Joint Stock Companies and New Companies Laws
Corporate governance
Corporate governance may be defined as rules, structures, processes, and relationships regulating and managing organizations. It is a standard framework in which the concerns of numerous stakeholders associated with the organization are protected. It encompasses all aspects of governance and contributes to creating a structure for its goals. For example, the SCA “Securities and Commodities Authority” was built in 2000 under Federal Regulation Number four of the United Arab Emirates. The Authority’s mission is to oversee and manage joint-stock companies and wealth management. As a result, every firm whose stocks are traded on the UAE Securities Exchange is subject to the SCA’s laws..
Joint Stock Companies and New Companies Laws Amendments
This year, a new amendment was created that clarified the yearly corporate governance framework criteria.. The details under Article 77 of the revised Resolution Number 3-RM 2020 are as follows:
- There must be specific identifications of “members of the board,” chief executive, chairman, and vice-chairman. Similarly, comprehensive biography of every member will also be presented along with the experience and qualifications of the members.
- Members of committees and the Board of Directors and the Authority and responsibilities handed to them and the actions carried out throughout the year.
- Members of committees and the Board of Directors and the Authority and responsibilities handed to them and the actions carried out throughout the year.
- The number of Board and Management Board meetings held and the identities of those that attended. The identities of the key shareholders who control more than 5% of the company’s equity wholly or partly and a quick explanation of the shareholder’s equity transformation.
- Include the following in the assessment on the management framework and corporate governance:
- The applicable rules of corporate governance
- The methodology of the identity of the Board’s competence
- The breadth of the Board’s complete implementation of internal audit processes.
- Every Board member and board subcommittee gives remuneration and bonuses during the fiscal year and their reasons.
- A list of the company directors, first and second grades, as listed in the company’s organizational structure, their operations, dates of initial consultation, detailed information of compensation packages, bonuses earned by each of them independently, or other remuneration obtained from the firm, along with the evaluation for such compensation packages..
Establishment of Joint Stock Companies under New Companies Laws
Following procedures, conditions and documents must be prepared to form a new joint-stock company in the UAE (private joint-stock company).
Conditions
- Every document must be translated into Arabic through a specific legal translator, and authentication must be required after that.
- There is a need for legally authorized personnel to submit the license application.
Procedure
- Approval of Trade Name is required before starting any other step
- Preliminary approval has been required; in the form of a certificate approving for business license application.
- An application must need to be approved by relevant governmental authorities; the procedure will be finalized according to the economic activity nature, such as:
- In the case of the insurance company, the application must be approved by Insurance Authorities; the same is the case for healthcare businesses as in that case the approval will be required from the Ministry of Health
Documents
- Certificate of the Trade Name and preliminary authorization certificate
- The applicant’s Passport or ID card (must be resident of the UAE)
- Registration or commercial certification must be required for the shareholder
- Business premises lease agreement
- Power of Attorney for representative attested explicitly from Notary Public.
- Business Signboard, Seal, Signature and Board measurement also required
- No objection certificate is also required to maintain the economic transaction within or outside the UAE
- Articles of Association
- Memorandum of Association of the Company, attested by Notary Public
- Both article and memorandum of association must be printed and published in the bulletin of the Ministry of Economic Affairs
- Regarding the incorporation of the company, there must be a letter of Executive Council Approval required
- Banking Operation Certification is needed to confirm the capital deposit amount
Fees
- Following fee structure will be followed:
- Fee for commercial registrar 100 AED
- License Issuance Fee 100 AED
- Fee for signboard 150 AED per sqm
- Commercial Activity Fee 25% of service enhancement fee
Conclusion
In a joint-stock company entity, company stock shares can be purchased and sold through the shareholders. Every shareholder possesses a specific proportion of such stock through the shape of share or ownership certificates. Such shares are transferable, and there will be no effect on the company’s existence or continuity.
Bibliography
Hosni SM, “Commercial and Civil Companies in UAE Law” (2011) 7 Arab Law Quarterly 159
James A, “Insurance Company. By-Laws. Validity” (2018) 13 the Virginia Law Register 491
Majumdar S and Asgari B, “Performance Analysis of Listed Companies in the UAE-Using DEA Malmquist Index Approach” (2017) 07 American Journal of Operations Research 133
Middle East Law and Governance E, “Middle East Law and Governance: An Interdisciplinary Journal” (2016) 3 Middle East Law and Governance 1
Reference
[1]Sayed M Hosni, “Commercial and Civil Companies in UAE Law” (2011) 7 Arab Law Quarterly 159.
[1]A James, “Insurance Company. By-Laws. Validity” (2018) 13 The Virginia Law Register 491
[1]A James, “Insurance Company. By-Laws. Validity” (2018) 13 The Virginia Law Register 491.
[1]Sudipa Majumdar and Behrooz Asgari, “Performance Analysis of Listed Companies in the UAE-Using DEA Malmquist Index Approach” (2017) 07 American Journal of Operations Research 133.
[1]Sudipa Majumdar and Behrooz Asgari, “Performance Analysis of Listed Companies in the UAE-Using DEA Malmquist Index Approach” (2017) 07 American Journal of Operations Research 133.
[1]Editor Middle East Law and Governance, “Middle East Law and Governance: An Interdisciplinary Journal” (2016) 3 Middle East Law and Governance 1.
