emirates (UAE) through UAE law. Every emirate has its own basic corporate code. This law is anticipated to come force on January 2, 2021.
What are the changes?
The major step has been that UAE has abolished the positive list enacted by the Cabinet and completely transformed their approach by being more aggressively inclined towards attracting and encouraging foreign ownership of businesses in the country. The requirement of a local agent being named in the paper work and license has been removed. Article 329 of the Commercial Companies’ law has also been revoked. The norm that an Emirati should be a majority shareholder has now been squashed, the concept of full foreign ownership has been introduced. Although there are some exceptions to this rule in the sectors which are of special interest (Oil & Gas, Real Estate) and importance for the UAE.
Businesses don’t need to be established in free zones unless established for VAT purposes or customs. Shareholders can now sue the company for failure of duty that results in damages, the aim is to create a holistic system of remedies for better empowerment and protection of their interests. Few things that the amendment entails is joint stock companies will be required to have proper corporate government and transparency, companies can now have non-shareholding professionals on their board of directors, they can now go public to sell up to 70 per cent of their shares after assessment through an initial public offering replacing the prior cap of 30 per cent and now even a single corporate shareholder can own private joint stock companies.

Conclusion

Over the last few years, the UAE has embarked upon a concerted drive to establish itself as a globalized centre which attracts a wide array of talent from a diverse assembly of nationalities and cultures. UAE has also abolished the positive list enacted by the Cabinet and introduced a much more robust approach to attract and encourage foreign ownership of businesses in the UAE. It goes without saying that if a company fails to comply with the amendments introduced, then it can be reasonably apprehended that the company will be deemed to be dissolved which would result in personal liability of the upper management (managers, directors). There could also be heavy imposition of fines.
In the light of these new changes and possible consequences and the fact that the clock is ticking, and it would be wise that companies review their constitutional documents and make the necessary changes at the earliest. These changes will bring greater foreign investment and components like better transparency and proper corporate governance. These amendments will also boost manufacturing industries.