New law to aid companies and boost economic competitiveness

ABU DHABI // A new federal law regarding the relations of companies and government institutions would boost the competitiveness of the UAE’s economy, said the Minister of Economy.

It relates to the rules of governance, the protection of the rights of shareholders and partners, supporting the flow of foreign investment, and the promotion of corporate social responsibility.

The minister, Sultan Al Mansouri, said it was to help the country to reach top positions on the Global Competitiveness Index.

“The law aims to contribute to the development of the business environment and the country’s capabilities and economic status,” he said.

President Sheikh Khalifa on Wednesday legalised the Commercial Companies Law No 2 of 2015, state news agency Wam said.

The law has 378 articles pertaining to commercial companies formed in the UAE, and special provisions applicable to foreign companies mentioned in the law.

Foreign companies that make the UAE a centre for their activities must establish a branch or a representative office here.

The law authorises a person to establish and own a single-person, limited liability company.

They are also allowed to set up a joint private or limited liability company.

In terms of shareholding, founders of a public joint stock company shall subscribe shares not less than 30 per cent and not more than 870 per cent of the capital before the initial public offering of the remaining shares.

As for debt-to-equity conversion, a company may, according to a special resolution, increase its capital through converting cash debt into equity after the board of directors presents a study to the General Assembly regarding the urgency of doing so.

Mr Al Mansouri said the new law would support economic diversification and accelerate the UAE’s moves towards becoming a knowledge-based economy that promotes creativity and innovation, in accordance with the UAE Vision 2021.