Tuesday, Feb 12, 2013
Abu Dhabi: It took the Federal National Council 80 minutes to agree on the scope of the new companies law and whether to call it the companies law or commercial companies law.
Members of the House eventually voted for calling it Companies Law and expanding it to cover all types of businesses including professional firms, which would take the form of limited liability companies.
Before voting on a move to determine the scope of the law and whether it will be applicable to only commercial companies or all types of companies including professional firms, Sultan Al Mansouri, Minister of Economy, reminded members of the House of their legal oath and responsibility towards the UAE, which was rejected by many members. The minister was forced to apologise and retract his remark
In a marathon five-hour debate, the House reviewed only seven articles of the draft law which is made up of 383 articles.
Members of the House will complete discussion of the law today (Wednesday).
The draft companies law (CCL), which aims to enhance the diversity and openness of the national economy, and to keep abreast with domestic and global economic changes by preserving a continuous and balanced growth in all economic sectors in the UAE, is being discussed by the Committee on Financial Affairs at the FNC.
The law is aimed at improving the business landscape in the UAE, making it easier to do business here and potentially boost the economy.
Under the draft law, the founders of a Public Joint Stock Company (PJSC) are obliged to subscribe to no less than 30 per cent of the issued capital of the company.
The draft law will not apply to companies excluded by a Cabinet resolution. These include companies wholly owned by federal or local authorities or any entities wholly owned by such companies, companies in which the federal or local authority, or any establishment, authority, department or company controlled or held by any of the foregoing (directly or indirectly) holds at least a 25 per cent shareholding and which operates in oil exploration, drilling, refining, manufacturing, marketing or operating in the energy sector in power generation, gas production, or water desalination and distribution.
The law states that the Cabinet can issue a decree outlining the conditions for registering companies operating in UAE free zones that wish to carry out their business activities outside the free zone, in the mainland (onshore) UAE. These decrees will open up the jurisdiction for free zone companies wishing to also operate in the UAE outside the free zones.
The draft law enforces strict corporate governance standards and procedures on PJSCs in accordance with international standards and practices. The Ministry of Economy will be issuing a decree setting out corporate governance requirements and a framework for PJSCs consisting of more than 75 shareholders. Banks, finance companies, financial investment companies, exchanges and money brokerage companies are excluded.
In addition to this provision, it is intended that the chairman of the Emirates Securities and Commodities Authority (ESCA) will issue corporate governance requirements for PJSCs and the board of the company.
By Samir Salama Associate Editor
Gulf News 2013. All rights reserved.
