Guide to the United Arab Emirates Commercial Companies Law 2021
Significant changes in the United Arab Emirates' (“UAE”) regime for regulating companies have taken place over the last few years. The pace of change continues to accelerate with an extensive legal reform programme introduced in 2021 to celebrate the 50th anniversary of the creation of the UAE. A new companies law regime, set out in Federal Decree-Law No.32 of 2021 on Commercial Companies (“CCL 2021”), is among the latest developments which local companies incorporated onshore in the UAE, their management, shareholders and potential investors need to understand.
The previous companies law regime, which was only introduced in 2015 and which was set out in Federal Law No. 2 of 2015, as amended (“CCL 2015”), has been repealed and replaced by the CCL 2021 with effect from 2 January 2022. Although the new companies law regime makes reasonably conservative adjustments to the CCL 2015 companies law regime and largely consolidates certain recent amendments to and regulations made under the CCL 2015, some new provisions have the potential to bring about transformational changes to the structuring of some types of transactions in the UAE. Boards need to be well informed and well prepared to ensure that they comply with the requirements of the CCL 2021 and, where relevant, that they can take advantage of the opportunities presented by the new regime.
The UAE Government has already implemented an impressive range of legal reforms in recent years. Landmark reforms have lifted restrictions on foreign investment regimes, enabling foreign investors to wholly own local companies subject to Federal restrictions protecting strategic sectors (read more…), modernised listing regulations, introduced more robust corporate governance frameworks and addressed a spectrum of other issues for companies, including taking security, bankruptcy and corporate rescue. Viewed holistically, these reforms promise to increase investor confidence in the UAE’s business environment, which is among the most progressive in the Middle East region.
In this guide, we look at the key provisions of the CCL 2021 that UAE companies and their directors, shareholders and potential investors need to know about.
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