UAE Federal Decree-Law Amends Commercial Companies Law To Boost Competitiveness And Investment Options

The UAE government has introduced a Federal Decree-Law to amend the Law on Commercial Companies. This change aims to boost competitiveness in the business sector and align with global economic trends. The amendment also seeks to modernise company laws, offering more options for investors and stakeholders, thereby enhancing the UAE's appeal as a top investment hub.

The Decree-Law introduces the concept of non-profit companies, which reinvest profits into their stated goals without distributing them to partners or shareholders. This allows social and developmental sectors to function within a flexible and transparent framework. Additionally, it provides advanced capital structure options through various share categories, including rights like voting and profit distribution.

In terms of financing, private joint-stock companies can now offer securities for private subscription on national financial markets, following regulations from competent authorities. This offers a new financing avenue without needing conversion into public joint-stock firms. The Decree-Law also regulates company delocalisation and registration changes between emirates and financial free zones while maintaining legal personality.

The law establishes clear procedures for these processes, promoting business mobility, expanding economic activities within the UAE, reducing commercial disputes, and safeguarding minority shareholders' rights. It also approves modern contractual mechanisms for managing shares and stocks, such as tag-along and drag-along transactions.

The Decree-Law regulates procedures for disposing of shares in case of a partner's or shareholder's death, ensuring company stability and continuity. It emphasises standards for valuing in-kind shares and accrediting appraisers according to strict controls that ensure transparency and fairness while protecting partners' and investors' rights in capital.

This legislative change represents a strategic advancement in the UAE’s ongoing efforts to modernise business laws. It aims to create a flexible legal environment that supports innovation and investment while enhancing national economic competitiveness both regionally and globally.

With inputs from WAM