Regulation of Mainland Companies in UAE

PUBLISHED: AUGUST 18, 2024

Note: This material is for informational purposes only and does not constitute legal advice or consultation. The information contained in the material may not be relevant at the time of reading it.

The main source of corporate law and regulation in the UAE is the Federal Decree-Law No. 32/2021 on Commercial Companies (Commercial Companies Law). This Law applies to all Mainland companies incorporated in the UAE.
The Commercial Companies Law contains provisions on the fiscal year of the Company (Article 28), distribution of profit and losses (Articles 29 & 30).
Title 3 of the Commercial Companies Law is dedicated to limited liability companies - one of the most demanded types of Mainland Companies in UAE.

As per Article 71 of the Commercial Companies Law a Limited Liability Company is a company that consists of a number of partners that is not less than (2) two and not more than (50) fifty, and each of them shall only be liable only to the extent of his share in the capital.

There is no requirement of a certain amount of the capital of the company. However, as per Article 76 of the Law, the Company shall have sufficient capital to achieve the object of its incorporation and the capital shall consist of shares equal in value.

The Company shall be managed by one or more managers as determined in the Memorandum of Association (MoA). The Company also can be governed by a board of directors. The capacity of manager of the board may be limited by the MoA.
The main document regulating the rights and obligations of the partners in the Company along with many other corporate questions is MoA.

Another document that might be concluded by the partners to regulate their relationship in a specific manner is a Shareholders agreement (SHA).

SHA might regulate operation and management of the Company and the general framework for the shareholders cooperation and understanding with respect to their rights and obligations towards the company.

UAE Law recognises the principle of freedom of contract, which allows the partners to regulate their relationship in the SHA in quite a wise manner. However SHA may not, in any way, contradict the law or UAE public order.

REGULEX has solid experience in drafting a bespoke Memorandum of Association, drifting a Shareholders Agreement supported by any other corporate documents you might need in your business journey.