On 23 November 2020, the President of the UAE, His Highness Sheikh Khalifa Bin Zayed Al Nahyan signed a decree bringing about fifty one amendments to the Commercial Companies Law of 2015 as well as adding three new articles (the "CCL"). Majority of the amendments relate to private joint stock companies and limited liability companies. However, the most significant changes to the CCL relate to the foreign ownership requirements in onshore companies in the UAE.
Changes relating to Foreign Ownership
Some of the noteworthy changes to the restrictions related to foreign ownership in onshore companies include:
- abolition of the need to have an Emirati majority shareholder in onshore companies (the standard requreiment was for 51% Emirati or GCC ownership. However, there were exceptions introduced for certain industries in 2018);
- annulment of the provision mandating the requirement for a UAE national or a UAE owned company to act as an agent; and
- removal of the requirement that a company's chairman be an Emirati and for the board of directors to include a majority of Emiratis.
The amendments will not apply to entities engaged in certain strategic sectors such as oil and gas exploration and utilities and transport, as well as all state owned entities.
Despite the breath of changes, licensing authorities will continue to have a discretion to decide in the level of participation by Emiratis/GCC nationals in any company. It would need to be seen how this discretion is exercised by the licensing authorities.
Formation of Committee
The CCL also provides for the formation of a special committee which shall oversee companies whose activities are of strategic importance or who operate in strategic sectors. The committee shall provide recommendations to the UAE Cabinet regarding the licensing of such entities. Based on the committee's recommendations, the UAE Cabinet will then issue the relevant licensing requirements for such companies.
When does the CCL come into force?
It is purported that the majority of the amendments shall come into force within one month of being published in the Official Gazette and companies will be provided with a grace period of one year to ensure their compliance with the amended CCL.
We will be providing a more detailed overview of the changes to the CCL after its publication in the Official Gazette.
For further details please contact any of our lawyers below.
This Client Alert provides a very brief summary of a change in law. It does not constitute legal advice and should not be used as a substitute for competent legal advice from counsel.
If you are in doubt about the obligations of your entity and require assistance, please contact Umera Ali or Aisha Gondal.