ABU DHABI // The Federal National Council yesterday began a two-day session to scrutinise the proposed Companies Law.
When passed, the law will overhaul regulations relating to the ownership and operation of companies and businesses in the UAE.
But in a sign of how difficult a job reforming the law will be, FNC members became bogged down over what it should be named.
After sometimes heated exchanges between members, the council closed the day having reviewed only the first eight of the proposed law’s 383 articles.
Articles range from how shares can be allocated to accounting standards, and could open the door to some businesses outside free zones being majority-owned by foreigners.
Some members argued it should be called the Companies Law and apply to “civil firms”, such as medical and legal practices. Civil firms enjoy benefits above other companies, including more leniency on bankruptcy.
Others wanted the legislation to be called the Commercial Companies Law and for it to exclude civil firms.
The Commercial Companies Law is the same name as its predecessor established in 1993, which does not apply to civil firms.
Other members wanted to keep the name Companies Law but exempt civil firms from it, while the Ministry of Economy favoured the same name but was against exempting civil firms.
“We’ve looked at some of the top trading centres in the world, such as US, UK, Malaysia, Hong Kong, as well as members of the GCC, and they have all used the name Companies Law or Act,” said Sultan Al Mansouri, Minister of the Economy.
Mr Al Mansouri said using a standardised name would make the law more easily accessible.
“This is a very sensitive subject as it affects attracting international investment,” he said. “It is very important to maintain a standardised naming scheme for our legislations, especially keeping the GCC in mind.
“Kuwait’s and Saudi Arabia’s Law is called the Companies Law. This will aid the process when unifying laws across the GCC.”
Dr Amal Al Qubaisi, an FNC member from Abu Dhabi, argued that the proposed law paid insufficient notice to civil firms.
“There are almost 400 points in the new law but only six address these civil businesses,” Dr Al Qubaisi said. “There should be clearer and more accurate legislation provided for these firms.
“I see that the 1985 Civil Firms Law shows more attention and protects the civil business more than this new one does. These businesses offer crucial services to the public.
“This law will stand for the next 20 years or more. If we apply this law as it is, we would be doing a severe injustice to this sector.”
The minister insisted civil firms had not been overlooked.
“In our discussion on the law, we addressed the civil firms many times, and some suggested issuing a separate law for the civil sector,” Mr Al Mansouri said.
“There must be a kind of specialisation for this sector and there is an importance to address this field.”
Most members voted to keep Companies Law as the title of the new legislation.
Not all concerns centred on the name. Ahmad Al Amash, a member from Ras Al Khaimah, said the legislation should focus on Emirati, rather than foreign businesses.
“We in the UAE must look at establishing legislation to assist our citizens as a priority. Not making international investment the priority, they have their own governments looking out for their needs,” M Al Amash said.
“I don’t see anything in this law that will encourage growth for Emiratis and Emirati businesses. I don’t want legislation that will help foreign companies hinder the growth of Emirati businesses.”
Ahmad Ahli, a representative from Dubai, echoed his concerns.
“How is this law going to assist trade, and assist Emiratis starting and running businesses?” Mr Ahli asked. “The Ministry of Economy has come up with an all encompassing law that has not addressed any of our concerns.”
In the afternoon session, members discussed whether the law should cover so-called joint ventures, business partnerships based on oral agreements.
An FNC committee previously suggested joint ventures should not be covered, and the ministry agreed.
But during yesterday’s sessions some members appeared to have changed their minds, saying joint ventures should be covered.
Mr Al Amash defended the committee’s decision, saying it was important to discourage such agreements, but another member argued some joint ventures are recognised in court.
The members voted to stick to the committee’s previous position.
The session ended at 3.15pm with eight articles discussed. The law's remaining 375 articles were adjourned until today.