New CLL in United Arab EmiratesJune 08, 2015
The purpose of the Federal Law No. 2, also known as the New CLL (New Commercial Companies Law) is to provide a legal and lawful expansion of the UAE’s development into a global market. This includes becoming a business environment that raises the levels of good corporate governance, the protection of shareholders, and the promotion of social responsibility of companies. In short, it seeks to bring UAE business practices squarely into an international, 21st century business world. By doing so, the UAE will boost the competitiveness of their economy, settling into one of the top positions on the Global Competitiveness Index.
For this process to occur, the pre-existing law had to be rewritten. The New CCL will be released by the UAE governing agency on July 1, 2015, and will replace the existing Federal Law No. 8. Incorporating over 378 articles, it is seen as a major overall, a more modern approach, and a step forward for UAE businesses. With the original law being active from 1984-2015, it covered the commercial companies and is now referred to as the Old Commercial Companies Law or Old CCL. The New CCL brings a series of changes and will require compliance by all companies by June 30, 2015. This includes amending their existing memoranda as well as their articles of association. Strict compliance is necessary and failure to do so risks having the company dissolved.
The New CCL is designed to strategically amend the Old CCL, providing a series of improvements and modifications as a result. Features of the New CCL includes the requirement for Public Joint Stock Companies to rotate auditors every three years. Another noticeable feature is that procedures be put in place for pledging shares as well as expert valuation of shares in kind. Finally, the New CCL includes the recognition of the concept of holding companies in the UAE. This includes limited liability companies as well as joint private companies. In particular, this is crucial for supporting the flow of foreign investments into this part of the world.
Through increased corporate responsibility, better oversight, and greater regulations, companies within the UAE will have the framework necessary to continue being an economic leader well into the 21st century. As seen in the New Federal Law No. 2, greater diversification within the UAE economy will ensure continued growth and health. Multinationals that require more information on the CCL and how it will affect their subsidiaries in the UAE can contact us: email@example.com