GENERAL PROVISIONS FOR COMPANIES

Definition of a Company

- Definitions

In application of the provisions of this Law, the following terms and expressions shall have the meanings assigned against each, unless the context requires otherwise:

State: The United Arab Emirates.

Federal Government: The Government of the United Arab Emirates.

Local Government: Any of the Governments of the Member Emirates of the Federation.

Ministry: Ministry of Economy;

Minister: Minister of Economy.

Central Bank: The Central Bank of the United Arab Emirates.

Authority: The Securities & Commodities Authority.

Competent Authority: The local authority having competence with regards to the affairs of companies in the relevant Emirate.

Company: The commercial company.

Diligent Person: The person having sufficient experience and commitment required in the performance of his work.

Governance: Corporate Governance is a framework consisting of a set of criteria, standards, and procedures that aim to ensure effective management of a company by its top-level executives in line with international practices and standards. The framework establishes clear duties and responsibilities for the Directors and Executive Management of the company, while also taking into account the protection of the rights of both shareholders and stakeholders. Ultimately, the goal of Corporate Governance is to promote transparency, accountability, and fairness within the organization, while maximizing shareholder value and promoting sustainable growth.

Working Day: The Ministries, Governmental Authorities, and local departments have designated official working days. These working days are determined by the respective organizations and typically include weekdays, Monday through Friday, excluding weekends and public holidays. These working days may also be subject to change based on the organization's policies, regulations, or other factors. It is important to check with the relevant organization to confirm their official working days and any changes to their schedule.

Special Resolution: A resolution is a decision made by the General Assembly of a joint-stock company, where the majority of shareholders holding at least 75% of the shares represented at the assembly vote in favor of the decision. This decision-making process is an important mechanism for corporate governance in joint-stock companies, ensuring that major decisions are made with the support of a significant majority of shareholders. It is important to note that the specific requirements for passing a resolution may vary depending on the laws and regulations of the country where the joint-stock company is registered.

Registrar: Companies Registrar appointed by the Minister, who performs his duties through the Companies Department of the Ministry.

Markets: The securities and commodities Markets licensed by the Authority to operate in the State.

Securities:

- Shares issued by joint stock companies;

- Derivatives and investment units as approved by the Authority;

- Bonds, deeds and bills issued by the Federal Government or the Local Governments or by the public authorities or establishments in the State.

- Bonds, deeds or any debt tools issued by companies in accordance with such regulation issued by the Central Bank and the Authority.

- Any other local or foreign Securities acceptable to the Central Bank and the Authority.

Public Subscription: The invitation for any natural or juristic person or class or classes of persons to purchase any Securities.

Securities Book Building: The process under which the price of the security is determined upon its issue or sale in a Public Subscription, in accordance with the provisions of the Decision issued by the Authority in this respect.

Strategic Partner: The partner whose contribution to the company provides technical, operational or marketing support to the company, for the good of the company.

Related Parties: The Chairman and other members of the board of directors and the senior executive management of the company and working therein, and the companies in which any of such persons holds at least 30% of their share capital and subsidiary, associated or sister companies.

Share Register: The register that shows the shares held by shareholders in Joint Stock Companies and the rights attached to such shares.

Share Register Secretariat: The body or bodies licensed by the Authority to keep the Share Register of Private Joint Stock Companies.

Member of the Board of Directors: Any member among the members of the company’s board of directors, including the Chairman.

- Objectives of the Law

The Law has for objective to contribute to the development of the working environment and capacities of the State and its economic position in regulating companies according to the various international norms related to governance rules and the protection of shareholders and supporting foreign investment and promoting the corporate social responsibility of companies.

- Companies Governed by the Provisions of this Law

The provisions of this Law and the Regulations, Instructions and Decisions issued in execution hereof shall apply to such companies established in the State. The provisions of this Law concerning foreign companies and the Regulations, Instructions and Decisions issued in execution hereof shall apply to foreign companies that have established in the State a base to conduct any activity therein or established a branch or representative office in the State.

- Companies Exempted from the Provisions of This Law

1. Other than the registration and renewal in the exempted companies register at the Ministry, the Authority and the competent authority, each according to its jurisdiction, the provisions of this Law shall not apply to:

a) Companies exempted under a Cabinet Decision and each of those whereby a special provision to that effect is contained in the Memorandums of Association or Articles of Association of such companies according to the controls issued by a Cabinet Decision;

b) Companies held in full by the Federal Government or the Local Government, and any other companies held in full by such companies if a special provision to that effect is contained in the Memorandum of Association or Articles of Association of such companies.

c) Companies in which the Federal Government, the Local Government or any of the establishments, authorities, departments or any companies controlled or held by any of them directly or indirectly, and having at least 25% of the shares of such companies, which operate in oil exploration, drilling, refining, manufacturing, marketing and transportation or operating in the energy sector of all kinds or in the electricity generation, gas production or water desalination, transmission and distribution, if a special provision to this effect is contained in the Memorandum of Association or Articles of Association of such companies.

d) Companies exempted from the provisions of Federal Law No. (8) of 1984 On Commercial Companies and its amendments, prior to the effective date of this Law.

e) Companies exempted from the provisions of this Law under special Federal Laws.

2. The companies referred to in the sub sections 1-b,-c,-d of this provision shall adjust their position in accordance with the provisions of this Law if such company sells or publicly offers any percentage of its share capital or lists its shares in any of the financial Markets in the State.