The New Commercial Companies’ Law within the UAE Presentation


The regulation of enterprise (or industrial regulation):

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  • set of rules to control industrial transactions and enterprise interactions;
  • is characterised as civil regulation and covers the rules of each non-public and public sectors of enterprise (Commercial Law in UAE, 2015).

Basic enterprise regulation in UAE:

  • Foreign funding regulation;
  • Competition regulation;
  • Laws for companies working within the territory of Dubai (licensing);
  • Law on certificates origin;
  • Law on industrial arbitration (Commercial Law in UAE, 2015).

These rules are important relating to the safety of the rights of versatile stakeholders corresponding to the staff, the employers, the shareholders, and clients. The guidelines additionally assist to realize higher effectivity and transparency of practices.


The New Law was launched on the first of April 2015.

It introduced a set of essential reforms regarding some basic rules within the spheres of enterprise and commerce.

Apart from establishing a number of additions and amendments, the New Law majorly preserved the previous options and provisions which might be important to the previous set of rules (Ibrahim , 2015).

The New Law applies to:

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  • Private joints inventory firms (JSCs);
  • Public joint inventory firms;
  • Limited legal responsibility firms (LLCs).

Companies the Law Does Not Apply to

Companies that work within the sectors of oil, fuel, energy, water, and vitality sectors and which might be straight or not directly owned by the federal government (at the least by 25%).

Companies owned by the UAE authorities totally or these whose possession belongs to the federal government of one of many Emirates.

The entities that function within the free zone as a result of free zone has a regulation that excludes the relation of the New Law to such firms. At the identical time, the applicability of the New Law is purposeful within the spheres had been the free zone entities are allowed to conduct enterprise operations onshore.

Finally, the businesses which might be exempted from the applicability of the New Law by the cupboard decision or federal regulation (Ibrahim, 2015).

Public Joint Stock Companies

Article 107 – public JSC might be based by ten establishers minimal (it was once 5 within the previous regulation).

Article 117 – founders of an organization are permitted to personal 30 to 70% of its capital, within the earlier regulation the proportion limits was once decrease – 20 and 45%.

The New Law encourages the enterprise house owners to proceed with the preliminary public providing (IPO).

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Article 129 (book-building practices of IPO) – pricing is set by the issuers and banks in settlement with buyers and promoting shareholders.

Article 151 – the rules in regards to the nationality of the board members stay with out modifications; specifically, nearly all of the board members, in addition to the chairperson, are to be the UAE natives.

Article 225 – the conversion of an organization debt to fairness is an possibility (this selection was not talked about within the earlier regulation) (Ibrahim, 2015).

Limited Liability Companies

Article 71 – the LLCs can now be owned by sole house owners (pure or company individuals), beforehand, the minimal variety of founders was set on two.

The minimal of managers assigned in an organization could now be one (it was once two within the previous regulation); the utmost variety of managers was once restricted to 5, whereas the New Law doesn’t present any restrict in any respect.

Article 86 – the individuals employed as managers in a single firm are prohibited from working one other enterprise that competes with the previous group (the regulation that was not current within the previous regulation) (Ibrahim, 2015).

Private Joint Stock Companies

Concept of a sole founder was added.

Two founding members totally subscribed to the capital of at the least 5 million Dirhams (the minimal variety of founders was three and their capital needed to exceed 2 million Dirhams within the previous regulation) can begin a non-public JSC.

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Article 264 – lockup interval for the non-public JSCs equals one monetary yr (within the previous regulation, this era was assigned as twice as lengthy).

The New Law mentions a brand new set of rules associated to the company authorized constructions (subsidiaries and holding firms) and the funding funds – these guidelines are new to the businesses’ regulation of the UAE and weren’t part of the earlier regulation (Ibrahim , 2015).


The most excellent modifications :

  • The New CC Law presents extra freedom relating to the institution and financing the businesses; nevertheless, the principles regarding their governance have change into a lot stricter and extra exact.
  • The main aim of the New Law is to facilitate the event of the UAE’s enterprise sector into an surroundings that’s regulated by the worldwide requirements (PwC, 2015).
  • The regulation serves to enhance the standard and thoroughness of the company governance, promote social accountability of the companies, and be sure that safety of the shareholders (Chartered Accountants Group, 2015).
  • Expert valuation of shares in sort.
  • The addition of the notion of holding firms.
  • The operations designed for pledging shares.
  • The regulation to alter the auditors as soon as in each three years for the general public joint inventory firms (PwC, 2015; Anders et al., 2016).


Since the reforms of the businesses’ Law are aimed on the promotion of the preliminary public choices, the addition of a sell-down possibility may very well be very engaging to the companies contemplating IPOs and associated transitions.

It is beneficial that the enterprise leaders overview them and alter their company guidelines accordingly as a way to keep away from the unintentional breach of the established lawful practices as a result of the New Law implies that the prevailing LLCs must make important changes to their rules and constructions inside one yr (Silver, 2015).


Anders, I., Eiler, P., Mauel, C., Lemmerz, A., Campbell, A., & Friz, C. (2016). Impacts of the New UAE Commercial Companies Law on Limited Liability Companies – What you ought to know. Web.

Chartered Accountants Group. (2015). New UAE Commercial Companies Law – Applicable for LLCs additionally. Web.

Commercial Law in UAE. (2015). Web.

Ibrahim, A. (2015). The new UAE Commercial Companies Law: A comparative view. Web.

PwC. (2015). New UAE Commercial Companies Law: Legal reforms to strengthen the authorized and regulatory panorama of doing enterprise within the UAE. Web.

Silver, J. (2015). The affect of the brand new UAE Companies Law on current LLCs. Web.

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