1.1    Introduction:

The United Arab Emirates (UAE) has recently implemented a series of transformative reforms through Federal Law No. 32 of 2021 on commercial companies. This landmark legislation aims to position the UAE as a premier destination for foreign direct investment. In this comprehensive guide, we will delve into the key aspects of this new law, breaking down its implications and offering insights into its impact on various types of companies.

1.2    Understanding the New Commercial Companies Law:

Effective since January 2, 2022, this law replaced Federal Law No. 2 of 2015, introducing substantial changes and codifying amendments made over the years. Companies were given a one-year transition period to align with the new regulations. We, at Legamart, are here to guide you through the intricacies of compliance.

1.3    Types of Companies Covered:

The law broadly encompasses various company types, including Limited Liability Companies (LLCs), Public Joint Stock Companies (PJSCs), Special Purpose Acquisition Companies (SPACs), and Special Purpose Vehicles (SPVs). While some companies enjoy exemptions based on specific criteria, the law creates a more inclusive and transparent framework.

1.4    Key Features and Changes:

Foreign Investments and Ownership:

1. Foreign nationals can now have 100% ownership in onshore companies, eliminating the need for an Emirati shareholder or agent.
2. The requirement of a UAE national or local company as a registered agent is no longer mandatory.

Special Acquisition Companies (SPACs):

The law introduces a legislative basis for SPACs, allowing them to facilitate mergers, acquisitions, and foreign investments.

Special Purpose Vehicles (SPVs):

SPVs are officially recognized for the first time, offering a separate legal structure for financing operations.

Limited Liability Companies (LLCs):

1. Extended powers for managers, allowing a six-month extension of their term.
2. Reduction of statutory reserves from 10% to 5%, providing more flexibility.
3. Relaxation in quorum requirements for shareholder meetings.

Public Joint Stock Companies (PJSCs):

1. Extension of public subscription periods to a maximum of 30 working days.
2. PJSCs can now issue shares at a discount, subject to regulatory approval.
3. New regulations on the remuneration of directors and caps on founder’s subscriptions.

1.5    Conclusion:

The UAE’s commitment to becoming a global business hub is evident in the significant changes brought about by Federal Law No. 32 of 2021. From fostering foreign investments to introducing innovative corporate structures, the legislation sets the stage for a dynamic and competitive business environment. As these reforms unfold, staying informed and seeking expert guidance, such as that provided by Legamart, becomes crucial for navigating the evolving business landscape of the UAE.