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UAE Company Law Overview; Legal Advice Online

legal advice Dubai, UAE Company Law

UAE Company Law Overview; Legal Advice Online

UAE Commercial Company Law No:8 of 1994 termed as “Old Law” amended as UAE New Commercial Company Law No:2 in the year 2015 (termed as “New Law”). The New Law updated all the regulations for corporate landscape and investment community. The New Law maintained a solid structure of Old Law and the New Law introduced some fundamental provisions for the existing companies, start-ups and investors. As per the Article 324, the commercial companies in the UAE are needed to adjust in compliance with New Law provisions within 1 year of effective date.

Main Provisions and Consequences of the Law

Main provisions of the New law and the consequences faced by the companies if they aren’t followed the provisions properly are given below:


For granting flexibility to both fully and partially owned companies by the UAE federal or local government, the legislator exempted the government’s share is not less than 25% of its share capital. The New Law exemption is also applicable to the companies that has already got exemption in the Old Law. Those who have the chance of getting exempted by the UAE Minister’s Cabinet also get into the New Law exemption category.

As these exemptions are provided, all the companies should make sure that the Memorandums and articles of Association are amended. They should contain all the necessary provisions for exemptions. This should be executed within 1 year from the effective date if the exemptions are fully provided from the New Law. This can avoid the penalty.

Company forms

New law eliminates two out of every seven commercial companies. They are Joint Venture Companies and Share Commandite Companies in the UAE. The other five forms are Simple Commandite Company, Public Joint Stock Company, Private Joint Stock Company, Joint Liability Company and Limited Liability Company. Other companies will be considered as null.

Provisions affecting Joint Stock Companies

The special resolution in Article 1 states as the resolution issued by majority of the shareholders who holds at least 75% of the shares in the general assembly. The New Law made decisions subject to the JSC’s resolutions. They are changing the share capital, company name alteration, Memorandum and Articles amendment, extending the term, granting some authorities to board and issuing of bonds.

The minimum founding partners for Private Joint Stock Companies reduced to 2 and for Public Joint Stock Companies to 5. As per article 117 of New Law, the minimum and maximum limits for founders’ subscription in Public Joint Stock Companies has been peaked to 30% and 70%. The New Law provide the Securities and Commodity Authority in the UAE with the right to issue a resolution for regulating the subscription mechanism in new shares (Article 129). This is purely based on the supply and demand criteria.

As per Article 143 the cap on board member numbers reduced to 11 from 15. Also, the minimum notice period for convening general assembly meeting changed to 15 days from 21 days. The second general meeting calling time limit has been reduced to 15 days from 30 days. But the minimum share capital requirement has been increased from AED 2million to AED 5 million for Private Joint Stock Companies. For Public Joint Stock Companies, it has been changed from AED 10 million to AED 30 million.

The JSC auditors’ role have been capped at only 3 consecutive years (Article 243). Article 197 tells that the shareholders pre-emption rights can be changed to other shareholders or third parties with a material consideration. Issuing the resolution to regulate the procedure of selling of such rights as per this article is also possible. Any financial help to shareholders in the form of donation, gift, loan or security is strictly prohibited in Public Joint Stock Companies (Article 222).

Provisions affecting Limited Liability Companies

As per Article 71 of New Law a Limited Liability Company (LLC) are allowed to be incorporated in the UAE as natural Emirati shareholder. On the other hand, the New law (Article 79) permits the pledge of LLC shares. They relate to the registration process of the pledge. In some cases, the registration of that kind of pledge is still restricted in favor of banks or some financial institutions.

In the case of pre-emption rights, the shareholder who intends to sell his or her shares in an LLC, shall disclose the name of purchaser and all the incorporated terms to other shareholders too (Article 80). As per Article 83, the shareholders can nominate the managers for the company. The notice period for general meetings to be conducted is reduced to 15 days from 21 days. It can be reduced more if the shareholders allow to the opinion. The statutory quorum for such meetings is increased from 50% to 75% (Article 96). If failed, the second and third meetings are to be conducted for meeting the quorum.


  • The company which refuses to disclose the minutes of shareholder meetings or company records to any shareholders. They will get a penalty of AED 10,000 to AED 50,000 (Article 342).
  • When the chairman fails to call for general meeting within said time, a penalty of AED 50,000 to AED 100,000 will be fined (Article 343).
  • If the loss of company reaches half of share capital, a penalty of AED 50,000 to AED 1 million will be fined on the chairman (Article 344).
  • Any company fails to amend its Memorandum and articles of association with new provisions within 1-year time limit from the effective date will be imposed with a penalty of AED 2,000 daily (Article 357).
  • Anyone who violates the New Law provisions will get a penalty of AED 10,000 (Article 360).
  • The person who assess the value of in-kind shares provided by the shareholders or founders exceeding the original value is strictly against the law. They will get a penalty of AED 500,000 to AED 1 million. An addition of 6 months to 3 years imprisonment (Article 362) may added up.
  • The imprisonment penalties are imposed in many other cases too. They are transferring misleading information, confidential breach, over valuating the shares, profit distribution, etc.


To know the importance of Company law provisions by all the existing companies and shareholders are very much important. Being familiarized with the law helps themselves from getting away from the obstacles. If you find it difficult to know the provisions of this law, we can assist you by providing free legal consultation in Dubai. You can also get legal advice Dubai through our online platform https://iadvise.live. Find lawyer UAE easily as we have many participating lawyers. Get company law knowledge at your fingertip and turn features into proven formulas.

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Disclaimer: We are not a law firm. We neither give legal advice nor provide legal service. All advice and services are provided by duly qualified and authorized practicing lawyers. We are a platform which facilities legal services. 




Eva Iris

Author Since:  October 8, 2020

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