The corporate law in the UAE governs the establishment, ownership and management of companies in Dubai and the rest of the Emirates. A new Commercial Companies Law replaced most of Federal Law no. 8 of 1984 concerning corporations in the United Arab Emirates.
The Companies Law was designed to maintain UAE’s favorable investment climate and contribute to the development of the Emirates. One important issue to consider when deciding to set up a business in the UAE, including Dubai, is that foreign ownership is limited outside of the Free Zones. In general, the new Companies Law does not interfere with the laws applicable in these special areas.
One of our lawyers in Dubai can give you complete information on the applicable laws and particularities for investment, depending on the area where you decide to open a business in Dubai.
Company management in the UAE
The limited liability company remains the most popular business structure in the UAE. It must be registered with the Commercial Register, it must have a maximum number of shareholders and a minimum share capital. Under the new companies’ law, one individual or corporate entity can become the sole shareholder in a limited liability company. The old law did not allow for a company with a single shareholder.
A company director’s duties in the UAE are similar to those applicable in other jurisdictions. He must act for the benefit of the company and may not be exempted from personal liability through a special article in the company’s memorandum. One of our lawyers in Dubai can tell you more about the director’s duties and liabilities.
According to the current corporate law, limited liability companies and joint-stock companies can be used as holding companies, for the purpose of developing business activities only through their subsidiaries. This is a positive change for large corporations who can now consider restructuring their presence on the market.
Foreign companies in Dubai
The UAE retained much of its policies concerning foreign investments in the new Companies Law. Foreign ownership is restricted to 49% while the remaining 51% of the company must be owned by a UAE national.
The Companies Law aims to align the corporate standards and practices in the UAE with the ones in other important business jurisdictions in the world. Corporate accountability and transparency are also treated in the corporate law.
The changes that allow certain types of companies to operate outside of the Free Zones (for example, onshore), are showing that the UAE has pro-business flexibility policies.
You can contact our law firm in Dubai for more detailed information on the company law and other laws governing investments in the UAE.