Federal Law No 8 of 1984

Federal Law No .
8 Acting upon the submission made by the Ministry of Economy and

Commerce , the proposal of the Cabinet and the Federal National Council
Issued on 20/3 / 1984 and the ratification of the Federal Supreme Council ,
Corresponding to 17 Jumada al - Akher 1404 H . Have promulgated the following Law :
CONCERNING COMMERCIAL COMPANIES TITLE ONE
Amended by :
GENERAL PROVISIONS
Federal Decree - Law no . 01/1984 dated 26/06/1984 , and
Article 1
Federal Law no . 13/1988 dated 26/12/1988 , and
As amended by Federal Law no . 13 dated 26/12/1988 :
Federal Law no . 04/1990 dated 22/12/1990 , and
In applying this Law , each of the following expressions and words shall
Federal Law no . 46/1992 dated 07/11/1992 , and have the meaning assigned thereto opposite to each :
Federal Law no . 15/1998 dated 25/10/1998 , and State : United Arab Emirates State .
Federal Law no . 25/2001 dated 04/11/2001 , and Ministry : The Ministry of Economy and Commerce .
Federal Law no . 14/2006 dated 03/06/2006 , and Minister : The Minister of Economy and Commerce .
Federal Law no . 18/2006 dated 11/06/2006 , and Competent Authority : Local competent Authority in the relevant
Emirate .
Federal Law no . 10/2007 dated 19/08/2007 .
Agent : Physical person holding the State nationality on the private
juristic person incorporated within the State totally owned by physical
Federal Law no . 01/2009 dated 05/07/2009 .
national persons .
We , Zayed Bin Sultan Al Nahyan , President of the United Arab Emirates

Article 2
State ,
Pursuant to the perusal of the provisional Constitution ; and
1 - The provisions of this Law shall apply to commercial companies

Federal Law no . 1 of 1972 regarding the Jurisdiction of the Ministries
constituted in the State or establishing in it the center of its activities . All
and the Powers of the Ministers , and its amending laws ; and
companies formed in the State must have its domicile therein .
1
2 - The provisions of this Law do not apply to companies , formed in the 4 - Public Joint - stock .
State free zone , as concerns matters regulated by a special provision in the
concerned free zone Statutes , with the exception of acquisition of the 5 - Private Joint - stock .
State nationality .
6 - Limited Liability companies .
3 - Excluding the acquisition of the State nationality , the provisions of
this Law do not apply to petroleum companies working in the field of 7 - Partnership Limited by shares .
prospection , extraction , marketing and transport ; companies producing
electricity , gas , water desalination and related activities such as transport ,
Article 6
distribution , etc ...; as well as companies excepted by decision taken in
Cabinet . All these exceptions concern matters which are specified in a
special provision in their constitutive contracts and main Statutes . As amended by Federal Law no . 13 dated 26/12/1988 :
Article 3 A Company that does not take any of the types referred to in the
preceding Article shall be null and void , and the individuals who enter into
a contract in its name shall be personally and jointly answerable for the
Each company constituted in the State shall hold its nationality but it
liabilities arising from such contract . Provisions of this Law shall apply to
shall not necessarily be entitled to the rights reserved only to citizens .
all companies even if under different names as long as their activities are
subject to the provisions herein .
Article 4
Article 7
A company is a contract under which two or more persons are
committed to participate in profit - making economic venture either by
A company in which the State or any other public body hold any share in
providing cash or work contributions and to divide between them profit or
its capital , irrespective of its amount , shall restrictively take the form of a
loss arising from such venture .
public joint - stock company .
For the purposes of the preceding paragraph , an economic venture shall

Should the State or the public body acquire a share in an existing
include each and every commercial , finance , industrial , agricultural , real
company , such company shall be converted into a public joint - stock
estate or other economic activities .
company .
Article 5
Article 8
A company established in the U . A . E shall adopt either one of the

Except for joint ventures , company Memorandum of Association and
following types :
any amendment thereto written in the Arabic language and duly registered
with the competent official body failing which the contract or its
1 - Joint liability . amendment shall be void .
2 - Sleeping partnership . Partners may invoke invalidity arising from failure to provide the
Memorandum in writing or to certify the same in the presence of each
3 - Joint - Venture . other , but may not be used as evidence against third parties who may
protest against the partners on the basis of such invalidity .
2
Article 9 The company's managers or members of its Board of Directors shall be
jointly liable to indemnify the damages incurred by the company , the
If , at the request of a third party a judgment is awarded whereunder the partners and third parties due to non - registration .
company is invalidated , the company shall then be invalid only in so far as
such third party is concerned , and the persons who entered into Article 12
agreement with him in the name of the company shall be personally and
jointly liable for the commitments arising from such agreement . However As amended by Federal Law no . 13 dated 26/12/1988 :
if the judgment concerning the invalidity is awarded at the request of a
partner , the invalidity effect shall commence only from the time such To the exception of joint ventures , a company shall not have a juristic
award is decreed . personality and may not start its operations unless after its registration in
the Commercial Register .
In all cases , procedures concerning the liquidation of a company
declared invalid and settlement of its partner's entitlements , as between The official instrument issued shall be published in the Ministry's special
themselves , shall be done in conformity with the conditions of the bulletin . Persons , who before the completion of registration formalities
contract . carry out business or acts for the account of the company , shall be jointly
liable on account thereof .
Article 10
However , a company under establishment shall have a juristic
As amended by Federal Law no . 13 dated 26/12/1988 : personality to the extent required for finalizing its establishment
procedures .
In case of difference between partners , testimony is not accepted as
evidence to prove what is contrary or beyond the scope of the Article 13
Memorandum of Association .
A company's objective must be lawful with due consideration given to
Article 11 standardization and specialization in its main objectives .
As amended by Federal Law no . 13 dated 26/12/1988 : Article 14
To the exception of joint - ventures , the Memorandums of Association A partner's share may be a specified amount of money ( cash share ) or
as well as amendments thereto , shall be publicized by registration in the may be made in kind ( contribution in kind ). In cases other than those
Commercial Register Registration formalities shall be specified by a derived from the provisions hereof , such share may be a contribution of
ministerial decision to be issued after consultation with the concerned work , but in no case may the share of a partner be the reputation and the
Authorities in the Emirates . authority which such partner enjoys .
A Memorandum not registered as aforementioned shall be deemed The company's capital shall comprise only cash shares and contribution
unenforceable with regard to third parties . Where failure of registration in kind .
concerns one or more particular ( s ) that should be publicized , these
particulars shall be unenforceable towards third parties . Article 15
3
Where a partner's share comprises a property title or any other real right If it is agreed in the Memorandum of Association to deprive a partner
, the partner concerned shall , in accordance with the rules applicable to form profits or relieve him from loss , such Memorandum shall be invalid .
sale agreements , be liable to the guarantee of such a share in case of
deterioration or maturity or in the event of an apparent defect or shortage It may be agreed , however , that partners contributing only with their
therein . work , shall be exempted from participation in the loss .
Should a share merely comprise usufruct of funds the rules in respect of Article 19
lease contracts shall apply to matters referred to in the preceding
paragraph . Where a partner's share in profit or loss in not specified in the
Memorandum of Association , his share thereof shall be on prorata basis to
If a partner's share includes rights with third parties , such partner's his share in the capital .
liability towards the company shall be discharged only upon recovery of
these rights . Where a Memorandum determines the partner's share in profits only ,
his share in loss shall be equal to his share in profits . The same ruling shall
Unless otherwise agreed , if a partner's share consists in work , then the also apply if only the partner's share in loss was determined in the
profits arising from such work shall be the company's right unless such Memorandum .
profits are obtained from patented right .
Where a partner's share is restricted to his work , his share in profit or in
Article 16 loss shall be specified in the Memorandum of Association . If , in addition
to his work , a partner's contribution is made in cash or in kind , he shall be
Each partner shall be considered indebted to the company for the share entitled to a share in the profit or in the loss in consideration of his work ,
undertaken by himself and unless settled on due dates , he shall be liable , and to another share against his cash share or his contribution in kind .
towards the company , to make good the damages resulting from such
delay . Article 20
Article 17 It is not permissible to distribute simulated dividends to the partners by

means of over - estimation of the company's - assets . If such dividends are
No personal creditor of a partner shall be allowed to satisfy his right distributed among partners , the company's creditors may claim from every
from his debtor's share in the company's capital . However , he may recover partner reimbursement of the amounts he so received even in good faith .
his right from dividends accrued to his debtor . If the company is dissolved ,
the creditor's entitlement shall evolve from the surplus balance of the Partners shall not be liable to reimburse actual dividends received even if
company's assets after liquidation . the company incurs losses during the following years .
If a partner's share consists of stocks , his personal creditor , in addition Article 21

to the entitlements referred to in the preceding paragraph , may request
the sale of these stocks to satisfy his rights out of the sale proceeds . All contracts , correspondences , discharge receipts and announcements
issued by a company shall show the name , kind , head office and serial
Article 18 number in the Commercial Register of such company . In addition to the
above requirements , in case of joint stock , companies partnerships limited
4
by shares and limited liability companies , the company's authorized capital All partners in a joint liability company must be State nationals .
and the paid - up amount thereof shall be indicated .
Article 26
Where a company is under liquidation , the same shall show on papers
issued thereby . The Memorandum of Association of a joint liability company shall
contain the following :
Article 22
a - Name , family name and surname , if any , of each partner and his
Without prejudice to commercial activities reserved only to nationals , as nationality , date of birth and place of residence .
may be prescribed herein or in any other law , it is a requirement for the
establishment of a company to have one or more national partner ( s ) b - Name and object of the company .
whose share in the company's capital is not less than 51 %.
c - The company's registered office and the branches thereof .
d - The capital and shares undertaken by each partner whether cash or in

TITLE TWO kind , the estimated value of these shares , contribution method and due
dates .
JOINT LIABILITY COMPANY e - Date of establishment , and expiry , if any .
Article 23 f - Management of the company and names of authorized signatories

and the extent of their respective powers .
A joint liability company is a company formed of two or more partners
jointly liable for the company's - obligations to the full extent of all their g - Commencement , and expiry dates of the company's financial year .
assets .
h - Rate of distribution of the profits and losses .
Article 24
Article 27
The firm - name of joint liability company shall be composed of the
names of all the partners or of the name of one or more partners together A partner in a joint liability company shall be deemed a merchant , and
with what may show the existence of company . In addition to the the company's bankruptcy shall lead to the bankruptcy of all partners .
foregoing , it may have a special trade name of its own .
Article 28
Where a name of an individual , who is not a partner therein , is
knowingly embodied in the name of the company , such person shall be
Shares may not be made in the form of negotiable instruments .
jointly liable for the company's obligations .
Article 29
Article 25
5
In a joint liability company , shares may not be assigned except by Article 34
approval of all the partners or by observing the terms and conditions of the
Memorandum of Association . A partner who withdraws from the company shall not be liable of the
commitments taken by the company subsequent to his withdrawal .
Any agreement whereby non - conditional assignment of the shares is
allowed shall be invalid . A partner may , however , agree to assign to Article 35
others the entitlements related to its share , but such agreement shall have
no effect except between the parties thereto . A partner who assigns his share in the company , shall not be released
from the company obligations towards it creditors unless the latters
Article 30 approve such assignment , in accordance with the procedures applied with
regard to assignment of debts .
All partners shall be jointly liable for the company's obligations to the full
extent of all their assets . Any agreement to the contrary may not be Article 36
invoked against third parties .
Unless otherwise agreed , a partner who is not a Manager may not
Article 31 interfere in the company's management affairs . However , such partner
may demand to be granted access to the company's operations , inspect its
No execution may be enforced on a partner's assets against the books and documents and give advice and orientation to its manager .
company's commitments unless an execution - deed against the company
is obtained , and the company is notified for payment . Article 37
The execution deed shall be conclusive evidence against the partner . Joint liability companies shall adopt resolutions by unanimous vote of
the partners , unless the Memorandum of Association provides for a
Article 32 majority vote and in this case " majority " shall mean numerical majority ,
except where the Memorandum provides otherwise .
Unless obtaining the other partners' approval , a partner shall not be
permitted to conduct any of the company's activities neither for his own Resolutions pertaining to the amendment of the Memorandum of
account nor for any third party's account nor to become partner in another Association shall be valid only in taken by the partners' unanimous votes .
joint liability company or to be a joint or silent partner in a commandite or
a limited liability company if any of the said companies carries out Article 38
competitive activities with those of the company .
Management of the company shall be carried out by all the partners
Article 33 unless such management , by virtue of the Memorandum of Association or
an independent contract , be vested in one or more partners or in a
A partner who joins a joint liability company shall together with the manager who is not a partner .
other partners , be jointly liable to the extent of all his assets for the
company's obligation preceding and subsequent to his joining the Article 39
company . Any agreement to the contrary between the partners may not
be used against third parties .
6
Should the company be directed by more than one manager , each A managing - partner , appointed under a separate contract , or one who
having a specific jurisdiction , each of them shall be liable only for the is not a partner but appointed under the Memorandum of Association , or
functions under his jurisdiction . by virtue of a separate contract , may freely resign office , provided that he
chooses convenient time for such resignation and shall , reasonably in
In case there is more than one manager and it is provided that they are advance , notify the partners thereof - otherwise he shall be liable to
jointly responsible for the management , their resolutions shall be valid indemnity . Such resignation shall not cause the company's dissolution .
only if reached by unanimity or by the majority of votes stipulated in the
Memorandum . However , each manager may individually carry out urgent Article 42
matters if omission thereof may incur substantial losses to the company or
may cause loss of sizeable profit thereto . The manager shall perform all acts consistent with the object of the
company , unless the company's Memorandum provides for the limitation
Should there be more than one manager the Memorandum does neither of his powers .
define the powers of each manager or provide that they should act jointly ,
any one of them may carry out any of the management businesses , Article 43
provided that the other managers shall have the right to object to any such
action before it is finalized . In this case , the majority votes of the Except with the partners' approval or as per an express provision in the
managers shall count , and in the event of a tie , the matter shall be Memorandum , it is not permissible for a manager to exceed normal
referred to the partners . management powers . The above restriction shall namely apply to the
following acts :
Article 40
a - Gratuitous contributions , except for casual minor ones .
A manager who is a partner , and is appointed in the Memorandum of
Association , may not be removed except by the partners' unanimous vote . b - Sale of the company's real properties , unless the same be part of the
Unless otherwise stipulated in the Memorandum , such removal shall company's objectives .
necessarily entail the dissolution of the partnership .
c - Mortgages of the company's real properties , even if the manager is
A manager who is a partner and who is appointed under a contract authorized to sell such properties .
independent of the Memorandum , or he who is not a partner but has been
appointed either by virtue of the Memorandum of Association or a separate
d - Sale or pledge of the company's trading premises .
contract , may be dismissed by a majority of the partners' votes but his
dismissal shall not entail the dissolution of the company .
Article 44
Article 41
The manager shall not be allowed to enter into agreement with the
company for his own account unless the partners' approval had been
A managing partner , appointed in the Memorandum of Association ,
obtained in each case independently .
shall not resign from office without acceptable reasons ; otherwise he shall
be liable to indemnity . Unless it is otherwise stipulated in the
Memorandum of Association , the resignation of such a partner shall cause Furthermore , the manager may not practice any activities similar to
the company's dissolution . those of the company , unless with the partners' permission which shall be
renewed each year .
7
Article 45 The firm - name of a sleeping partnership shall be composed of the
names of the joint partners in addition to an indication showing the
A manager shall be held responsible for damages sustained by the existence of the company . Moreover , a special trade - name may be added
company , the partners or third parties as a result of breach of the to the foregoing .
Memorandum of Association or default in the performance of his functions
. Any provision to the contrary shall be null and void . A sleeping partner's name may not be incorporated in the name of the
company . If knowingly incorporated , such sleeping partner shall , with
Article 46 regard to bona fide third parties , be deemed a joint partner .
Profit and loss and the share of each partner therein shall be determined Article 50
at the end of the company's fiscal year calculated on the basis of the
balance sheet and the profit - and - loss account . Subject to the rules hereinafter stated , a sleeping partnership shall be
deemed a joint liability company with regard to joint partners , and the
A partner shall be deemed a creditor to the partnership for the amount rules governing joint liability companies shall equally apply to commandite
of his share in the profits upon the determination of such share and shall , .
unless otherwise agreed , cover , from profits of the following years , any
deficit in the capital generated by the loss . Except as above stated , it is not Article 51
permitted to commit a partner , except by his own consent , to
complement the deficit of his share in the company's capital , if caused by In addition to the information stated in Article 26 , the contract of a
losses . sleeping partnership shall contain a partner's name , surname , nationality ,
place of birth and place of residence , as well as his participation in the
capital and the amount paid thereof .
TITLE THREE
Article 52
SLEEPING PARTNERSHIP
A silent partner is not liable towards the auditors of the company except
Article 47 to the extent of his participation to the capital .
A sleeping partnership is a partnership composed of one or more jointly - Article 53

associated partners liable for the company's obligations to the extent of all
their assets together with one or more sleeping partner ( s ) liable for the Notwithstanding an authorization thereto , a silent partner may not
company's obligations only to the extent of their respective participation in interfere in the management's affairs when such affairs are related to third
the capital . parties . However , within the limits prescribed in the Memorandum of
Association , a silent partner may participate in the internal administration
Article 48 affairs and provided that no damage be sustained by the company , he may
, furthermore , ask for copies of the profit - and loss account and the
All joint partners in a sleeping partnership must be U . A . E nationals . balance - sheet , to verify the accuracy of their contents by inspecting the
company's books , either personally or through a representative , who may
Article 49 , or may not , be a partner .
8
Article 54 The association shall be restricted to the relationship between the
partners but shall not operate in respect of others . Evidence of the
A silent partner who violates the restrictions provided for in the association may be substantiated by all means of proof .
preceding Article shall be liable in all his assets for obligations arising from
actions carried out by him . Article 57
A silent partner may also be held liable , in all his assets , towards all A joint venture agreement shall regulate the rights and obligations of
commitments of the company if management acts carried out by him the partners and the manner of distribution of profits and losses . This
would invite others to believe beyond doubt that he is a partner . In such a agreement is neither subject to the requirement of entry in the commercial
case the provisions concerning the joint partners shall apply to that silent Registry no to publicity .
partner .
Article 58
Should a silent partner , whether under implied or expressed proxy from
the joint partners , carry out the managerial prohibited acts , the said A partner in a joint venture shall not be considered a merchant unless he
partners shall be jointly liable with him for the obligations arising from carries out personally commercial transaction .
such acts .
Article 59
Article 55
Unless otherwise agreed , each partner in a joint Venture shall maintain
Resolutions of a sleeping partnership shall be adopted by the unanimous title to his subscribed contribution .
votes of joint and silent partners , unless the Memorandum of Association
provides that a majority vote would suffice . Unless otherwise stipulated in Article 60
the Memorandum of Association , consideration shall be given to the
majority in numbers .
Joint ventures are not allowed to issue bonds or negotiable instruments .
Resolutions pertaining to the amendment of the Memorandum of

Article 61
Association shall be valid only if endorsed unanimously by both the joint
and the silent partners .
Third Parties shall have the right of recourse only against the partner
with whom they have dealt . In the event of any manifestation by the
TITLE FOUR partners indicating to third parties the existence of an association , then
the Joint Venture may be considered an actual company , and the partners
shall be jointly liable towards third parties .
JOINT - VENTURES
Article 62
Article 56
Each partner may demand access to the joint - venture books and
A joint venture is an association between two or more partners to share documents either by himself or through a proxy from among the partners
profits or losses of a commercial business or businesses carried out in the or others , provided that perusal by such proxy does not cause any damage
private name of one of the partners . to the company . Any agreement to the contrary shall be null and void .
9
Article 63 the change of its name . The new name shall be noted in the Commercial
Register in accordance with the provisions of the law .
Provisions of Article 37 of this Law shall apply to joint ventures .
Article 67
TITLE FIVE
The company's capital must be adequate to achieve the objectives of its
foundation , and in all cases may not be less than ten million Dirhams .
PUBLIC JOINT - STOCK COMPANIES
Article 68
CHAPTER ONE
Both the Memorandum and Articles of Association must comply with the
specimen provided by ministerial decision to be issued . Any inconsistency
CHARACTERISTICS OF PUBLIC JOINT - STOCK COMPANIES therewith must be approved by the Minister .
Article 64 Article 69
Any company whose capital is divided into negotiable shares of equal The Memorandum and Articles of Association of the company shall
value shall be considered a public joint - stock company and a partner specify its duration . Should the company's objectives so require , the said
therein shall be liable only to the extent of his share in the capital . duration may be extended or reduced , by resolution of the Extra - Ordinary
General Assembly .
Article 65
CHAPTER TWO
A public joint - stock company shall have a name taken from its object
and it may not be the name of a physical person unless the object of the
company is the exploitation of a patent registered in the name of the said FOUNDATION OF PUBLIC JOINT - STOCK COMPANIES
person , or it has , upon its formation or thereafter , acquired a commercial
concern and has adopted its name to be it own name . Article 70
In all cases , the term " Public Joint Stock Company " should be appended Shall be deemed a founder whoever signs the company's preliminary
to the name of the company . It is not permissible , however , for a public agreement and Articles of Association with the intent to assume the
joint - stock to adopt the name of another company or a name similar liability arising therefrom . Constitution of the company may be licensed
thereto , otherwise the other company may ask the competent only if the number of founders is al least ten persons .
administrative or judicial body to compel the company which has used its
name to change it . However , the Federal Government or the Governments of the
respective member - Emirates may alone establish a company , as it may
Article 66 associate in the subscription to the capital a number of subscribers less
than that provided in the preceding paragraph .
A company may change its name by a resolution adopted by the Extra -
Ordinary General Meeting . Rights , obligations or legal proceedings Article 71
instituted by , or against , the company shall not be affected as a result of
10
The founders shall choose from among them a committee composes of Article 74
a minimum of three and a maximum of five members to undertake the
foundation formalities with the concerned authorities . As amended by Federal Law no . 13 dated 26/12/1988 :
Article 72 The application for the foundation of a company shall be submitted to

the competent authority on the form prepared for this purpose to which
During the period of establishment , the company shall have a juristic shall be appended its Articles of Incorporation and Memorandum of
personality and to the extent required for its foundation . During the said Association as well as the projects' feasibility study and of the time
period the company shall be bound by the action taken by the founders , schedule proposed for its execution . The application shall be entered in
provided the company's establishment is completed according to the law . the special Register kept for this purpose with the competent Authority .
Article 73 A committee shall be formed , by decision of the competent Authority ,

composed of representatives of each Ministry and the competent Authority
The Memorandum and Articles of Association shall be drawn up in order to examine the application and the feasibility study of the project
between the founders in accordance with the specimen to be issued by to be executed by it . The Committee may require the applicant to
ministerial decision which shall include the following information : supplement any necessary documents or particulars , or Memorandum of
Association so that they would comply with the provisions of this Law and
1 - Name of the company and its registered office . its implementing regulations .
2 - Company's duration . The Committee shall prepare a report of the findings within two weeks
from the date of the application or of completing the documents required
by this Law or its implementing regulations , as the case may be .
3 - Object of its constitution .
Article 75
4 - Founders' names , their places of residence , profession and
nationalities .
5 - Capital , number of the capital shares and value and kind of each
share . The competent Authority shall issue its decision concerning the
application for a company's establishment in the light of the findings
contained in the report of the committee referred to in the previous Article
6 - Particulars of each non - cash share , name of its subscriber and the
, within a maximum period of sixty days from the date of submitting the
conditions pertaining thereto , along with the pledges and privileges on
application or of completing the documents required by the committee , as
such a share .
the case may be . Non - issuance of the decision within such period shall be
deemed a rejection .
7 - An approximate estimate of the company's expenses , wages and
charges to which the company is committed for its foundation .
Should the application be rejected , or the said period lapse , the
founders may challenge the rejection before the competent Civil Court
8 - An undertaking on the part of the founders to seek the completion of within sixty days as of the date they are notified of the rejection , or the
the foundation formalities . lapse of the period referred to in the previous paragraph , as the case may
be .
11
As amended by Federal Law no . 13 dated 26/12/1988 : As amended by Federal Law no . 13 dated 26/12/1988 :
If the application for a company's establishment is approved , the The founders shall subscribe to a minimum of 20 % and a maximum of
competent Authority shall issue a decision licensing the company's 45 % of the company's capital , and shall , prior to the publication of the
foundation , which decision shall be published in the Official Gazette of the subscription announcement , pay upon subscription the amount equal to
State at the founders' expense and notified to the Ministry . the percentage required to be paid by the founders for each share . Prior to
the invitation for public subscription , the founders have to provide the
Founders shall commence the subscription in the company's shares Ministry and the competent Authority with a certificate from the bank
according to the procedures provided for in this Law and its implementing where payment was made evidencing that they have paid the percentage
regulations within fifteen days from the date of issue of the referred to .
aforementioned decision .
Article 79
Article 77
Invitations for public subscription shall be announced in two local Arabic
dailies at least five days before the commencement of subscription . In Subscription may be made with one or more bank ( s ) designated by the
addition to a summary of the Memorandum and Articles of Association , founders from among those banks operating within the State . Payments
the announcement shall contain the following details : due upon subscription shall be deposited with such bank ( s ).
1 - Payment , by the founders , for the required percentage of the value Article 80
of their shares .
Subscription to the shares shall be made by an application containing in
2 - The maximum number of shares open for subscription . particular the name , objectives and capital of the company , subscription
conditions , name and address of each subscriber and his address in the
3 - The number shaves required to acquire membership in the Board of State , profession and nationality and the number of shares he intends to
Directors . hold and an undertaking on his part expressing his approval of the
provisions contained in the company's Memorandum and Articles of
4 - Date , place , and conditions of subscription . Association .
5 - Percentage of shares owned by nationals and terms of disposal Subscription shall be made forthwith and without condition . Any
thereof . condition put by the subscriber in the subscription application shall be
considered non - existent .
6 - Any other matters affecting the rights or obligations of the
shareholders . Each subscriber shall receive a printed copy of the company's
Memorandum and Articles of Association against a fee fixed in the Articles
of Association .
Founders shall sign the subscription announcement and shall be jointly
liable for the credibility of the contents thereof .
Article 80 bis
12
Added by Federal Law no . 14 dated 3/6 / 2006 : provided the Minister's approval of the decrease is secured . Approval of
capital reduction shall be by a decision from the Minister approved by the
The Ministry of Finance is entitled to subscribe to the share of any public competent Authority . As an exception to the provisions of Article 78 , the
joint stock company established in the State and offering its shares to founders may , by approval of the Minister and the competent Authority ,
public subscription , up to maximum limit of 5 % of the shares offered for subscribe to the unsubscribed shares .
subscription . This percentage in full shall be allotted prior to the allotment
of the other subscribers shares . Article 84
Article 81 If the establishment of the company is relinquished , founders shall be

jointly liable for the reimbursement to the subscribers of the paid - up value
Subject to the provisions of Article 67 above , initial payment of the of the shares .
value of each cash share upon subscription shall not be less than 25 % of
its registered value . Unless otherwise stipulated in the Memorandum of In the event of decrease of the capital , the subscribers are entitled to
Association , payment of the balance shall be made within a period not with draw from their subscription within a period of not less than the
exceeding five years from date of foundation . period of initial subscription , otherwise their subscription shall be final .
The paid up portion of the share value shall be mentioned on the share . In such a case , the founders may re - offer the relinquished shares for a
new public subscription .
Article 82
Article 85
Subscription shall remain open for a minimum period of ten days and
maximum of ninety days during which all shares , founders' shares Should subscription exceed the number of shares offered , the shares
excepted , shall be offered for public subscription . The foundation of shall be allocated among the subscribers prorata to their subscriptions .
company shall be completed only after all its shares are subscribed to . Allocation shall be to the nearest complete share and provided that no
shareholder is deprived from participating in the company irrespective of
In the event of incomplete subscription during the said period , the the number of shares subscribed thereto .
founders may , by decision of the competent Authority , extend the
subscription period for a maximum period of thirty days provided that the The Minister may , upon a proposal by the founders and approval by the
Ministry be duly notified of the competent Authority's decision in this competent Authority , decide to initially distribute a number of shares not
respect . exceeding ten thousand Dirhams in value , among all subscribers ,
thereafter distribution shall take place in the manner referred to in the
Article 83 previous paragraph .
Should the period referred to in the preceding Article lapse before all Amounts received from the shareholders shall be deposited with a bank
shares offered for subscription are covered , the founders shall either to the account of the company under establishment . Such amounts may
relinquish the foundation of the company altogether or decrease its capital
13
be transferred only to the Board of Directors following entry of the Assembly decide to reduce the assessment , the contribution may either
company in the Commercial Register . withdraw it from the capital or pay the difference in cash money .
Article 87 In case the Assembly resolves to reject the contribution in kind , or if it is

withdrawn by the owner , subscription thereto may be made in cash
Subscription may be made by contributions in kind . according to the terms and conditions concerning cash subscription , or
reduce the capital to the extent of the difference in value , provided that
In this case , such contributions shall be evaluated by a committee set up the capital is not reduced below the limit fixed in this Law and on condition
by order of the Minister , under the chairmanship of a judge named by the that the Minister approves the reduction .
Minister of Justice or the Head of the Department of Justice or him
whoever acts on his behalf in the concerned Emirate , as the case may be , Resolutions concerning the assessment of a contribution in kind shall be
and member of the Board of Directors of the concerned Chamber of adopted by the numerical majority of subscribers shares paid in cash ,
Commerce and Industry to be nominated by its Chairman , a member of provided that such majority should possess a minimum of two - thirds of
the Municipal Council or the Department of Municipality named by the the said shares . Contribution in kind , even if they hold shares in cash ,
Mayor in the concerned Emirate and a member from among the specialized shall have no right of vote .
experts .
If the contribution in kind is made by all the subscribers , their
A contribution in kind made by a public body may be a concession or a assessment thereof shall be final , provided it does not exceed the value
franchise to utilize certain public funds . The committee shall submit its estimated in accordance with the Committee report .
report within thirty days from the effective date of its mandate . The
Minister may , upon a justified request from the Committee , extend the Contributions in kind shall represent only fully paid shares .
above period .
Article 88
A copy of the Committee report shall be forwarded to the founders who
shall deposit an adequate copy thereof at the company's seat and As amended by Federal Law no . 13 dated 26/12/1988 :
announcement to that effect shall be published in two local Arabic dailies ,
at least fifteen days before the meeting of the constitutive General Founders shall , within thirty days from date of closure of subscription ,
Assembly . Anyone concerned shall have the right of access to the report . convene the subscribers to a constituent General Meeting , and copies of
the convocation shall be sent to the Ministry and to the competent
However if the Committee's assessment was lower than that of the Authority .
founders' , the contribution in kind shall be requested either to cover the
difference in cash or by another contribution in kind , equal to the amount If the founders fail to address such convocation before the lapse of the
of such difference , approved by the other founders . Credibility as to the period referred to in the preceding paragraph , the Ministry shall do so .
accuracy of its assessment shall be in the manner herebefore mentioned . The General Meeting shall be validly held if attended by the owners of
The person who submits a contribution in kind may , however , withdraw three quarters of the total number of subscribed shares either in person or
the same entirely and pay its estimated amount in cash as assessed by the by proxy . The Meeting shall be chaired by a founder elected for the
founders . purpose by the General Meeting .
The Committee's assessment shall be submitted to the constitutive If the above quorum is not reached , a second Meeting shall be
General Assembly for approval , rejection or reduction . Should the convened within thirty days from the date of the first Meeting and this
14
second Meeting shall be validly held if attended by presence of one half of 4 - Assembly resolutions concerning approval of the founders' report ,
the shareholders , or their proxies . In the event such a quorum is not assessment of the contributions in kind and election of the first Board of
reached the attending shareholders , or any one of them , may either claim Directors .
the dissolution of the company or call for a third Meeting to be held within
fifteen days from the date of second Meeting . This third Meeting shall be 5 - Supporting documents with regard to the validity of the
validly held regardless of the number of subscribers represented therein . incorporation procedures .
Resolutions of the Constituent General Meeting shall be adopted by
absolute majority of the shares represented therein . Each of the Ministry Article 91
and the competent Authority may send one or more representative to
attend the meeting as observers without having a voting right , and their
The Minister shall , within thirty days from date of submission of the
attendance shall be recorded in the minutes of the General Meeting .
application , issue a decree declaring the constitution of the company to be
published , at the company's expense , in the Official Gazette together with
Article 89 the Memorandum and Articles of Association .
The Constituent General Meeting shall discuss the following matters in Article 92
particular :
Within fifteen days from the date of publication of the company's
1 - Incorporators report on the constitution of the company and the constitution , the Board of Directors must fulfill the publication procedures
costs it entailed . and its registration in the Commercial Register .
2 - Election of the first Board of Directors and appointment of auditors . Article 93
3 - Approval of the assessment of the value of the contributions in kind . In case the constitution of the company is not accomplished , a notice to
this effect shall be addressed by the Ministry to the public . Subscribers
4 - Advertising the final constitution of the company . shall have the right to recover the amounts paid by them as of the date of
such notice and the banks where subscription took place shall reimburse to
Article 90 the subscribers these amounts . The incorporators shall be jointly liable to
reimburse these amounts in addition to the damages , if any , as well as
Within seven days from the date of the Constituent General Meeting , the expenses incurred for the constitution of the company . They are also
the incorporators shall request the Minister to declare the constitution of jointly liable to third parties for all their acts and behaviors during the
the company . The following documents shall be appended to the period of establishment .
submitted application :
Article 94
1 - An acknowledgment substantiating full capital subscription , the
portion of the shares value paid by the subscribers and a list of their names Upon publicizing the company in the Commercial Register , the results of
, and the number of shares subscribed to by each . all acts carried out by the incorporators for the account of the company
prior to such publicity shall be transferred to it and all expenses incurred by
2 - Minutes of the constituent General Meeting . the incorporators to this effect shall be borne by the company .
3 - Articles of Association as approved by the same Meeting . CHAPTER THREE

15
MANAGEMENT OF THE COMPANY Board of Directors of the companies in excess of the legal limitation taking
into consideration the most recent appointment . A director whose office is
SECTION ONE invalidated shall reimburse all amounts received from the concerned
company .
THE BOARD OF DIRECTORS
Article 99
Article 95
The Board of Directors shall elect , from among its members , chairman ,
The management of the company shall be vested in a Board of Directors and a vice - chairman who will act for the chairman in the latter's absence .
. The Articles of Association shall determine its formation , the number of The chairman must be a UAE national .
the Directors and their term of office , provided that their number is not
less than three , and not more than twelve and their term of office does Article 100
not exceed three years . A Director may be elected for more than one term
. The majority of the directors must be UAE nationals . Should the said
ratio of UAE nationals on the Board of Directors be lower than that
Article 96 provided for in implementation of this Article , its should be completed
within three months , at most , otherwise the Board resolutions adopted
The Ordinary General Meeting shall elect by secret ballot the members after the lapse of the said period shall be null and void .
of the Board of Directors . As an exception , the incorporators may appoint
between them the first Board of Directors for a maximum period of three Article 101
years .
Article 97
Before 1st January of each year , each company shall provide both the
As amended by Federal Law no . 13 dated 26/12/1988 : Ministry and the competent Authority with a detailed list , approved by the
Chairman , of the names , offices and nationalities of the chairman and
A director must not have been convicted in a crime relating to honor and members of the Board of Directors .
integrity unless he has been reinstated or granted amnesty by the
concerned authorities . The Ministry and the competent Authority must be notified by the
company of any change in that list instantly upon its occurrence .
Article 98
Article 102
No director , either in his personal capacity or as a representative of a
juristic person , shall be a director in more than five joint - stock companies In event of a vacancy on the Board of Directors , the Board has to
having their head offices within the State . appoint a director to fill the vacancy provided that the General Assembly be
instantly notified of such appointment during its first meeting for approval
Nor shall he be a chairman or a vice - chairman of more than two , or election of a replacement , unless otherwise provided for in the
companies having their Head offices within the State , nor managing company's Articles of Association . The newly elected director shall
director of more than one company located in the State . Membership of complete the term of his predecessor .
the Director who violates this provision shall be annulled in respect of the
16
In the event vacancies amount to one fourth of the number of directors , Article 106
the General Assembly shall be convened within a maximum period of three
months from the date of the last vacant office in order to fill the vacancies . A member of the Board of Directors shall be deemed as resigning should
he absent himself , without an excuse accepted by the Board , for three
Article 103 consecutive meetings .
The Board of Directors shall assume all the powers necessary to carry out Article 107
the businesses required in satisfaction of the company's objectives , save
such powers as may be vested by the law or the company's Articles of Minutes of the Board meetings shall be entered in a special register . The
Association , in the General Assembly . However , the Board of Directors is Directors attending the meetings as well as the Board reporter shall sign
not allowed to enter into loan agreements which terms exceed three years the minutes . Any dissenting director may enter his objection in the
, to dispose of the company's real property or place of business , to minutes of the meeting .
mortgage the same , release company debtors from their commitments ,
enter into settlement or arbitration agreements unless the same are Article 108
expressly granted by the company's Articles of Association or embodied by
nature in the company's objectives . In other than these to instances , the
Unless prior approval , renewable annually , be obtained from the
performance of such acts must be sanctioned by the approval of the
General Assembly , neither the Chairman nor any other director shall be
General Assembly .
allowed to participate in any business competing with the company's
business or to carry out trade activities for their own account or for the
Article 104 account of others in any branch of activities carried out by the company .
The company may otherwise claim indemnity therefrom or consider the
The Chairman of the Board is the President of the company who business carried out by them for their account as if carried for its own
represents it before the courts . The Chairman's signature shall be deemed account .
to be the Board's signature in so far as the company's relationship with
third parties is concerned . He shall enforce the Board resolutions and Article 109
comply with its recommendations . The Chairman may , in some of his
authorities , delegate powers to others .
A director who has an interest conflicting with the company's interests
in a transaction , submitted to the Board of Directors for approval , shall
Article 105 notify the Board of the same and enter his acknowledgment in the minutes
of the meeting . Such director shall have no right of vote in respect of this
Board meetings shall be valid only if attended by the majority of transaction .
directors . Resolutions shall be adopted by majority of votes of those
present or represented . In case of a tie , the Chairman shall have a casting Article 110
vote .
The company shall be bound by the actions taken by the Board of
A director may delegate another director to vote on his behalf during his Directors within its competence . The company shall as well answer for
absence , provided that a director is not allowed to hold more than one damages caused by illicit actions taken by the Directors in the course of the
proxy . management of the company .
Voting by mail is not permitted . Article 111

17
The Chairman and the Directors shall be answerable to the company , Board members because of faults committed in the course of discharging
the shareholders and third parties for acts of fraud and misuse of powers their duties . If the act generating liability was submitted to the General
and for any violation of the law or the company's Statutes and for Assembly and it was ratified by it , the liability action shall be forfeited one
mismanagement . Any condition to the contrary shall be null and void . year subsequent to the meeting issuing such resolution . However , if the
act attributed to the directors constitutes a criminal offence , the liability
Article 112 claim shall be forfeited only if the public claim is forfeited .
Liability provided for in the preceding Article , shall incumb on all Article 116
members of the Board of Directors in cases where the fault arises from a
resolution adopted unanimously . However , in the event of resolutions As amended by Federal Law no . 13 dated 26/12/1988 :
reached by majority votes , dissident directors shall be held harmless if they
entered their objection in the minutes of the meeting . The General Assembly may , even if it is otherwise stipulated in its
Statutes , discharge all or part of the Board members , and in such case the
In case of absence of any director from the meeting in which the General Assembly shall elect other members to replace them and shall
resolution was adopted , he shall be held liable unless and until it is proven notify of such action , both the Ministry and the competent Authority .
that he was not aware of the resolution or that he , despite his awareness ,
was unable to protest against it . Article 117
Article 113 A director who has been discharged from his office may not be
renominated for Board membership before the lapse of three years from
Action in liability shall be introduced by the company against the Board the issuance of the discharge resolution .
of Directors due to errors causing damages to shareholders as a whole . A
General Assembly's resolution shall be required name the person who shall Article 118
introduce such action in the company's name .
The Articles of Association shall set forth the method of to determining
If the company is in the course of liquidation , then the liquidator shall , the Directors remuneration which may not exceed 10 % of the net profit
institute such action upon a resolution taken by the General Assembly . after deducting depreciation and reserve and distribution of dividends of
not less that 5 % of the capital to the share - holders .
Article 114
SECTION TWO
Every shareholder is entitled individually to institute such action in case
the company fails to do so , should he sustain a personal damage as ORDINARY GENERAL MEETING
shareholder from such act provided he notifies the company of his
intention to sue . Any provision in the company by - laws to the contrary Article 119
shall be null and void .
The Ordinary General Meeting of shareholders shall be convened by the
Article 115 Board of Directors at least once every year within four months following
the end of the financial year at the place and date fixed in the company's
A resolution adopted by the General Assembly releasing the Board of Articles of Association . However , the Board may , whenever it deems
Directors from liability shall in no way forfeit the civil liability action against necessary , call for the Meeting to convene .
18
The Board of Directors shall convene the General Meeting whenever it is As amended by Federal Law no . 13 dated 26/12/1988 :
requested to do so by the Auditor . If the Board fails to convene the
meeting within fifteen days from the date of such request , the Auditor Extending the convocation to all shareholders shall be done though an
may directly call for the meeting . announcement to this effect in two local Arabic dailies and by registered
letters twenty one days at least before the date fixed for the meeting .
Article 121
The announcement shall contain the meeting agenda . A copy of the
As amended by Federal Law no . 13 dated 26/12/1988 : convocation papers shall be sent to both the Ministry and the Competent
Authority within the period fixed in the preceding paragraph .
If at least 10 ( ten ) shareholders representing at least 30 % of the capital
should for serious reasons request the General Meeting to convene , the Article 124
Board shall act accordingly and shall , within fifteen days from the date of
such request , send the convocation . In case the Board fails to do so , the The agenda of the Annual General Meeting shall contain the following :
Ministry , after consultation with the competent Authority , may , within
fifteen days of the date of application send the convocation at the request 1 - Hearing and ratifying the report of the Board of Directors on the
of the said shareholders or at the request of a lesser number of company's activities and its financial position during the preceding year
shareholders representing at least 30 % of the capital . and the auditor's report .
Article 122 2 - Discussing and approving the company's : balance sheet and profit -
and - loss accounts .
3 - When necessary , electing members of the Board of Directors , and
After consultation with the competent Authority , the Ministry has to appointing auditors and , unless provided in the company's Articles of
convene the General Meeting in any of the following instances : Association , fixing the auditors' remunerations .
1 - Failure to convene the meeting after the lapse of thirty days from the 4 - Considering the proposal of by the Board of Directors concerning
date fixed in Article 119 . distribution of dividends .
2 - If the number of Board members fall below the minimum required for 5 - Discharging the Directors and Auditor from liability , or else decide to
the validity of its meetings . take liability action against them , as the case may be .
3 - If the Ministry discovers at any time a violation of the law , a breach Article 125
of the company's Articles of Association or a mismanagement .
Every shareholder is entitled to attend the General Meeting and shall
In all the cases provided herein and in the preceding three Articles , both have a number of votes equal to the number of shares held by him .
the Ministry and the competent Authority may delegate one or more of its
representatives to attend the General Meeting as observers with no right to Article 126
vote . Their presence shall be entered in the minutes of the Meeting .
19
Whoever is entitled to attend the General Meeting may appoint a proxy , The General Meeting may not deliberate on matters not mentioned in
other than a member of the Board , through a special power evidenced the agenda . Nonetheless it is entitled to deliberate on serious matters
writing . In such capacity no authorized proxy may hold more than 5 % of discovered during the meeting .
the company's capital .
If a public body shareholder or if a number of shareholders representing
Persons lacking capacity or completely incapacitated shall be at least 10 % of the company's capital cash for entry of particular issues on
represented by their legal representatives . the agenda , the Board of Directors shall have to comply , otherwise the
Assembly is entitled to decide discussion of such matters .
Article 127
Article 130
The General Meeting shall be chaired by the Chairman of the Board of
Directors or his deputy or whoever the Board might assign for this purpose Every shareholder shall be entitled to discuss matters on the agenda of
. the General Meeting and to address queries to the member of the Board of
Directors . The Board shall answer these queries to the extent not
In case of failure of the said persons to attend the meeting , the General detrimental to the company's interests .
Assembly shall appoint from among the shareholders a chairman and a
reporter for its meeting . A shareholder who is not satisfied with the reply may refer the matter to
the General Meeting .
If the General Meeting is discussing a matter related to the Chairman of
the meeting , it shall select from among the shareholders one to preside . Any Provision in the company's Articles of Association to the contrary
shall be null and void .
Article 128
Article 131
The General Meeting shall be valid only if attended by shareholders
representing at least one half of the company's capital . In the event of lack The Articles of Association shall determine the method of voting with
of quorum during the first meeting , the General Meeting shall hold a regard to the General Meeting resolutions . Election , of Board members ,
second meeting within a period of thirty days succeeding the first meeting their discharge or accountability shall take place by secret ballet .
. The second meeting shall be valid in all cases .
Article 132
Subject to the provisions of Article 132 hereunder , the General
Meeting's resolutions shall be taken by absolute majority of votes Directors may not participate in voting in the General Meetings on
represented in the meeting . matters concerning their discharge from managerial liability or their
personal interests or disputes arising between them and the company .
Article 129
Article 133
The General Meeting is competent to examine all matters pertaining to
the company's affairs other than those reserved by law or by the company's The Minutes of the General Meeting shall indicate the names of
Articles of Association for the Extra - Ordinary General Meeting . attending shareholders either in person or by proxy , the number of shares
held or represented by those present , the number of votes allocated
20
thereto , resolutions made and the number of votes , for or against , and a The court action in nullity shall be forfeited after the lapse of one year as
sufficient resume of discussions held during the meeting . of the date of the challenged resolution . Filing the court action shall stay
the execution of the resolution unless decided otherwise by the court .
Article 134
SECTION THREE
Minutes of the General Meeting shall be regularly recorded after each
session in a special register to be kept in compliance with the provisions to EXTRA - ORDINARY GENERAL MEETING
be prescribed by a ministerial regulation . The Chairman of the meeting ,
the Reporter , teller of votes and Auditor shall sign each minutes . Article 137
Signatories of the minutes shall be liable for the veracity of the contents Subject to the other powers prescribed herein , the Extra - ordinary
thereof . General Meeting shall have the power to amend the company's
Memorandum and Articles of Association . The same meeting , however ,
Article 135 may not amend the company Articles in a manner leading to increased
burdens on the shareholders or amend the main objectives of the company
As amended by Federal Law no . 13 dated 26/12/1988 : or move the company's head office incorporated in the State to any other
foreign country . Any provisions stipulating otherwise shall be null and void
Resolutions adopted by the General Meeting in compliance with the .
provisions of the law and Articles of Association shall be binding on all the
shareholders whether present at or absent from the meeting and whether The Extra - Ordinary General Meeting shall be competent to :
in favor or against such resolutions .
1 - Increase the capital or reducing it .
The Chairman of the Board of Directors shall enforce the resolutions of
the General Meeting and notify a copy thereof to both the Ministry and the 2 - Dissolve the company or merge it with another company .
competent Authority .
3 - Sell the venture carried out by the company or dispose of it in any
Article 136 other manner .
Without prejudice to the rights of bona fide third parties , any 4 - Extend the term of the company .
resolutions made in violation to the provisions of this Law or Articles of
Association shall be null and void . Article 138
Any resolution , made in favour of , or causing damage to , a particular Subject to provisions stipulated hereunder , the provisions pertaining to
group of shareholders or granting a special privilege to the Board members the Ordinary General Meeting shall apply to the Extra - Ordinary General
or others regardless of the company's interests may be annulled . Meeting .
A resolution adjudged in nullity , shall be deemed not existing with Article 139
regard to all shareholders . The Board of Directors has to publish the
decision in nullity in two local dailies issued in the Arabic language . As amended by Federal Law no . 13 dated 26/12/1988 :
21
The Extra - Ordinary General Meeting shall meet only upon convocation The Chairman of the Board of Directors shall enforce the resolutions of
of the Board of Directors . The Board has to address such convocation if so the Extra - Ordinary General Meetings and forward , within fifteen days
requested by a number of shareholders representing at least 40 % of the from date of issue thereof , a copy of the same to both the Ministry and the
company's capital . Should the Board fail to do so within fifteen days as of competent Authority .
this request , the applicant may request the Ministry to address such
convocation after consultation with the competent Authority . Article 142
The Ministry and the competent Authority may delegate one or more Prior to the date fixed for Ordinary or Extra - Ordinary General Meetings ,
representatives to attend the meeting without having the right to vote , shareholders shall enter their names in a special register prepared for this
and their presence shall be entered in the minutes of the meeting . purpose at the company's head office . The Register shall show
shareholders names , number of shares represented by them and name of
Article 140 the owners of such shares , together with the submission of their proxy
deeds . The shareholder shall be given a card to attend the meeting in
As amended by Federal Law no . 13 dated 26/12/1988 : which shall be mentioned the number of votes he deserves whether in
person or by proxy .
An Extra - Ordinary General Meeting shall be valid only if attended by
shareholders representing at least three quarters of the company's capital . Article 143
If this quorum is not attained , the Meeting shall re - convene within a The resolution of the Extra - Ordinary meeting concerning the
period of thirty days after the first meeting . The second meeting shall be amendment of the Company's Statutes shall obey to the same procedures
valid if attended by shareholders representing one half of the company's required for publicizing the Articles of incorporation .
capital .
SECTION FOUR
If no quorum is attained in the second meeting , a third meeting shall be
called to be held within a period of thirty days as of the date of the second AUDITORS
meeting . The third meeting shall be valid irrespective of the number of the
attending shareholders . Resolutions reached by the latter meeting shall be Article 144
valid only if approved by the competent Authority .
Each joint - stock company shall have one or more auditor ( s )
Article 141 appointed by the General Meeting of shareholders for a term of one
renewable year . The General Assembly shall determine the auditor's
As amended by Federal Law no . 13 dated 26/12/1988 : remunerations .
Extra - Ordinary General Meeting resolutions shall be reached by a Board of Directors may not be mandated for this purpose . The founders
majority of shares represented in the meeting except where such however , may appoint an auditor who will carry out his duties until the
resolutions pertain to an increase or reduction of capital , extension of the first General Meeting is convened .
company's term , winding it up , amalgamating it with another company or
its conversion . In all such cases the resolutions shall be valid only if Article 145
adopted by a majority of three quarters of the shares represented in the
meeting . The auditor must fulfill the following requirements :
22
1 - He must have his name entered in the list of auditors in compliance The Auditor shall convene the General Meeting in the event of failure on
with the provisions of Federal Law No . 9 for 1975 Regulating the the part of the Board of Directors to do so and whenever extreme necessity
Profession of Accountancy and Auditing so require . In either of such cases , the Auditor shall draft and publish the
agenda .
2 - He is not allowed to be simultaneously an auditor and a participant in
the foundation of the company or a member of its Board or to carry out Article 149
any technical , administrative or advisory work therein .
The Auditor shall preserve the company's secrets and shall not , except
3 - He is not allowed to be partner or an attorney or a relative to the in the General Meeting , disclose to the shareholders or to others any of
fourth degree of a company founder or Director . the company's secrets that came to his knowledge in the course of
discharging his duties ;. In the event of failure to abide by the above
Article 146 provisions , he shall be subject to dismissal and a claim in damages .
The Auditor shall examine the company's accounts and inspect its The Auditor shall attend the General Meetings and present his views
balance - sheet , and the profit - and - loss account . He shall also take note with regard to matters relating to his assignment particularly with regard
of the proper implementation of the law and the company's Statutes . He to the company balance sheet and shall recite his report before the General
shall submit a report of his findings to the General Meeting and deliver Meeting . The report must include the following :
copies of the same to both the Ministry and the competent Authority .
1 - Whether the Auditor has satisfactorily obtained the information he
Article 147 considers necessary .
As amended by Federal Law no . 13 dated 26/12/1988 : 2 - Whether the balance sheet and the profit - and - loss account are
consistent with facts and includes all what the provisions of the law and
The Auditor shall have at any time right of access to all the company the company's Statutes provide that it must be written therein and whether
books , records documents and other papers . He may request explanations these do clearly and honestly reflect the financial position of the company .
as he may deem necessary for the performance of his task and verify the
company's assets and liabilities . The Chairman of the Board of Directors 3 - Whether the company keeps regular accounts .
shall facilitate his mission .
4 - Whether the inventory was conducted according to established
In the event of obstruction of the auditor's mission , the Auditor shall principles .
enter the same in a report to the Board of Directors . If the Board did not
facilitate his mission , the Auditor shall send copies of his report to both the 5 - Whether the information contained in the Board of Directors' report
Ministry and the competent Authority and submit the matter to the complies with the company records .
General Meeting .
6 - Whether the provisions of the law or the company's Statutes were
Article 148 violated during the financial year to an extent that affects the company's
activities or its financial position , and shall further state whether , in the
23
limits of the information made available to him , such violations are still Article 153
existing .
The company's capital is constituted of equal shares which nominal
If two Auditors are employed by a company , each shall submit his report value may not be less than one Dirham and not more than one hundred
independently . Dirhams . Upon incorporation of the company it is not permitted to issue
shares at a lower or higher price than the nominal value plus issue charges
The Auditor's report shall be recited at the General Meeting and each .
shareholder shall have the right to discuss and request explanations with
regard to the facts contained therein . All company shares shall have equal rights and be subject to equal
obligations .
Article 151
Article 154
The Auditor shall be responsible to the company with regard to audit
control and credibility of details contained in his report and shall indemnify Shares issued shall be negotiable registered shares and it is not allowed
the company against damages sustained by it as a result of what he to issue shares to bearer . As to dividend vouchers which the Company's
committed during the exercise of his work . In case there are several Statutes determine their forms and terms , they may be registered or to
auditors , each shall be liable for his mistakes that generated the prejudice . bearer .
Claims concerning the liability described in the preceding paragraph not Article 155
be heard after the lapse of one year as of the date of the General Meeting
in which the Auditor's report was recited . If the act attributed to the A share is indivisible . However , if the title to a share devolves by
Auditor , constitutes a criminal act , the claim in liability shall remain in inheritance to a number of heirs or if its title is acquired by number of
existence throughout the duration of the public claim . persons , they shall select one of them to act as their representative before
the company and all such persons shall be jointly liable for the obligations
CHAPTER FOUR arising from the ownership of the share .
Article 156
DEEDS ISSUED BY THE COMPANY
No shareholder shall be released from paying the share value . Set - off
Article 152 between such obligation and the shareholder's entitlements from the
company is not allowed .
Deeds issued by the company are shares and debentures .
A company creditor may file the lawsuit in his own name against the
It is not permissible to create founders' shares nor to grant the founders shareholder claiming from him payment of the share value .
or others any particular preferences . It is further not permissible for the
company to issue preference shares of any kind . Article 157
SECTION ONE A shareholder may not ask reimbursement of the amounts paid by him
to the company as share in the capital .
SHARES
24
Article 158 company shall , at the end of each financial year , provide the Ministry and
the competent Authority with copies of these particulars and of any
Following its incorporation , the company shall substitute subscription amendments thereto .
receipts with provisional share certificates signed by two Directors showing
the name of the shareholder and the number of shares he subscribed to , Article 162
methods of payment of their value , paid up amount and date of payment
in addition to the serial number of the provisional certificate , numbers of Title to a share shall be transferred upon entry of the conveyance in
shares owned by him and the company capital and its head office . These writing in the company's register and this entry shall be marked on the
certificates shall stand as shares . share . The conveyance is not binding to the company or to third parties
except as from the date of entry in the Register .
Article 159
The company , however , may decline entry of the conveyance of shares
Within six months from the date of registration in the Commercial in the following circumstances :
Register , the company shall substitute the provisional certificates for
shares which deed should be signed by at least two members of the Board 1 - If such conveyance is in violation of the provisions of this Law or
of Directors . If the value of the share is paid in installments , the Articles of Association .
company's liability with regard to delivery shall be deferred until full
settlement . 2 - If the shares are under lien or sequestration by court order .
Shares representing contributions in kind may be delivered only after 3 - If the shares are lost and no new shares were given in replacement
transfer of title to these contributions to the company . thereof .
The share shall in particular bear the date of the permit authorizing the 4 - If the company is a creditor against the shares , it may withhold from
foundation of the company and of its publication in the Official Gazette , recording the conveyance until payment of its dues .
the company's capital and the number of the capital shares , in addition to
the company's seat and duration .
5 - If a party to the contract is completely or partially incapacitated , or
declared bankrupt or insolvent .
Article 160
Article 163
Dividend vouchers shall be attached to the share and may be registered
or to bearer and in all cases shall be negotiable . Any restriction to their
The Company's Articles of Association shall determine the methods and
negotiability shall be null and void .
conditions of disposal of shares provided that such disposal does not
decrease the State citizens quota in the company's capital below what is
Article 161 prescribed by this Law .
Shares , names of shareholders , their nationalities and place of Shares may be pledged by delivery of the same to the mortgagee after
residence and the paid up amount of the share value shall be registered by satisfying the procedures prescribed in Article 162 above .
the company in a special register named " The Shares Register ". The
25
Unless otherwise agreed in the mortgage deed , the mortgagee shall share and enter the sale and the name of the new owner in the Share
have the right to collect dividends and exercise the rights attached to the Register .
share .
Article 168
Article 165
As amended by Federal Law no . 25 dated 4/11/2001 and Federal Law
If a title of a share devolves by heritage or will , the heir or legatee shall no . 18 dated 11/6 / 2006 :
request registration of the transfer of title in the Register of Shares .
The company may not pledge its own shares or buy them off unless for
If the title is transferred by a mandatory court order , it shall be recorded the purpose of reducing the capital amount or for depreciation of the
in the Register of shares and mention to this effect shall be marked on the shares in which case these shares shall have neither the right of vote in the
share . General Meeting nor a share in the dividends .
Whoever acquires the share title may not exercise the rights resulting The Company may , nevertheless , purchase a maximum percentage of
therefrom except as of the date of its entry in the said Register . its shares not exceeding 10 % of these shares for the purpose of reselling in
accordance with the following criteria :
Article 166
1 - The Company should obtain the approval of the Securities and
The company's assets may not be attached due to debts owed by a Commodities Organization prior to the purchase transaction according to
shareholder . Creditors of the indebted shareholder may , however , lay an the criteria set by the Organization to this effect .
attachment on the share and the dividends accrued therefrom and the
attachment of the share shall be mentioned in the Register of Shares by 2 - The purchase transaction should be executed by the Company's
virtue of a judicial announcement and thereafter mention shall be made on Board of Directors within a period not exceeding one year from the
the share itself to the effect that it has been attached . approval of the Organization .
Article 167 3 - The Company should have a cash surplus to execute the purchase
transaction , without using the capital or the legal reserve fund for the
If a shareholder fails to pay the installment of the share value on due purpose .
date , the Board of Directors may proceed with execution on the share by
notifying the shareholder by registered letter to pay the due installment 4 - With due observance of the provision of clause ( 9 ) of this Article ,
and if he fails to pay within thirty days , the company may sell the share by the purchase transaction must be announced to the public through
public auction and recover the amount of outstanding installments publishing it in two wide - spread local dailies , one of which at least issued
together with interest and expenses from the proceeds of the sale and in the Arabic language , and provided there is a lapse of two weeks
refund the balance to the shareholder . If the sale proceeds are short of between the date of announcing the Company's intention to purchase the
satisfying company's entitlements , the company shall have the right of shares and the effective date of executing the purchase transaction .
recourse on the private properties of the shareholder .
5 - The Company should not proceed with any sale transaction during
The company shall cancel the share object of the execution , and deliver the process of the advertised purchase transaction and provided that the
to the purchaser a new share under the same number as the cancelled sale of the purchased shares be completed within a period not exceeding
two years as of the date of the last purchase . In case the sale is not
26
completed within the prescribed period , the purchase transaction shall be restrictions and the conditions provided for in this Law and in the Articles
considered of the purpose of reducing the capital and consequently the of Association .
purchased shares shall be destroyed .
Article 170
6 - The purchase and sale transactions should take place in one of the
financial markets licensed in the State . The shareholder may inspect the company's books and documents ,
after securing the authorization of the Board of Directors or the General
7 - The Company must not issue new shares before completing the sale Assembly as prescribed by the Company's Articles of Association .
transaction of the purchased share .
The Court may instruct the company to provide the shareholders with
8 - The redemption transaction by the Company of its shares should not specific information not detrimental to the company's interests .
take place within the 15 ( days ) preceding , or the ( 3 ) days subsequent to
advertising the Company's financial data or any material information that Article 171
might affect the share price up or down .
The Articles of Association may provide for share depreciation during the
9 - The Company must not reiterate a request for approval to purchase life of the company if its venture depreciates gradually or is based on
its shares for the purpose of reselling except after the lapse of a minimum temporary rights .
period of one year from the date of the last sale of its purchased shares .
Part of the profit and annual reserve for share depreciation , shall be
10 - Should the Company be a bank , it must obtain the approval of the allocated by ballot provided that the shareholder whose share is
Central Bank prior to any purchase and provided it undertakes to finance depreciated shall obtain a bonus share .
the purchase transaction from the financing sources and in accordance
with the rules as determined by the Central Bank to this effect . Depreciation may be effected by the company's purchase of its own
shares , and the shares thus obtained shall be destroyed by the company .
11 - Neither the Company's Board of Directors nor any of its executive
officers may be a party to the purchase or sale transactions executed by the Article 172
Company .
The Company's Article's of Association shall determine the rights
12 - The purchase and sale transactions of the Company's shares must attached to bonus shares . However , the Articles shall allocate a portion of
be declared in the quarterly report issued by the Company . the net profits for undepreciated shares with priority given thereto as
opposed to the bonus shares . Upon the expiry of the Company's duration ,
The purchased shares for the purpose of resell shall forfeit the right to holders of undepreciated shares shall have priority in collecting from the
the dividends and to voting in the General Meeting until they are re - sold . liquidation assets an amount equal to the registered value of the shares .
A shareholder shall be entitled to all rights attached to the share and in Shares in consideration of cash subscribed to by the founders or shares
particular his right to obtain his share in the profits and in the Company's in consideration of property or services may not be disposed of before the
assets in case of liquidation , to attend the General Meetings and vote its publication of the balance sheet and the profit and loss account for at least
resolutions ,. These rights should be exercised in accordance with the two financial years after the announcement of the company's foundation .
27
These shares shall be marked to show both their kind and the date of the Article 177
company's foundation .
It is permissible , however , during the prohibition period , to transfer
the title of shares paid in cash by means of sale by one founder to another Subsequent to the approval of the General Meeting , the company may
or to a Director for submission as security for his management or from contract loans against issuing negotiable bonds of equal value .
heirs of a founder , in the event of his death , to third person .
The General Meeting may authorize the Board of Directors to fix the
The provisions contained in this Article shall also apply to subscriptions amount and terms of the loan . The loan shall be entered in the
made by the founders in the event of increase of the capital , before the Commercial Register and notified to both the Ministry and the competent
lapse of the prohibition period . Authority .
Any resolution issued by the Ordinary or the Extra - Ordinary General Debentures shall be registered or to bearer , but shall continue to be a
Meetings affecting the shareholder's rights derived under the provisions of registered bond until full payment of its value .
this Law or the company's Articles of Association or increasing his liabilities
shall be deemed null and void . Article 179
Article 175 The Company shall not issue debentures before full payment of its
capital by the shareholders and the publication of its balance sheet and loss
The company's Articles may restrict the negotiation shares or the shares - and - profit account for one financial year at least .
provisional certificates , for amounts exceeding their registered value plus
issue charges , prior to the publication of the balance sheet and the profit - Nevertheless , the company may issue debentures before the
and - loss account for the initial financial year . publication of the balance sheet only if the State or an operating bank
therein guarantees the payment of these debentures or if guaranteed by
Article 176 instruments issued by any of the above .
If the Articles of Association provide for redemption in favour of the Article 180
shareholders , share - owners shall , before disposing of their share , notify
the company of the name of the purchaser party and the price agreed . The The value of the debentures shall in no way exceed the available capital
shareholders may , within a period fixed in the Articles of Association , as shown in the last approved balance sheet unless the company was
substitute themselves for the purchasing party . Should the Board of permitted to do so under its incorporation decree or unless the debentures
Directors decide that the price was over - valued , it may ask the Auditor to are guaranteed by the State or by a bank operating therein .
fix a fair price for the share .
The resolution concerning the issue of loan debentures shall be effective
SECTION TWO only after it is registered in the Commercial Register .
DEBENTURES Article 181
28
Debentures issued for a single loan shall give their holders equal rights , Within one month from the closing date of subscription , the Board of
and any provision to the contrary shall hereby be revoked . Directors shall provide the Ministry and the competent Authority with a
statement on the subscription progress and names and nationalities of
Article 182 subscribers and their respective subscriptions .
Debentures offered for public subscription shall be made through one or Article 185
more banks operating within the State . They shall be offered to the public
at least fifteen days in advance by notice published in two local Arabic Resolutions adopted during the General Meetings of shareholders shall
dailies signed by the members of the Board of Directors and containing the apply to bond holders . The same assemblies , however , may not modify
following : the rights granted to bond holders except by their approval in a special
meeting reserved for them in accordance with the provisions governing
1 - The decree approving the issue of debentures and its date . the Extra - Ordinary meeting of shareholders .
2 - Number of debentures , their nominal value and the closing date of Article 186
subscription .
Debentures may not be converted into shares unless so stipulated in the
3 - Interest rate . loan conditions and compliance with the terms provided for in the
preceding Article .
4 - Maturity date , terms of payment and payment guarantees , if any .
If conversion is decided , the bond holder may , at his discretion , either
5 - The company's paid - up capital . accept the conversion or collect the registered value of the bond .
6 - Number of debentures already issued , their guarantees and the SECTION THREE
outstanding debentures upon issuance of the new ones .
LOSS AND DAMAGE OF SHARES AND DEBENTURES
Article 183
Article 187
If a registered share or bond is lost or damaged , the owner thereof
Income bonds may not be issued by the Board of Directors except by whose name is shown in the Company's Register may ask for a new
decision of the competent Authority . The company may also issue instrument in replacement thereof .
debentures payable with an issue premium payable upon depreciation or
settlement thereof . The company may further issue bonds with The owner shall publish in two local Arabic dailies the serial numbers of
incremental value . the lost or damaged instruments , their number as well as the number and
serial numbers of the dividend coupons attached thereto .
Article 184
If , within thirty days from the date of publication , no objection is
As amended by Federal Law no . 13 dated 26/12/1988 : received by the company , it shall provide the owner with a new
instrument wherein it shall be stated that it was issued in replacement of a
lost or a damaged one . Such instrument shall entitle its holder all the
29
rights and subject him to all obligations related to the lost or damaged Unless a higher percentage is fixed by the company's Articles of
instruments . Association , ten percent of the company's net profit shall be deducted
annually to create the statutory reserve .
Article 188
The General Assembly may discontinue such deduction whenever the
Whoever objects to the giving of an instrument in lieu of the lost one , statutory reserve reaches one half of the paid - up capital .
referred to in the preceding Article , may , within fifteen days from date of
publication , file his claim before the competent court , and , in the event The statutory reserve may not be distributed to the shareholders , but
of failure to do so , the objection shall be disregarded . any excess , beyond one half of the paid up capital , may be used for the
distribution of dividends to the shareholders in years where the company's
The court shall decide the case summarily . net profits are not enough to cover the percentage fixed for them in the
company's Article of Association .
Article 189
Article 193
Upon being notified of the final judgment , the Company shall deliver
the substitute bond to the beneficiary thereof . The Articles of Association may provide putting aside a specific
percentage of the net profit to creating provisions to be used for the
purposes described therein . Such provisions may not constitute a statutory
CHAPTER FIVE reserve to be allocated for the purposes provided for in the Articles and it
may not be used for any other purposes , except by resolution of the
COMPANY FINANCES Ordinary General Meeting .
The company shall have a financial year to be determined in its Articles The Articles of Association shall fix the percentage of net profit which
of Association . must be distributed to shareholders after the deduction of the legal and
statutory reserves .
Article 191
A shareholder is entitled to his share in profit upon the issue of the
At least one month before the annual General Meeting , the Board of General Assembly's resolution approving such distribution and the Board of
Directors shall , in each financial year , prepare the company's balance - Directors shall implement the said resolution within thirty days from the
sheet , profit - and - loss account , a report on the company's activities and date thereof .
financial position during that year , as well as the method proposed for the
distribution of net profits . Article 195
The Chairman of the Board of Directors' shall sign the report , the Fictitious profits may not be distributed . The Board of Directors shall be
balance sheet and the profit - and - loss account . liable to the shareholders and the company in respect thereof .
30
A company whose establishment requires a long time may , in its The company's capital may be increased by a resolution adopted during
Articles of Association , allow for the grant of a fixed interest to the an Extra - Ordinary General Meeting stating the increase volume and the
shareholders during the establishment period . issue price of new shares .
Article 197 The aforesaid General Meeting may , however , authorize the Board of
Directors to fix a date for the enforcement of the said resolution provided it
The Company shall neither grant cash loans of any kind whatsoever to does not exceed five years after its issue , otherwise it shall be considered
its Chairman or to any of its Directors nor shall it guarantee any loan as non - exciting .
contracted their favor with third persons .
Article 200
As an exception to the foregoing , banks and fiduciary companies may ,
within the limits of their objectives and under the terms applied to their The company's capital may not be increased except after the initial
customers , grant loans to the Chairman or any of the Directors , open capital is fully paid - up .
credits in their favor or guarantee them in their loans contracted of with
third persons . Article 201
Article 198 Capital increase shall be affected by either of the following methods :
Except for minor customary donations and provided the company makes 1 - Issue of new share .
profit , no donations of any kind may be granted unless after the lapse of
two years as of the date of its foundation . 2 - Merger of reserves into the capital .
With regard to other kinds of donations , their validity is contingent on 3 - Conversion of debentures into shares .
the issuance of a resolution by the Board or Directors upon authorization
from the General Assembly , and provided that it does not exceed 2 % of
Article 202
the company's average net profits realized during the two financial years
preceding the year during which the donation was made .
Regulations pertaining to subscription in the initial shares shall apply to
subscription in the new ones .
CHAPTER SIX
Article 203
MODIFICATION OF COMPANY CAPITAL
SECTION ONE
New shares shall be issued with a par value equal to the par value of the
CAPITAL INCREASE initial shares . However , Extra - Ordinary General Meeting may add an
issue premium to the par value of the share and determine its amount
Article 199 provided that approval of the competent authority and the Ministry is
obtained .
31
This issue premium shall be added to the legal reserve even if in so Conversion of the debentures into shares shall be made by allocation of
doing the reserve exceeds half of the capital . the capital reserve , in full or in part , for this purpose .
Article 204 SECTION TWO
The shareholders shall have priority to subscribe in new shares . Any REDUCTION OF CAPITAL
condition in the Articles of Association , or the resolution increasing the
capital , stating otherwise shall be null and void . Article 209
Article 205 Subject to the Ministry's approval , capital shall not be reduced except by
resolution adopted during an Extra - Ordinary General Meeting and after
The Chairman shall , publish in two local Arabic dailies , a notice hearing the Auditor's report . Reduction may be made in either of the
informing the shareholders of their priority in subscription , its following two instances :
commencement and expiry date , and of the prices of the new shares .
1 - If the capital exceeds the company's needs .
A shareholder who wishes to exercise such right shall express his desire
in writing within the period fixed for subscription . 2 - If the company sustains loss which may not likely be recovered from
future profits .
Article 206
Article 210
Allocation of shares to shareholders applying for subscription shall be
pro rata to the shares held by them provided that it does not exceed the Reduction of capital shall be made by one of the following means :
shares applied for . The remaining shares shall be allocated for the
shareholders who applied for more than the ratio pertaining to the shares 1 - Decrease of the par value of shares , either by reimbursement of part
owned by them . The balance shall be offered for public subscription . of their value to the shareholders or by releasing them from the unpaid
amount of their shares in full or in part .
Provisions concerning the assessment of contributions in kind shall apply
should the increase in capital include such shares , provided that the 2 - Decrease of the value of shares by calling off a part of such value
Ordinary General Meeting shall stand for the Statutory General Meeting . equal to the loss sustained by the company .
Article 207 3 - Write off a number of shares equal to the portion intended to be
reduced .
Merger of reserve in the capital shall be done either by the creation of
bonus shares distributed among the shareholders pro rata to the shares 4 - Purchase and destruction of a number of shares equal to the portion
held by them , or by means of increase in the par value of the share equal intended to be reduced .
to the increase in the capital , provided that the shareholders shall not be
liable to any financial burdens as a result thereof .
In all instances , the provisions of Article 152 above shall be observed
and the General Assembly resolution shall fix the method to be following
Article 208 by reduction .
32
Article 211 TITLE SIX
The Board of Directors shall publish in two local Arabic dailies , the
PRIVATE JOINT - STOCK COMPANY
resolution deciding the reduction of the capital , and , within sixty days
from the date of publication , the creditors shall provide the company with
documents in support of their debts enabling the company to pay their due Article 215
debts and provide adequate securities for deferred ones .
A number of founders , not less than three , may , among themselves ,
Article 212 establish a private joint - stock company whose shares are not offered for
public subscription and they may subscribe to the full amount of the capital
which should not be less than two million Dirhams .
If the capital is reduced by reimbursement of part of the par value of the
shares to the shareholders or by releasing them from the unpaid amount of
the shares value , in full or in part , such reduction may not be invoked Article 216
against the creditors who either submitted their demand within the period
fixed in the preceding Article or who obtained adequate securities for the Except for provisions concerning public subscription , all provisions
payment of deferred debts . contained herein with regard to public joint - stock shall apply to private
joint stock companies .
Article 213
Article 217
If the capital is decreased by writing off a number of shares , equality
between the shareholders shall be observed . The shareholders whose As amended by Federal Law no . 13 dated 26/12/1988 :
shares are cancelled shall , within the period to be fixed by it , provide the
company with the shares decided to be cancelled failing which the A private joint stock company may be converted into a public joint stock
company may consider such shares cancelled . company if satisfying the following requirements :
This shall not result in depriving the shareholder from participating in 1 - The par value of issued shares must be paid up in full .
the company .
2 - The company must have completed two financial years .
Article 214
3 - The company must , during the two years preceding the application
If it is resolved to reduce the company's capital by the purchase and for conversion , have realized net profits distributable to shareholders
destruction of a number of its shares , all shareholders shall be invited to which average shall not be less than ten per cent of its capital .
offer their shares for sale . Such invitation shall be published in two local
Arabic dailies , or sent by registered letters . If the number of shares offered 4 - The resolution calling for the conversion of the company must be
for sale exceeds the quantity decided to be purchased by the company , adopted in an Extra - Ordinary General Meeting by a majority of three
sale offers shall be reduced pro rata to the excess . Purchase price shall be quarters of the company's capital .
fixed according to the provisions of the Articles of Association . If no
provision is contained in this respect , the company shall pay fair prices The Minister shall issue a decision declaring the Company's conversion
fixed by the company's Auditors in accordance with the prevailing to a public joint stock company . This decision , along with the Company's
evaluation methods or the market price , whichever is higher .
33
Articles of Incorporation and Memorandum of Association , shall be A limited liability company shall neither resort to public subscription for
published , at the Company's expense , in the Official Gazette . the creation or increase of its capital or for obtaining needed loans , nor
issue negotiable stocks or bonds .
TITLE SEVEN
Article 222
LIMITED LIABILITY COMPANIES All shares in cash or contributions in kind mentioned in the Company's
Statutes must be distributed between the partners and the value of each
share shall have to be paid in full upon foundation .
CHAPTER ONE
Shares in cash shall be deposited in a bank operating in the State . The

ESTABLISHMENT OF THE COMPANY bank may not release the deposited amount except to the company's
Managers and only upon submittal of evidence to the proving that the
Article 218 company is entered in the Commercial Register .
A limited liability company is an association of a maximum number of Article 223

fifty and a minimum of two partners .
In case a partner makes a contribution in kind , the amount thereof shall
Each of them shall be liable only to the extent of his share in the capital , be assessed in the Company's Statutes together with mention of its kind ,
and the partners shares may not take the form of negotiable instruments . name of the contribution and the amount it represents in the capital . The
partner who makes a contribution in kind shall be liable towards third
Article 219 parties for the accuracy of assessment of its amount as stated in the
company's Statutes . If it is proven that the share was over - evaluated the
A limited liability company shall have a name derived from its objectives said partner shall pay the difference in cash to the company and the
or from the name of one or more of the partners . founders shall be jointly liable in their private assets for the payment of
such difference .
The term " limited liability company " shall be added to the company's
name , and stating the amount of its capital . In the event of failure on the Article 224
part of the Directors to observe this provision they shall be jointly liable in
their personal assets of the company's obligations , in addition to payment The Founders shall draw - up the Company's Statutes which shall include
of damages . the following statements :
Article 220 1 - Name and objectives of the company and its head office .
With the exception of insurance , banking and investment of funds for 2 - Names of the partners , their nationalities , places of residence and
the account of others , a limited - liability company may perform any lawful addresses .
activity .
3 - Amount of the capital , share of each partner and a statement of the
Article 221 contributions in kind , of the corporeal shares , if any , their amounts and
names of the contributors .
34
4 - Names and nationalities of the company's Managers , and names of As amended by Federal Law no . 1 dated 5/7 / 2009 :
the members of the Control Board in the cases where it is required by law
to create such Board . The limited - liability company shall have a sufficient capital for the
fulfillment of the objective for which it was established . Such capital shall
5 - Date of commencement and expiry of the company . be determined by the partners therein , and shall be constituted of equal
shares .
6 - Methods of distribution of profits and loss .
A share shall be indivisible , and if the share is held by more than one
7 - Form of notices to be addressed by the company to the partners . person , they shall appoint one of them who will be considered by the
company as the owner of such share . The company may fix a date for such
The Ministry may draft a specimen Statute of Association containing the owners to declare their appointee , failing which the company shall have
above and such other particulars as it may deem fit . the power to sell the share for the account of its owners , and in this case
the partners shall have priority to purchase it .
Article 225
Unless otherwise stipulated in the Statutes , profits and losses shall be
divided equally between shareholders .
The manager of the company shall apply for its entry in the Commercial
Register . Such application shall be annexed to the company's Statutes
together with the other documents showing the distribution of shares Article 228
between the partners , payment of their value in full and deposit of the
same in a bank operating in the State . In its head office , the company shall maintain a special register for the
partners showing the following details :
The company shall not perform any of its activities before it is registered
in the Commercial Register . 1 - Names and surnames of the partners , their places or residence ,
nationalities and professions .
Article 226
2 - Number and value of shares owned by each of the partners .
If during the establishment period the number of partners exceeded the
limit fixed by the law , the competent Authority shall notify the company to 3 - Transactions carried out with regard to the shares and date thereof .
rectify its position . If the company fails to do so within six months , it shall
be deemed dissolved and the partners shall be jointly and severally liable of The company's managers shall be jointly liable for the said register and
the debts and obligations borne by the company from date such excess the credibility of its contents . The partners , and whoever holds an interest
occurred . However , the partners proving that they had no knowledge of , shall have the right of access to the said register .
such excess shall be exempted .
Article 229
CHAPTER TWO
SHARES AND CAPITAL

In January of each year , the company shall provide the Ministry and the
competent Authority with the particulars recorded in the register referred
Article 227 to in the preceding Article along with the amendments thereto .
35
Article 230 In the event of commencement of the execution procedures by a
creditor against the share of his debtor , such creditor may agree with the
A partner may , by virtue of an official instrument , assign his share to debtor and the company on the method and terms of sale , otherwise the
another partner or to third persons , in accordance with the conditions set share shall be offered for sale in public auction .
forth in the Company's Statutes . Such assignment may not be opposed to
the company or third persons except as of the date of its entry in the The company may recover the share sold for the benefit of one or more
Company's Register and the Commercial Register . partners under the same conveyance terms as awarded to the successful
bidder , within fifteen days from the date thereof .
The company may not abstain from recording the assignment in the
register unless it is inconsistent with its Statutes . The above provisions shall apply in the event of a partner's bankruptcy .
In all cases , the assignment may not cause decrease of the national CHAPTER THREE
partners' share in the capital below 51 % of the total number of shares , or
may not increase the number of partners above that provided for in Article
218 . MANAGEMENT OF THE COMPANY
A partner who intends to assign his share to a person who is not a The management of the limited liability company shall be assumed by
partner in the company , whether against consideration or not , shall , one or more manager ( s ). They shall be selected either from the partners
through the company's manager , notify the other partners of the or from others provided that their number does not exceed five .
assignment terms . Upon receipt of such notice , the manager shall notify
the partners instantly . Each partner may request recovery of the said share The managers shall be appointed in the Statutes or in a separate
at an agreed price . In the event of disagreement over the price , the contract for a limited or an unlimited period .
company's auditor shall fix that price as it is on the recovery date . If , after
thirty days , no request was made by a partner for the recovery of such In the event of failure to appoint the managers in the above mentioned
share , the assignor shall be free to dispose of his share . manner , they shall be appointed by the Partner's General Meeting .
If more than one partner used the right of recovery , the shares , or the In case the manager is appointed in the company's Statutes for an
sold share , shall be divided among them pro rata to their share in the unlimited period , he shall maintain his office throughout the company
capital , subject to the provisions of Article 227 above . term unless his removal is provided for in the Statutes . In such an event ,
removal of the manager shall be effected by the majority required for
Article 233 amendment of the company's Statutes unless a different majority is
provided for in the same Statutes .
A share of a partner shall devolve to his heirs . A legatee shall be
deemed a heir in this respect . If the company's Statutes do not provide for the removal of the manager
, he may be removed either by a unanimous vote of the partners or by a
Article 234 court - order , where significant reasons justify taking such action .
36
Article 237 The managers shall have no vote whether in the election of members of
the control Board , or in their removal from office .
Unless the powers of the manager are fixed in the company's Statutes ,
the company's manager shall have full powers to carry out the Article 241
management affairs of the company , and his actions shall be binding on
the company , provided that they are substantiated by the capacity under The Control Board shall inspect the company's books and documents
which he acts . and shall carry out inventory of the treasury , goods , financial papers and
documents in support of the company's entitlements . Also , it may , at any
Provisions pertaining to liabilities of Directors of a joint - stock company time , instruct the managers to submit a report on their activities and
shall apply to the said manager , and any condition stipulated in the control the budget , the annual report and distribution of the profits , and
company's Statutes to the contrary shall be null and void . shall , at least fifteen days prior to the date set for the meeting , submit a
report to this effect to the General Meeting of the partners .
Article 238
Article 242
Members of the Control Board shall not be liable for the actions of
Within three months from the expiry of the financial year , the managers managers unless they had knowledge of the mistakes and failed to
of the company shall prepare its balance sheet and the profit and loss mention same in their report to the General Meeting of the partners .
account and shall prepare an annual report on the company's activities and
financial position in addition to there proposal for the distribution of Article 243
dividends .
Partners who are not managers in companies where no Control Board
Within ten days from the approval of the balance sheet and the profit - exists shall have the same rights of control as those assumed by joint
and - loss account , the managers shall provide the Ministry and the partners in General Partnerships in accordance with the provisions of
competent Authority with the aforesaid documents . Article 36 .
In the event of more than one manager , the Statutes may provide for A limited liability company shall have a General Meeting comprised of all
the formation of a Board of managers and determine both the operating the partners . The Meeting shall convene at the invitation of the managers
system of the said Board and the majority needed for the validity of its at least once every year within the four months preceding the expiry of the
resolutions . financial year at the venue and date fixed in the Statutes .
Article 240 The managers shall invite the General Meeting to hold a meeting if same
be requested either by the Control Board or by a number of partners
Should the number of partners exceed seven , control shall be vested in holding not less than one quarter of the capital .
a Board comprising at least three partners . The said Board shall be
appointed by the company's Statutes for a limited period . The General Invitations to the General Meeting shall be addressed by registered mail
Meeting may re - appoint them after the expiry of the said period or to each partner at least twenty one days before the date of the Meeting .
appoint others , and may , for a good reason , remove them at any time .
37
The convocation must include the agenda , venue and time of the meeting Article 248
.
Each partner shall be entitled to discuss items included in the agenda
Article 245 and the managers must answer their questions in a manner not
detrimental to other company's interests . If a partner considered the reply
Each partner is entitled to attend the General Meeting irrespective of the to his query insufficient , he may refer to the General Meeting whose
number of shares he holds . He may appoint a partner , other than a resolution shall be enforceable .
manager , to represent him by proxy at the General Meeting . Each partner
shall have a number of votes equal to the number of shares owned or Article 249
represented by him .
Unless otherwise stipulated in the Statutes , the General Meeting
Article 246 resolutions shall be valid only if adopted by a number of votes representing
at least one half of the capital .
The agenda of the annual General Meeting shall include the following :
If such majority is not achieved during the first meeting , a second
1 - Hearing the managers' report on the company's activities and meeting , within twenty one days from the first , shall be held . Unless
financial position during the year , the Control Board's report and the otherwise stipulated in the Statutes , resolutions in the latter meeting shall
auditor's report . be adopted by majority of the votes represented therein .
2 - Approval of the balance sheet and the profit - and - loss account . Article 250
3 - Fix dividends to be distributed to the partners . The managers may not take part in voting on resolutions relating to their
discharge from managerial liability .
4 - Appoint the manager or the Control Board members and fix their
remunerations . Article 251
5 - Other matters within their jurisdiction in accordance with the An adequate summary of minutes of the General Meeting deliberations
provisions of the law or the Statutes . shall be drawn - up , Minutes as well as the General Meeting resolutions
these minutes shall be entered in a special register kept at the company's
Article 247 seat . Any of the partners , either in person or through an attorney , may
inspect that register as well as the company's balance sheet , profit - and -
loss account and annual report .
The General Meeting may only deliberate on matters mentioned in the
agenda except , if , during the meeting , material facts demanding
deliberation , be disclosed . Article 252
If a partner requests the inclusion of a specific item on the agenda , the As amended by Federal Law no . 13 dated 26/12/1988 :
managers shall comply therewith , otherwise the partner shall be entitled
to refer the matter to the General Meeting . It is not permissible to amend the partnership agreement nor to increase
or decrease its capital , except with the approval of a number of partners
representing three quarters of the capital and unless , in addition to the
38
above quorum , a numerical majority of the partners is stipulated in the Article 256
partnership agreement . Nevertheless , the partners obligations may not be
increased except by their unanimous approval and no reduction in the A partnership limited by shares is an association comprising both active
company's capital shall be valid except after approval of the competent partners who are jointly liable in all their assets for the company's
Authority . obligations , and shareholding ( sleeping ) partners who are liable only to
the extent of their shares in the capital .
Article 253
Article 257
The partnership shall have one or more auditor ( s ) appointed each year
by the partners' General Assembly . These auditors shall be subject to the In so far as the active partners are concerned , the partnership shall be
same provisions concerning the auditors in joint - stock companies . deemed a general partnership , and the active partner shall be deemed a
merchant even if he was not qualified as such prior to his participation in
Article 254 the partnership . All active partners must be UAE nationals .
Without prejudice to the rights of bona fide third parties , shall be null Article 258
and void any resolution adopted by the partners' General Assembly in
violation to the provisions of this Law or the partnership's contract , or The capital of a partnership limited by shares shall be divided into
when issued in the interest of certain partners or causing damages to negotiable shares of equal value .
others without due consideration to the interests of the company . Only
the partners who protested against such decision and those who , for good Article 259
reasons , were unable to protest , may ask the annulment thereof .
The name of the " partnership limited by shares " shall contain the name
The annulment of the resolution shall result in considering it as non - of one or more active partners . A creative name or one derived from its
existent for all partners . own object may be annexed to the partnership's original name .
Action in nullity may not be received after the laps of one year as of the It is not allowed to insert the name of the sleeping partner in the
date of issue of the decision . Unless otherwise ordered by the court , filing company's name , but if inserted knowingly , he shall , with regard to bona
of the claim does not necessarily suspend the enforcement of the decision . fide third parties , be deemed an active partner .
Article 255 In all cases the term " partnership limited by shares " shall be added to
the partnership's name .
The partnership must each year , put aside 10 % of its net profit to
constitute a statutory reserve . If such deduction should amount to half of Article 260
the capital , the partners may opt to suspend same .
Provisions pertaining to the establishment of a joint - stock company
TITLE EIGHT shall apply to the establishment of a " partnership limited by shares "
subject to the following :
PARTNERSHIP LIMITED BY SHARES 1 - All joint partners and the other founders shall sign the Partnership
Agreement and Statutes . In so far as their liability is concerned , the
39
provisions concerning a joint - stock company founders shall equally apply the acts of administration performed by him . If he carried out such acts by
thereto . authority of the joint partners , the party who had authorized him so to do
shall be jointly liable with him for the obligations arising from such acts .
2 - Names , surnames , nationalities and places of residence of the active
partners shall be mentioned in the partnership Agreement . Article 266
3 - The partnership's capital shall be not less than five hundred thousand Each partnership limited by shares shall have a Control Board comprising
Dirhams . at least three members appointed by the General Assembly either from the
sleeping partners , or from others for a period of one year subject to
Article 261 renewal in accordance with the provisions of the Statutes . The joint
partners shall have no vote in the election of the members of the Control
Deeds issued by a partnership limited by shares shall be subject to the Board .
provisions concerning the shares issued by a joint - stock company .
The first Control Board shall have to ascertain that the foundation
Article 262 procedures have been accomplished according to the Law provisions and
the members of this Board shall be jointly liable in this respect .
The partnership's management shall be assumed by one or more active
partners , and the names of the persons entrusted with the management Article 267
and their respective powers shall be provided for in the Partnership
Agreement and Statutes . In so far as their responsibility is concerned , the The Control Board shall control the company's acts . For this purpose ,
provisions concerning founders and directors of joint - stock companies the Board may ask the managers to provide it with a report on their
shall apply thereto . management . It may also examine the books and documents of the
partnership and conduct a stocktaking of its assets . The Board shall give its
Article 263 views on such matters as the company managers may refer thereto , and
authorize the transactions whenever such authorization is required by the
Statutes .
The provisions concerning the functions and removal of the directors of
joint - stock companies shall also apply to the managers of the partnership
limited by shares . If the Board notices a serious violation in the partnership's management
, it shall be entitled to convene the General Meeting .
Article 264
The Board shall , at the end of each financial year , submit to the General
Meeting of shareholders a report on the results of its control over the
A sleeping partner , even if he holds an authorization , may not interfere
company’s affairs .
in the management of affairs related to third persons . He may , however ,
within the limits allowed by the Statutes participate in the internal
administrative affairs . The members of the Control Board shall not be responsible for the
managers' acts or their results unless they had knowledge of the violation
except for those discovered or came to other knowledge but failed or
Article 265
ignored notifying the General Meeting thereof .
If a sleeping partner violates the restriction provided in the preceding

Article 268
Article , he shall be liable in of all his assets for the obligations arising from
40
A partnership limited by shares shall have a General Assembly CHAPTER ONE
comprising all shareholders . Such Assembly shall be subject to the same
provisions governing the General Assembly of joint - stock companies .
REORGANIZATION OF COMPANIES
Except with the mangers' approval , the General Assembly shall not
Article 273
adopt resolutions pertaining to the Company's relation with third parties .
A company may be converted from one form to another and such re -

Article 269
organization shall be virtue of a decision taken in compliance by with the
provisions concerning the amendment of the company's Memorandum or
Unless it is otherwise provided for in the Statutes , the Extra - Ordinary Articles of Association and completion of the formalities pertaining to the
General Meeting may not amend the Statutes of the partnership limited by form to which it was converted .
shares except with the consent of all active partners .
A resolution for re - organization shall be accompanied by the company's
Article 270 statement of assets and liabilities and the estimated amount of both .
A partnership limited by shares shall have one or more auditor ( s ) who Re - organization of a company and its evaluation shall be entered in the
shall be subject to the same provisions governing the auditors in joint - Commercial Register .
stock companies .
Article 273 Bis
Article 271
Added by Federal Law no . 10 dated 19/8 / 2007 :
The provisions concerning the accounts of the joint - stock companies
shall equally apply to the commandite limited by shares .
1 - The local Family Company : is the company wholly owned by physical
persons affiliated to one family related to ascendants up to the fourth
Article 272 degree grandfather , or juristic persons wholly owned by the members of
one family tied up with the same degree of kinship as concerns the local
In the event of vacancy in the position of the manager of the partnership family company , regardless of the form of such company .
limited by shares , the Control Board shall appoint a temporary manager
who will attend to urgent administrative affairs until the General Meeting 2 - With the exception of the provisions of the two Articles 78 and 273
convenes . of this Law , partners in a local family company which is converted to a
public joint - stock company may detain no more than 70 % of its capital
Such temporary manager shall , within fifteen days from date of his and deduct not less than 30 % of it to be offered in public subscription .
appointment , convene the General Assembly for a meeting in accordance
with the procedures set forth in the Statutes , failing which the Control Article 274
Board shall send the convocation without delay .
A company shall continue to maintain after conversion its rights and
TITLE NINE liabilities prior to its re - organization . Re - organization shall not release
the joint partners from the company's liabilities preceding the conversion
unless this is approved by the creditor and such approval shall be
RE - ORGANIZATION AND MERGER OF COMPANIES
41
assumedly given if the creditor did not object in writing to the conversion Merger has to be according to the following procedures :
within three months from the date they are formally informed of the
conversion in accordance with the procedures decided by the Minister . 1 - A resolution of dissolution to be issued by the merged company .
Article 275 2 - Evaluation of the net assets of the merged company according to the
provisions of this Law concerning evaluation of contributions in kind .
In the event of re - organization into a joint - stock company , a
partnership limited by shares or a limited liability company , each partner 3 - The merging company shall issue a resolution increasing its capital in
shall have a number of shares or stocks equal to the value of his shares . accordance with the evaluation result of the merged company .
If the partner's share falls short of the minimum limit of a share in a 4 - The increase in the capital shall be distributed among the partners in
limited liability company , he shall have to complete it . the merged company pro rata to their shares .
CHAPTER TWO 5 - In the event of the shares being represented by stocks and provided
that two years have elapsed since the date of foundation of the merging
company , the said stocks may be negotiable upon their issue .
AMALGAMATION OF COMPANIES
Article 278
Article 276
Consolidation shall be effected by resolutions issued respectively by
Even if under liquidation , a company may be amalgamated with each of the consolidated companies calling for dissolution and thereafter a
another company of the same or of different , kind . Amalgamation shall be new company shall be established in accordance with the provisions
by either of the following method : stipulated herein . If the new company is a joint - stock company , the
experts' report on the evaluation of the contributions in kind shall be
1 - By merger ; i . e . by way of dissolution of one or more company and adopted without need for reference to the constituent Assembly .
transfer its assets and liabilities to an existing company .
Article 279
2 - By consolidation ; i . e . by way of dissolution of two or more
concerns and the foundation of a new company to which all assets and A number of stocks or shares shall be allocated to each amalgamated
liabilities of the dissolved companies are transferred . concern equal to its share in the capital of the new company . These shares
shall be distributed between the partners in each amalgamated company
The merger or consolidation resolution shall be adopted by agreement pro rata to their shares therein .
between desirous parties of the same in accordance with the established
process concerning the amendment of the company's Memorandum or Article 280
Articles of Association . The said resolution shall be effective only after
securing the approval of the competent authority as defined herein in
The amalgamation resolution shall become effective three months after
conformity with the form to which the company was converted .
it is entered in the Commercial Register . Within the said period the
creditors of the amalgamated company may , by registered letter , submit
Article 277 an objection to the company against the amalgamation . The
amalgamation process shall be suspended unless the creditors waive the
42
protest , or until the court dismisses it by a final decree , or the company The court may order the dissolution of any of the joint partnerships ,
settles the debt if matured or provide sufficient guarantees for its sleeping partnerships or joint - ventures at the request of one of the
settlement if deferred . partners therein if it deems that reasonable justification thereof exist . Any
stipulation depriving a partner from exercising such right shall be null and
In the absence of any objection during the above - mentioned period the void .
amalgamation shall be deemed final and either the amalgamating
company or the new company shall substitute the amalgamated If the reasons justifying dissolution are attributed to actions by a partner
companies in all their rights and obligations . , the court may order his expulsion from the company , and in this case the
company shall remain in existence between the remaining partners . The
partner's share shall be deducted when estimated in accordance with the
TITLE TEN last inventory or any other method deemed by the court suitable .
TERMINATION OF A COMPANY The court may also order the dissolution of the company at the request
of a partner in the event of failure on the part of the other partner to fulfill
his undertakings .
CHAPTER ONE
Article 283
DISSOLUTION OF A COMPANY
In addition to the provisions of Article 281 above , joint partnerships ,
Article 281 sleeping partnerships or joint - ventures shall be dissolved in any of the
following events :
A company shall be dissolved in any of the following cases :
1 - Withdrawal of a partner , if the company is composed of two partners
1 - Expiry of the period fixed therefore in the Agreement or Statutes of , provided that if such withdrawal was made in bad faith or at an
Association unless renewed in accordance with the provisions included inappropriate timing , the court may order the partner to stay in the
therein . company in addition to payment of damages indemnity , if necessary .
2 - Consummation of the purpose for which the company was Except for serious reasons appreciated by the court , a partner may not
established . request withdrawal from a company of specified duration .
3 - Loss of all or most of the company's funds to an extent whereby the 2 - Death of a partner or the issuance of a judgment of interdiction ,
fruitful investment of the remnant is impossible . bankruptcy or insolvency against him . The Agreement of Association may ,
however , include a provision for the survival of the company with the
4 - Amalgamation . heirs of the deceased partner , even if all or some of the heirs are minors .
In the event of death of a joint - partner and the successor being a minor ,
the latter shall be deemed a silent partner to the extent of his predecessor's
5 - Unanimous consent of the partners to terminate its duration unless
share . In the latter case the existence of the company shall depend on a
the Agreement of Association provides that a specific majority is sufficient .
court order to maintain the minor's assets in the company .
Article 282
Article 284
43
If , in the Agreement of Association of a joint partnership , sleeping Article 287
partnership or joint venture , there is no provision for the survival of the
company in the event of withdrawal or death of a partner , issuance of a Should all joint partners in a partnership limited by shares be involved in
judgment of interdiction , bankruptcy or insolvency against him , the the withdrawal , death , interdiction , bankruptcy or insolvency , the
partners may , within sixty days from the occurrence of any of the above company shall be dissolved , unless its Statutes provide for the possibility
events , unanimously resolve to maintain the company between of transforming to another kind of company .
themselves . Such agreement may not , however , be invoked against third
parties except as of the date of its entry in the Commercial Register . Article 288
In all cases where the company is maintained between the remaining A limited liability company shall not dissolve upon withdrawal or death
partners , the share of the withdrawing partner shall be estimated on the of a partner or issuance a judgment of interdiction , bankruptcy or
basis of the last stocktaking unless the Association Agreement provide for insolvency against him unless otherwise stipulated in the Partnership
any other evaluation method . Agreement .
Neither the said partner not his successors shall have any portion of the Article 289
accrued entitlements of the company except if same entitlements arise
from transactions carried out prior to his withdrawal from the company .
If a limited liability company sustains losses amounting to one half of
the capital , the Managers shall refer the matter of dissolution of the
Article 285 company to the General Assembly . The majority needed for the
amendment of the Partnership Agreement is required to pass a resolution
If a joint - stock company sustains loss amounting to one half of the for dissolution of the partnership .
capital , the Board of Directors shall convene an Extra - Ordinary General
Meeting in order to consider whether the company should be maintained If the loss amounts to three quarters of the capital , the partners holding
or dissolved before the term fixed in its Articles of Association . one quarter of the capital may request the dissolution of the company .
Should the Board fail to convene the Extra - Ordinary General Meeting or Article 290
if the latter fail to adopt a resolution on the matter , any interested party
may file a lawsuit asking for the dissolution of the company .
To the exception of joint - ventures , publicity of the dissolution of a
company shall , in all cases , be made by inserting same in the Commercial
Article 286 Register and publication , in two local Arabic dailies . Dissolution of a
company may be invoked against third parties only from the date of
Unless otherwise provided for in the company's Statutes , a partnership publicizing it . The company Managers or the Chairman of the Board of
limited by shares shall be dissolved upon withdrawal or death of a joint Directors , as the case may be , shall pursue the execution of the above
partner who is entrusted with the management of the company or upon procedure .
issuance of a judgment of interdiction or bankruptcy or insolvency against
him . If there is no provision in the partnership's Statutes in this respect ,
the Extra - Ordinary General Meeting may resolve to maintain the company CHAPTER TWO
by following the established procedures concerning the amendment of the
Statutes to this effect . WINDING - UP AND PARTITION
44
Article 291 The liquidator shall publicize the decision appointing him as well as the
partners agreement or the General Meeting resolution concerning the
Upon its dissolution , a company shall enter in the process of winding - method of liquidation , or the court order related thereto , by effecting an
up . Throughout the winding - up period , it shall maintain its corporate entry in the Commercial Register .
entity to the extent required for the completion of the winding - up
formalities . The term " under liquidation " shall be conspicuously annexed Appointment of the liquidator , or the method of liquidation , may not
to the name of the company . be apposed to third parties , except after the date of entry in the
Commercial Register .
Article 292
The liquidator's remuneration shall be fixed in his letter of appointment ,
Upon the dissolution of the company , the powers of either the otherwise it shall be fixed by the court .
Managers or the Board of Directors shall cease . They shall , however ,
continue to assume the company's management , and with regard to third Article 296
persons , they shall be deemed liquidators until a liquidator is appointed .
Upon his appointment , and in coordination with the Managers or the
Throughout the period of winding - up , the company structures shall Chairman of the Board or Directors , the liquidator shall carry out an
remain in function but their authority is restricted to liquidation affairs that inventory of the company's assets and obligations . The abovementioned
do not fall within the liquidator's powers . shall provide the liquidator with their accounts , and deliver to him the
company's assets , books and documents .
Article 293
Article 297
For the winding - up of the company , the provisions of the Following
Articles shall be complied with , unless a method for winding - up is The liquidator shall prepare a detailed list of the company's assets and
provided for in the company's Memorandum or Articles of Association , or obligations and a balance - sheet signed with him by the Managers of the
an agreement between the partner is reached in this respect upon company or the Chairman of its Board .
dissolution .
The liquidator shall keep a register to record the liquidation process .
Article 294
Article 298
Winding - up shall be carried out by one or more liquidator ( s )
appointed by the partners , or by the General Assembly with the absolute The liquidator shall take all necessary actions to ensure the safeguarding
majority vote required for passing the company's resolutions . of the company's funds and rights , and shall , without delay , recover from
third parties the amounts due by them and shall deposit the recovered
If winding - up is ordered by court decree , the court shall define the amounts in a bank for the account of the company under liquidation upon
method to be followed and shall appoint the liquidator . In any case , the collection .
functions of the liquidator shall not end as a result of death of the partners
or their bankruptcy , insolvency or interdiction , even if he was appointed Unless it is a winding - up requirement , and provided the partners are
by them . treated equally , the liquidator may not ask the partners to pay the
remainder of their respective shares .
Article 295
45
Article 299 Should any creditor fail to submit his claim , his debt shall be deposited
with the court treasury . Sufficient funds shall also be deposited for the
The liquidator shall assume all functions required for winding - up settlement of disputed debts , unless the creditors concerned have
purposes , particularly to represent the company before courts , settle the obtained sufficient guarantees , or if it was decided to delay partition of the
company's debts and sell its movable or immovable properties either by company's funds until settlement of the dispute with regard to the said
auction or in any another manner , unless a certain sale - procedure is fixed debts .
in the liquidator's appointment instrument . Except with the consent of the
partners or the Ordinary General Meeting , the liquidator , may not sell the Article 304
company's assets in one lot .
Should there be several liquidators , their actions shall be valid only by
Article 300 their unanimous approval , unless otherwise provided for in their
appointment instrument . This condition shall not kind third parties except
Unless necessary for the completion of previous business transactions , after it is entered in the Commercial Register .
it is not allowed for the liquidator to carry out new transactions . Should
the liquidator undertake new business transactions not required for Article 305
winding - up , he shall be held liable in all his assets , and in the event of
several liquidators , all of them shall be jointly liable . Actions taken by the liquidator and required by the winding - up process
, and as long as they fall within his jurisdiction , shall be binding on the
Article 301 company , and the liquidator shall be held harmless of any liability arising
directly from such actions .
Upon the dissolution of a company , all debts shall be due immediately
and the liquidator shall notify all creditors , by registered mail , of the Article 306
commencement of liquidation and shall invite them to submit their
demands . Notice to this effect may be made by publication in two local The liquidator shall complete his assignment within the period
Arabic dailies in the event of unknown creditors or if their places of prescribed therefore in his appointment instrument , and if such period is
residence are unknown . In all cases , the notice of liquidation shall grant not fixed therein , each partner shall have the right to ask the court to fix
the creditors a grace period of al least forty five days from the date of such the winding - up period .
notice to submit of their claims .
Said period may not be extended except by resolution of the partners or
Article 302 the General Assembly , as the case may be , after taking cognizance of the
liquidator's report , in which are stated the reasons which prevented the
If the company assets fall short of settlement of all the debts , the completion of the winding - up process in time . If such period is fixed by
liquidator shall effect the settlement pro rata to such debts without the court , it may not be extended except by order of the court .
prejudice to the rights of preferred creditors .
Article 307
Debts arising from the liquidation process shall , by preference to all
other debts , be paid from the company funds . The liquidator shall submit to the partners or the General Assembly a
provisional account on the liquidation - affairs every six months . He shall
Article 303 also provide the partner with any information or data they request with
regard to the winding - up status .
46
Article 308 Removal of the liquidator shall be in the same manner whereby he was
appointed , and any resolution or decree for his removal must appoint a
Company assets arising from the winding - up shall , after payment of substitute .
the company's debts , be partitioned . Each partner shall , upon partition ,
receive an amount equal to the value of the share he contributed to the Removal of the liquidator shall be entered in the Commercial Register
capital . and may not be raised against third parties except from the date of
publicizing it .
The remaining company's assets shall be distributed among the partners
pro rata to their respective shares in the profit .
TITLE ELEVEN
Article 309
FOREIGN COMPANIES
If the net assets of the company do not suffice for payment in full of all
the partners' shares , the loss shall be distributed among them at the rate Article 313
fixed for the distribution of losses .
Without prejudice to the special agreement entered into between the
Article 310 Federal Government or a local Government on the one hand , and certain
companies on the other , the provisions hereof , to the exception of the
Upon completion of the winding - up process , the liquidator shall provisions concerning the foundation of companies , shall apply to foreign
submit to the partners or the General Assembly a final account of the companies that perform their main activities in the State or have their
winding - up process which shall be terminated upon the approval of the administration center therein .
final account .
Article 314
The liquidator shall publicize the completion of the winding - up by
making an entry in the Commercial Register . Completion of the winding - As amended by Federal Law no . 13 dated 26/12/1988 :
up may be raised against third parties only from the date of its entry in the
Commercial Register and the liquidator shall upon completion ask the Except for foreign companies operating under special licenses within
deletion of the company's entry from the Commercial Register . duty - free areas in the State , foreign companies shall not perform their
main activities or establish offices or branches in the State until permit to
Article 311 this effect be obtained from the Ministry after prior approval of the
competent Authority in the concerned Emirate .
The liquidator shall be liable towards the company if , during the period
of winding - up , he has mis - conducted its affairs . He shall also be liable The issued permit shall specify the activity which a company is
to damages for the prejudice sustained by third parties as a result of his authorized to carry out . In order to obtain this permit , the company must ,
faults . as a condition , have an agent from among the citizens of the State .
Should the agent be a company it must have the nationality of the State
Article 312 and all partners therein must be citizens of the State . Moreover , the
obligations of the Agent towards the company and third persons shall be
limited to extending the necessary services to the company without
47
bearing any financial liabilities or obligations related to the company or its In the event of denial or lack of lawful excuse after the lapse five years ,
branches and offices inside or outside the State . claims against the liquidator arising from the winding - up operations and
claims against the company managers , Directors , and / or control Board
Foreign Companies licensed to operate within the State , under the shall be inadmissible after the lapse of five years , unless a shorter period is
preceding paragraph , shall not commence their business except after prescribed by law .
registration in the Foreign Companies Commercial Register kept with
Ministry . Registration Formalities in the said Register as well as the criteria The computation of the above period shall start as of the date of
of preparing the accounts and balance - sheets of the branches of foreign publicizing of the winding - up in the first instance and from the date of
companies shall be regulated by a ministerial decision to be issued in this perpetrating the act generating liability , in the second case .
respect .
TITLE THIRTEEN
The Foreign Company's office or branch in the State shall be considered
their domicile as concerns its activities within the State . The activities of
the said office or branch shall be directly governed by the law in force in INSPECTION OF COMPANIES
the State .
Article 318
Article 315
The Ministry and the competent Authority , in reciprocal coordination
Foreign companies their offices or their branches referred to in the between them , are entitled to control joint - stock companies and
preceding Article shall not commence their activities in the State except partnerships limited by shares to ascertain that they have complied with
after entry in the Commercial Register . the provisions of this Law or the companies' Articles of Association . The
Ministry and the authority concerned , together or separately at any
They must have a separate balance - sheet , a separate profit and loss moment , may further inspect the company through one or more
account and shall appoint an auditor . inspectors and examine its accounts and ask for whatever data from the
Board of Directors or the managers .
Article 316
The Ministry or the competent authority may also request the
If a foreign company or its office or branch performs activities in the dissolution of the company if it has been established or has carried out its
State before complying with the measures defined in the preceding Article activities in violation of the law . The competent Civil Court shall have
, the persons who assumed such activity shall be jointly and severally liable jurisdiction to decide on such request .
.
Article 319
TITLE TWELVE
Partners who own at least one quarter of the capital in joint - stock
companies may request the Ministry to inspect the company with regard to
INADMISSIBILITY OF CLAIMS serious violations attributed to the Directors or the Auditors in the course
of their duties set forth in this Law or in the company's Articles of
Article 317
48
Association , whenever there are serious reasons indicating the The General Meeting may remove the Directors and institute liability
perpetration of such violations . action against them . Its resolution shall be valid if adopted by partners
holding one half of the capital after deducting from the capital the share of
The application must include evidence showing the applicants , the Director whose removal is under consideration . It may also demand
seriousness to take such measures and that their application was not the replacement of the Auditors and institute a liability action against them
submitted for mischievous or defamatory purposes . .
The application submitted by the partners must be accompanied by the TITLE FOURTEEN
shares owned by them and such shares shall remain in custody until final
judgment is given .
PENALTIES
After consultation with the competent Authority and hearing the
applicants , the directors and the auditors in a private session , the Ministry Article 322
may decide to inspect the company and its books and delegate one or
more experts for this purpose at the expense of those who asked for the Without prejudice to a more severe punishment prescribed in any other
inspection law , shall be imprisoned for a minimum period of three months and a
maximum of two years and / or fined a minimum of ten thousand Dirhams
Article 320 and a maximum of one hundred thousand Dirhams :
The Directors and employees must allow the inspectors to have access to 1 - Whoever willfully enters false information or details inconsistent with
all the books , documents and papers of the company as may be requested the provisions of this Law in the company's Memorandum or Articles of
and submit to them the necessary information and explanations thereto . Association , in the publications for subscription in stocks and bonds or in
any other company documents . The same provision applies to whoever
Article 321 knowingly signs or distributes any such documents .
As amended by Federal Law no . 13 dated 26/12/1988 : 2 - Every founder or manager who invites the public for subscription in
stocks or shares of a limited liability company , and any one who offers
If the Ministry discovers that what was attributed by the inspection such documents for the account of the company .
applicants to the Directors or Auditors was incorrect , it may order
publication of the inspection result in lone of the local Arabic dailies and 3 - Any one , who in bad faith evaluates contributions in kind submitted
charge the inspection applicants with the expenses , without prejudice to by the partners for more than their real value .
their liability to pay damages , if sustainable .
4 - Any manager or director who distributes dividends or interests to the
If proven to the Ministry and the competent Authority that what was partners or other persons in a manner in violation to the provisions of this
attributed to the Directors or the Auditors was correct , the Ministry shall , Law or with the company's Memorandum or Articles of Association and any
after consultation with the competent Authority , take urgent measures Auditor who , while knowing their inconsistency , had sanctioned such
and convene a General Meeting instantly . In this event the Meeting shall distribution .
be presided by a Ministry's representative named by the Minister , who
holds as a minimum , the position of an Assistant Undersecretary . 5 - Any manager , director or liquidator who willfully enters false
information in the balance sheet or the profit - and - loss account or who
49
willfully omits substantial facts from such documents with the intent to 4 - Any company who violates the provisions concerning the established
conceal the actual financial position of the company . quota of shares to be held by State citizens in the company's capital the
quota of citizens in the Board of Directors and every manager or chairman
6 - Any auditor who deliberately makes a false report on the result of his therein .
auditing or who willfully conceals substantial fact in such report .
5 - Anyone who purposely obstructs access to the company's books and
7 - Any manager , director , member of the control Board , consultant , documents by the auditors or the officers delegated by the Ministry or the
expert or auditor or an assistant or employee thereof and any person while local Authority in charge of inspection of the company , or one who
in charge of inspecting the company divulges the company secrets which refrains from submitting information and explanation required by them .
he obtains ex officio or utilizes the same for a personal interest or to the
benefit of any other person . 6 - Any company who violates the provisions of this Law or the
regulations in implementation thereof and any founder , Director or
8- Chairman of the Board therein .
Any person appointed by the Ministry or the competent Authority to Criminal liability with regard to the violations prescribed in this Chapter
inspect a company , who willfully enters in his reports on the result of committed by a company shall be addressed against the legal
inspection process , false facts or willfully omits to enter in such reports representative of the company .
substantial facts that may affect the result of the inspection .
TITLE FIFTEEN
Article 323
Without prejudice to a more severe punishment prescribed in any other CLOSING PROVISIONS
law , shall be punished with a fine of not less that ten thousand Dirhams
and not more than one hundred thousand Dirhams : Article 325
1 - Any one who disposes of shares in manner inconsistent with the Abrogated by Federal Law no . 13 dated 26/12/1988 .
provisions established by this Law .
Article 326
2 - Any one who issues shares , subscription receipts , temporary
certificates or stocks or who offers the same for negotiation in violation to As amended by Federal Law no . 13 dated 26/12/1988 and Federal Law
the provisions of this Law . no . 4 dated 22/12/1990 :
3 - Any one who appoints a director or an auditor in a join - stock After coordination with the competent authorities in the Emirates , the
company and any one who obtains a guarantee or loan therefrom in Minister shall issue the Executive Regulations necessary for the
violation to the restriction provisions contained herein and the same implementation of this Law .
applies to any Chairman of the Board of Directors of a company wherein
any such violation occurs . Furthermore , a Cabinet decision shall determine the fees due for the
publication of the commercial companies' official documents in the
50
Register or for the publications set up by the Ministry and any amendment Corresponding
brought thereto ; as well as the fees for the licensing of branch offices of to 20 March , 1984 .
foreign companies or for their registration in the Foreign Companies'
Register , along with any amendments that may occur to such companies' Zayed Bin Sultan Al Nahyan
data . This applies in the cases where the provisions of this Law require
such registration , licensing or renewal , provided that the fees may not President of the United Arab
exceed the sum of Dhs . 10,000 ( Ten Thousand Dirhams ). Emirates State
Article 327 This Federal Law has been published in the Official Gazette , issue no .
137 , p . 7 .
Employers delegated by the Minister or the competent Authority , as the

case may be , shall have the status of juridical police in establishing the
crimes in violation to the provisions of this Law and its implementing
decisions . They shall have the right of access to all the company's books ,
registers and documents . The company's responsible officers shall provide
the abovementioned employees with all the information , data and
documents they might request for the performance of their assignment .
Article 328
Any provision violating the provisions of this Law is hereby abrogated .
Article 329
As amended by Federal - Decree Law no . 1 dated 26/6 / 1984 :
This Law shall be published in the Official Gazette and shall become
effective as of the first of January 1985 .
Promulgated by
Us at the Presidential
Place in Abu
Dhabi .
On 17 Jumada al
- Akher 1404 H .
51

Federal Law No 8 of 1984

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Federal Law No 8 of 1984

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Federal Law No .

8 Acting upon the submission made by the Ministry of Economy and

Corresponding to 17 Jumada al - Akher 1404 H . Have promulgated the following Law :

CONCERNING COMMERCIAL COMPANIES TITLE ONE

We , Zayed Bin Sultan Al Nahyan , President of the United Arab Emirates

1 - The provisions of this Law shall apply to commercial companies

For the purposes of the preceding paragraph , an economic venture shall

A company established in the U . A . E shall adopt either one of the

As amended by Federal Law no . 13 dated 26/12/1988 : Article 14

Article 17 It is not permissible to distribute simulated dividends to the partners by

If a partner's share consists of stocks , his personal creditor , in addition Article 21

d - The capital and shares undertaken by each partner whether cash or in

JOINT LIABILITY COMPANY e - Date of establishment , and expiry , if any .

Article 23 f - Management of the company and names of authorized signatories

A sleeping partnership is a partnership composed of one or more jointly - Article 53

Resolutions pertaining to the amendment of the Memorandum of

Article 72 The application for the foundation of a company shall be submitted to

Article 73 A committee shall be formed , by decision of the competent Authority ,

Article 81 If the establishment of the company is relinquished , founders shall be

As amended by Federal Law no . 13 dated 26/12/1988 : Article 86

Article 87 In case the Assembly resolves to reject the contribution in kind , or if it is

2 - Election of the first Board of Directors and appointment of auditors . Article 93

3 - Articles of Association as approved by the same Meeting . CHAPTER THREE

Voting by mail is not permitted . Article 111

As amended by Federal Law no . 13 dated 26/12/1988 : Article 150

As amended by Federal Law no . 13 dated 26/12/1988 : Article 164

Article 169 Article 173

Article 174 Article 178

DEBENTURES Article 181

Article 190 Article 194

Article 192 Article 196

Article 204 SECTION TWO

Shares in cash shall be deposited in a bank operating in the State . The

A limited liability company is an association of a maximum number of Article 223

SHARES AND CAPITAL

Article 231 Article 235

Article 232 Article 236

Article 239 Article 244

If a sleeping partner violates the restriction provided in the preceding

A company may be converted from one form to another and such re -

As amended by Federal Law no . 13 dated 26/12/1988 : Article 324

Employers delegated by the Minister or the competent Authority , as the

Any provision violating the provisions of this Law is hereby abrogated .

As amended by Federal - Decree Law no . 1 dated 26/6 / 1984 :

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