Union Properties' shareholders approve restructuring of operations and business continuity

Company's board was granted authority to appoint experts to initiate legal proceedings against its former board members who were dismissed for misconduct

DUBAI, UNITED ARAB EMIRATES – Mar 1: View of the residential project by  Union Properties at Motor City in Dubai. (Pawan Singh / The National) *** Local Caption ***  PS01- MOTOR CITY.jpg

Shareholders of Union Properties voted to continue the company's operations and approved a revised turnaround strategy at its annual general meeting as the Dubai developer struggles to stem losses.

The company's turnaround strategy aims to tap into its existing real estate portfolio and adjacent services subsidiaries to capitalise on the current momentum in the Dubai property market, the company said in a statement on Thursday to the Dubai Financial Market (DFM), where its shares are traded.

Union Properties aims to return to profitability "by optimising its cost base and restructuring its debt", the statement added.

“The AGM marks a significant step towards resolving the company’s legacy issues and progressing with the company’s rejuvenation, as shareholders endorse our new turnaround strategy and affirm their support for legal action against the previous board and management," said Amer Khansaheb, board member and managing director of Union Properties.

The new strategy aims to "create a leaner organisation in order to achieve profitability", he said.

Union Properties' shares were up 1.06 per cent to 29 fils on the DFM at 11.30am UAE time.

The company swung to a net loss of Dh966.76 million ($263m) in 2021 from a net profit of Dh200.98m the previous year after it rectified the value of its property portfolio that “had been inflated in prior years”, it said in March.

The annual meeting was convened to adhere to the UAE federal law on commercial companies that mandates that if the accumulated losses of a joint stock company reach half of its issued capital, the board of directors must, within 30 days from the date of disclosure, convene the general meeting to "consider a decision regarding the continuity of the company's activity or to dissolve the company prior to the expiry of its term".

The developer's ratio of the accumulated losses to the capital amounted to 68.3 per cent, requiring a nod from its shareholders to continue operations.

Union Properties ran into trouble with regulators last year after the Securities and Commodities Authority, the UAE's markets watchdog, filed a complaint against its senior executives in October, accusing them of forgery, abuse of authority, fraud and damage to the interests of the company.

A new board was appointed in December, and a complete financial and accounting review was conducted by a third party, which uncovered "widespread fraud and misconduct by the company’s former management involving forgery, misappropriation of funds and various other financial violations", Union Properties alleged.

Union Properties said in its latest update the board was granted the authority to appoint legal and financial experts to file and follow up on legal proceedings against the developer's previous board members, who were dismissed.

Shareholders also approved the appointment of new auditors for the year 2022, the statement said.

Updated: May 05, 2022, 8:30 AM