peopleCeNTiLMeN date_rangeAralık 4 2022

Uae New Commercial Companies Law

Special Purpose Acquisition Companies (SPACs) will also be introduced under the new law (as public joint-stock companies (PJSC)). PSPCs are “shell companies” formed for the purpose of being publicly traded and raising capital for the purpose of acquiring assets (usually shares of private companies). As with VPS, PSCPs are exempt from the requirements of the new legislation, but are subject to regulations published by the FCC. Branches of foreign companies are no longer required to appoint a domestic service agent. The UAE`s Federal Law No. 32 of 2021 on Commercial Companies applies to any economic entity engaged in commercial, financial, industrial, agricultural, real estate or other economic activities on the mainland. Upon entry into force (i.e. 2. January 2023) to make any necessary adjustments to comply with the new law. Therefore, it is important to ensure that the requirements of the new law are applied and reflected in the articles of association of these companies (where applicable). The general commercial laws apply with the exception of Federal Decree-Law No. 32 of 2021 on Commercial Companies.

The new Companies Act entered into force on 2 January 2022. All companies have one year to comply with the changes introduced. During this transition period, all companies should assess the impact of the new law on companies, update their articles of association and ensure that they are fully compliant by 2 January 2023. What and why? As part of the UAE government`s major legislative reforms (as part of the government`s broader “Towards the Next 50” project) on the occasion of the UAE`s 50th anniversary, the federal law was announced on 20 September 2021 by Decree No. 32 of 2021 on Commercial Companies (the “New Law”). The new law repeals the old Commercial Companies Act as it is Federal Law No. 2 of 2015 (and its amendments) (the “Old Law”). The new law focuses on foreign investment and ownership, new business vehicles, and general corporate governance issues, all aimed at creating a more investor-friendly business environment.

The new Act repeals and replaces Federal Act No. 2 of 2015 (“Old Law”), which was amended in 2020 by Decree No. 26 of 2020 (“2020 Amendment”). The 2020 amendment aimed to facilitate foreign direct investment and improve the regulation of public joint-stock companies (“PJSC”) (see our previous warning here). Jasem Alanizy focuses on cross-border mergers and acquisitions, private equity and capital markets transactions in the UK and the Middle East. He has represented public and private companies, private equity firms, sovereign wealth funds and venture capitalists in connection with acquisitions, sales, joint ventures, investments and corporate restructurings. This warning reminds all companies registered in the UAE to make the necessary adjustments within one year (subject to further extension) from 2 January 2022, in line with key changes to the new law. Non-compliant companies are then considered dissolved. The new Companies Act allows newly created companies to carry out CSRs and set aside profits for these purposes. This removes the restriction imposed in the 2020 amendments, which allowed a CMP to contribute to CSR only if it was established for at least two fiscal years with a cap of two percent (2%) of the average profit of the last two fiscal years.

In addition, the new Companies Act requires publication on a company`s website, even if it does not contribute to CSR, which was no longer necessary after the 2020 amendments. Private Security Companies Laws – Ministry of the Interior SPACs have now been given a legal basis in the UAE. The new Companies Act defines it as a public limited company (“PJSC”) that has been approved by the Securities and Commodities Authority (“SCA”) for the sole purpose of acquiring or merging companies. PFCPs are recognized by the New Companies Act, but are also exempt from the law itself and are subject to separate regulations issued by the FCC earlier this year.

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