Commercial Companies Law — articles 201–300

1. Subscriptions for newly issued shares shall be governed by the same rules of subscription for the original shares. 2. The board of directors shall publish a summary of the prospectus of the shares of rights issue as a…

1. New shares shall be distributed to the shareholders applying for subscription in proportion to the shares held by them, provided that this proportion shall not exceed the new shares they have applied for. 2. Subject t…

Under a special resolution, the reserve may be converted into capital through the issuance of bonus shares to be distributed to the shareholders in proportion to their respective shareholdings, or through an increase in …

The Bonds or Sukuk shall be converted into shares according to the terms of the prospectus as approved by the SCA. The approval of the Central Bank shall be obtained if the Company is licensed thereby.

The Capital of the Company may not be reduced without the prior consent of the SCA and the issuance of a Special Resolution after hearing the report of the auditor. The Capital may be reduced in either of the following c…

The Capital may be reduced by any of the following methods: 1. Reducing the nominal value of the shares, through either partially refunding their value to the shareholders or relieving the shareholders of all or part of …

1. Upon reducing its capital by any method according to the provisions of this Decree Law, the company shall adhere to the following: a. The controls, conditions and procedures to be issued under a resolution of the SCA.…

The board of directors of the Company shall, within five [5] business days of the effective date of the resolution to increase or reduce its capital, have such resolution registered with the SCA, the Competent Authority …

1. Unless otherwise provided for in this Decree by Law, the shareholders in the Company shall have equal rights attached to the shares. 2. The Cabinet, upon the proposal of the Authority, may issue a resolution specifyin…

1. Each share shall have a nominal value as specified in the AOA of the Company. 2. Shares may be issued against the payment of at least one quarter of their nominal value, so that the remaining value balance thereof sha…

Shares shall be of a registered type, and no bearer shares may be issued. Shares shall also be negotiable.

The method and conditions for disposition of shares shall be determined in accordance with the provisions of this Decree Law, the regulations and resolutions of the SCA and the AOA of the Company. Disposition of shares m…

Shares may be pledged by being delivered to the creditor or his representative after the applicable procedures have been satisfied. The pledgee shall be entitled to pick up the profits and to exercise the rights attached…

Title to Company's shares listed on any of the financial markets licensed in the State shall be transferred in accordance with the applicable procedures of the SCA and the financial market on which such shares are listed…

1. Title to Company's shares that are not listed on the financial markets shall be transferred by recording the transfer in a register held by the Company, and the same shall be annotated on the share certificate. The tr…

1. If title to a share is transferred by way of inheritance or will, the heir or legatee shall request that the title transfer be recorded in the share register. 2. If the title transfer is effected under an enforceable …

Every share shall be indivisible. However, if the title to a share is conferred upon several heirs or if the share has multiple holders, they shall choose from among themselves a representative vis-à-vis the Company. The…

1. Founders' shares, whether in cash or in kind, may not be traded prior to the publication of the balance sheet and the profit and loss account for at least two fiscal years of the date of listing the Company on the fin…

The company's property may not be attached on account of a shareholder's debt. However, any shareholder's creditors may attach the shareholder's shares and their resulting profits, so that the attachment shall be annotat…

1. If a shareholder in a Joint Stock Company fails to pay any installment on his subscription when it becomes due, the board of directors may notify the shareholder to pay the outstanding installment by registered letter…

1. The Company may not relieve the shareholder from his obligation to pay the value of a share, and such obligation may not be set off against any of the shareholder's rights owed by the Company. 2. Any creditors of the …

1. The company may not pledge its own shares or purchase such shares unless the purchase is intended to reduce the issued capital or for the amortization of the shares. in which case, such shares shall not have a vote in…

If the name of any person or the number of the shares held by such person is not entered in the Company's shareholder register, or in case of any unjustified failure or delay to record the fact that a person is no longer…

1. A shareholder in a Joint Stock Company shall have: a. All rights attaching to the share, particularly the right to a share of the profits and assets of the Company upon liquidation and to attend meetings of the Genera…

1. It shall not be permitted for the company or any of its subsidiaries to provide financial aid to any person to enable them to hold any securities issued by the company. Financial aid shall, in particular, include the …

1. Notwithstanding the provisions of Articles [197, 199, 200 and 201] of this Decree Law, the Company may, under a special resolution, increase its Capital by bringing in a Strategic Partner. The board of directors of th…

1. Within three months of the date of the resolution to include a strategic partner as a shareholder of the company, the company's board of directors shall offer the shares to the strategic partner, subject to any condit…

1. Notwithstanding the provisions of Articles [197, 199, 200 and 201] of this Decree Law, the Company may, under a special resolution, increase its Capital through the capitalization of its cash debit. 2. The board of di…

1. Notwithstanding the provisions of Articles [201, 200, 199 and 197] of this Decree Law, the Company may by Special Resolution increase its Capital in order to implement a share incentive scheme for its employees. 2. Th…

1. Unless, after its incorporation, the company has listed its shares on any of the financial markets in the State, the board of directors shall, within three months of the date of registration of the company in the Comm…

1. If a share, bond or Sukuk certificate is lost or destroyed, the holder of the certificate in whose name the shares, bonds, or Sukuk are registered may request a new certificate in lieu of the lost or destroyed certifi…

1. It shall be permissible for the company – based upon prior approval of the SCA – to issue negotiable bonds or Sukuk that are either convertible or non-convertible into shares in the company with equivalent values per …

1. The bonds or Sukuk or any other debt instruments shall be issued only based upon a special resolution by the General Assembly of the company. The company may delegate the board of directors to determine the date of is…

Once a Special Resolution to issue convertible bonds or Sukuk has been passed, the Company may not, before the bonds or Sukuk are converted or paid for, reduce its Capital or increase the minimum dividends decided to pai…

Shares received by the holders of bonds or Sukuk that have been converted into shares in the capital of the company shall have a share in the profits to be distributed for the fiscal year during which the conversion took…

The Company may not advance or defer the maturity date of bonds or Sukuk unless otherwise provided for in the resolution to issue the bonds or Sukuk and the prospectus. However, if the Company is dissolved for any reason…

The rights of holders of Company-issued bonds and Sukuk, which are not offered for public subscription, shall be set out in the agreement creating such bonds and Sukuk. Such agreement shall also include the procedure to …

1. The board of directors of each Joint Stock Company shall prepare accounts for each fiscal year that include a balance sheet as at the data of the last day of the fiscal year and a profit and loss account. 2. The accou…

1. The auditor shall audit and prepare a report on the accounts for the fiscal year of the Company. The accounts shall be approved by the board of directors and presented to the General Assembly together with the auditor…

The companies shall apply international accounting practices and standards when preparing their periodic and annual accounts and determining dividends.

The annual financial statements of the company shall be published according to the controls determined by the SCA and a copy thereof shall be deposited with both the SCA and Competent Authority.

1. [10%] of the net profits of the Company shall be deducted each year and set aside to form a statutory reserve, unless the AOA of the Company provides for a higher percentage. 2. The General Assembly may stop such dedu…

The AOA of a Joint Stock Company may provide for the allocation of a certain percentage of net profits to create a voluntary reserve to be allocated for the purposes provided in the AOA. The voluntary reserve may not be …

1. The General Assembly of the Company shall determine the percentage of net profits to be distributed to the shareholders after deducting the statutory reserve and the voluntary reserve. 2. A shareholder shall be entitl…

1. Subject to prior approval of the SCA, the company may, under a special resolution, decide to allocate a portion of its annual profits or cumulative profits for CSR purposes. 2. The company shall disclose, on its websi…

1. Every public joint stock company shall have one or more auditors to be nominated by the board of directors and approved by the General Assembly. 2. The General Assembly shall appoint an auditing firm for a renewable o…

The board of directors of the SCA shall pass a resolution determining the controls for approving auditors for Public Joint Stock Companies. In particular, the auditor shall meet the following criteria: 1. He shall be lic…

1. Subject to the provisions of the federal law regulating the audit profession, as amended, the auditor shall issue a report on the accounts audited by him. If the Company has more than one auditor, they shall assign th…

1. The auditor shall audit the accounts of the Company, inspect the balance sheet and the profit and loss account, review the Company's transactions with the Concerned Parties, and ensure the application of the provision…

The auditor shall keep confidential all Company information that comes to his possession in the course of performing his responsibilities for the Company. The auditor shall not disclose such information to third parties …

The auditor and his staff may not purchase Securities of the Company which he audits, sell such Securities directly or indirectly, or provide consultation to any person on such Securities, failing which, the auditor shal…

1. The auditor shall notify the SCA of any violations of the provisions of this Decree Law or any violations which constitute a criminal offence, detected in the course of performing his duties for the Company, within 10…

The auditor shall read out his report at the General Assembly Meeting in which the Company's balance sheet is considered. The report shall state whether the auditor has reviewed the information he deems necessary for the…

1. The Company may, under a resolution of the General Assembly, remove the auditor. 2. The chairman shall notify the SCA of the resolution dismissing the auditor and the reasons for such dismissal, within 7 [seven] days …

1. The auditor may resign during his term of office by serving a written notice upon the Company and the SCA. Such notice shall terminate his audit mandate with the Company as of the date when the notice is given or any …

The auditor shall be liable vis-à-vis the Company for his audit and the accuracy of the information in his report and for damages suffered by the Company due to acts performed by the auditor during the course of his duti…

A liability lawsuit instituted against the Company's auditor shall be time barred upon the lapse of one year of the date of the General Assembly Meeting at which the auditor's report was read. However, if the act attribu…

1. A private joint stock company is a company where the number of the shareholders is at least two. The capital of the company shall be divided into shares with the same nominal value, to be paid in full without offering…

1. The issued Capital of the Company shall not be less than [AED 5,000,000] five million dirhams and shall be paid in full. Such limit may be amended by a resolution of the Cabinet based upon the proposal of the Minister…

1. The founders shall choose from among themselves a committee consisting of at least two members to complete the company incorporation procedures and registration with the competent bodies. It shall be fully liable for …

1. The Founders Committee shall submit the incorporation application to the Competent Authority, together with the MOA and AOA of the Company, the economic feasibility study for the venture to be set up by the Company an…

1. An incorporation application shall be filed with the Ministry, together with the Competent Authority's initial approval and the Company's MOA and AOA, the economic feasibility study for the venture to be set up by the…

1. Private Joint Stock Companies shall maintain a register showing the names of the shareholders, number of shares held by each shareholder and any transactions on the shares. The register shall be delivered to the Share…

1. The Founders Committee, or its representative, shall apply to the Ministry for an incorporation certificate to be issued to the Company. The application shall be accompanied by the following documents: a. A bank certi…

1. The board of directors of the Company shall, within five [5] business days of the date of an incorporation certificate being issued by the Ministry, commence the process of registering the company with the Competent A…

1. Title to shares shall be transferred by recording the transfer with the Share Register Secretariat. Such transfer shall be invoked vis-à-vis the Company or third parties only of the date of such registration with the …

1. The ownership of the shares of a Private Joint Stock Company may not be transferred before the publication of the balance sheet and the profit and loss account for at least one fiscal year, commencing from the date of…

Save for the provisions on public subscription, and in respect of matters not specifically provided herein, all the provisions of this Decree Law concerning Public Joint Stock Company shall apply to the Private Joint Sto…

1. A holding company is a Joint Stock Company or a Limited Liability Company that sets up subsidiaries in the State or abroad or controls existing companies, by holding shares or equity stake enough to enable it to contr…

1. The objects of a holding company shall be limited to the following: a. To hold shares or equity stake in Joint Stock Companies and Limited Liability Companies; b. To provide loans, guarantees and finance to its subsid…

A holding company shall take appropriate measures to ensure that subsidiaries maintain adequate accounting records to enable the Directors or the board of directors of the holding company to verify that the financial sta…

1. A Company shall be classified as a subsidiary of a holding company under any of the following conditions: a. If the holding company holds a controlling interest in the Capital of the Company and controls the compositi…

The holding company shall, at the end of every fiscal year, prepare a consolidated balance sheet, profit and loss account, and cash flow statement for the holding company and all its subsidiaries and shall present a bala…

1. Mutual funds shall be established in accordance with the terms and conditions set out in a resolution of the SCA. 2. Mutual fund licenses issued by the Central Bank prior the effective date of this Decree Law shall be…

The mutual fund shall have its own legal personality, legal form and independent financial liability.

1. Any company may be converted from one form to another while retaining its legal personality, in accordance with the provisions of this Decree by Law and the regulations and resolutions regulating the conversion of com…

1. Subject to the provisions of Article [299] of this Decree Law, a Public Joint Stock Company may be converted into a Private Joint Stock Company subject to the following conditions: a. The approval of the joint committ…

Subject to the provisions of Article [275] of this Decree Law, the following conditions apply for conversion into a Public Joint Stock Company: 1. The issued shares or equity stake shall be fully paid up or the partners …

1. Any Company may be converted into a Public Joint Stock Company, based on an application filed using the SCA's standard form and signed by the authorized signatory of the Company. 2. The following documents shall be at…

1. The Company shall announce the conversion resolution in two daily newspapers issued in the State; one of which is published in Arabic, within five [5] days of the date of the conversion resolution, and shall notify th…

1. A partner or shareholder that opposes the conversion resolution may withdraw from the Company and redeem the value of his equity stake or shares, by making an application in writing to the Company within fifteen [15] …

1. The company, wishing to convert into a public joint stock company after the SCA's approval has been obtained and a special resolution has been issued by its General Assembly, may sell its shares and / or offer new sha…

Subject to the provisions of Article [276] of this Decree Law, the Company shall submit a copy of the conversion resolution to the Ministry or the SCA, as applicable, and the Competent Authority, together with: 1. Detail…

1. Upon conversion, each partner or shareholder shall have a number of shares or equity stake in the new Company equal to the value of his shares or equity stake in the Company prior to conversion. If the value of the sh…

1. Upon approval of the conversion resolution by the Ministry or the SCA, as applicable, and the Competent Authority, the Registrar shall be informed to update the records accordingly. 2. The Competent Authority shall re…

1. Notwithstanding the provisions of Articles [199, 200 and 201], the Company may, under a special resolution of the General Assembly or an equivalent body, even during the course of liquidation, merge with any other Com…

The merger agreement shall set out the conditions and method of merger, particularly the following: 1. The MOA and AOA of the merging Company or the new target company; 2. The name and address of each Director or the pro…

1. The Directors or managers of every merged and merging Company shall present the draft merger agreement to the General Assembly or equivalent body for approval by the majority necessary to amend the MOA of the Company.…

1. A holding company may merge with one or more of its wholly owned companies as a single Company without entering into a merger agreement. Merger shall be effected by Special Resolution of those companies, passed by the…

1. Save for joint stock companies, partners and shareholders who oppose the merger resolution may request to withdraw from the Company and redeem their shares, by making an application in writing to the Company within fi…

Every merging Company or merged Company shall notify its creditors within 10 [ten] business days after approval of the merger by the General Assembly. Such notice shall: 1. State that the Company intends to merge with on…

1. A creditor that gives notice of opposition to the Company under Clause [4] of Article [290] of this Decree Law without his claim being paid or settled by the Company within thirty [30] days of the date of the notice, …

1. Upon approval of the merger resolution by the Ministry or the SCA, as applicable, the Registrar shall be informed to update the records accordingly. 2. The Competent Authority shall update its records to reflect the t…

Merger shall entail that the merged company or companies shall cease to exist as a corporate entity and be succeeded by the merging company or the new target company in respect of all rights and obligations. The merging …

1. Without prejudice to all legal rules and procedures regulating the incorporation of companies, the divestiture of the joint stock company under the provisions of this Decree Law shall take place by splitting the compa…

1. The divestiture shall be horizontal when the shares of the new companies are held by the same shareholders of the parent company before the divestiture and at the same equity stakes. The divestiture shall, on the othe…

The company's board of directors shall draw up the detailed draft divestiture plan, particularly the assets and liabilities that belong to the parent company and the new companies resulting from the divestiture, for subm…

The company's board of directors shall obtain no objection from the Ministry or SCA, as the case may be, on the method of divestiture and detailed divestiture plan, particularly the assets and liabilities that belong to …

Shares of the parent company shall be issued after the amendment is made, while shares of the new company shall be issued after the same is registered with the Competent Authority. A note shall be recorded in the commerc…

1. Any person or an associated group – as determined by the resolution issued by the SCA in this respect – purchasing or carrying out any act that may lead to the acquisition of shares or securities that are convertible …