UAE Law and Practice Contributed by: Amir Alkhaja, Areen Jayousi, Gulsun Ozmen and Alia AlMarzooqi, Habib Al Mulla & Partners
PJSC Governance A PJSC must have a board of directors comprising no fewer than three, and no more than 11, members elected by the general assembly, unless otherwise approved by the SCA. The board is responsible for the overall management, strategic direction, and supervision of the company and must satisfy the independence and governance requirements prescribed under the applicable SCA Corporate Governance Rules and Standards. The board typically appoints a chief executive officer or managing director to oversee the company’s day-to- day operations and executive management. While this creates a practical distinction between oversight and executive functions, the UAE PJSC governance framework does not adopt a formal two-tier board structure in the continental European sense. Listed PJSCs are additionally required to establish specialised board committees, including an audit committee and a nomination and remuneration com - mittee, in accordance with the applicable SCA gov - ernance regulations. 3.5 Directors’, Officers’ and Shareholders’ Liability Directors’ and Managers’ Duties and Liability Under the Commercial Companies Law, managers of an LLC and directors of a PJSC owe duties of care, loyalty and good faith to the company and its share - holders. Personal liability may arise for losses caused by fraud, undisclosed or improperly approved con - flicts of interest, wilful mismanagement or conduct in excess of the authority conferred by the company’s constitutional documents. Claims for breach of duty may be brought by the com - pany itself, by qualifying shareholders meeting pre - scribed thresholds or in insolvency proceedings by a court-appointed liquidator. Criminal liability may arise where a director or manager has engaged in fraudu - lent conduct, misappropriation of company assets or other criminal acts in connection with the manage - ment of the company.
Shareholders’ Limited Liability and Piercing the Corporate Veil Shareholders of an LLC, PrJSC or PJSC are not per - sonally liable for the company’s obligations beyond their capital contributions; the principle of limited liability is fundamental to UAE corporate law. In exceptional circumstances, however, UAE courts may disregard the company’s separate legal per - sonality and impose personal liability on sharehold - ers where the corporate structure has been used to perpetrate fraud, evade legal obligations or conceal improper conduct. This may arise, for example, where there has been substantial commingling of personal and company assets or affairs. The legal basis for this principle derives from broader doctrines of good faith, abuse of rights and prohibition of fraud under UAE law, including the Civil Transac - tions Law, as amended by Federal Decree Law No 25 of 2025. which comes into force on 1 June 2026. The application of this doctrine by the UAE courts remains limited and strictly fact-specific. The primary legislation governing employment in the UAE mainland private sector is Federal Decree-Law No 33 of 2021 on the Regulation of Labour Relations (the “Labour Law”), which came into effect on 2 Feb - ruary 2022. Since its enforcement, the Labour Law has been amended three times, with the most recent amendment in 2024. The Labour Law is supplemented by Cabinet and min - isterial decisions issued by MOHRE, which also over - sees registration, compliance and dispute resolution. There is no system of collective bargaining or statu - tory trade union recognition in the UAE mainland; in practice, the employment relationship is governed by the Labour Law and the individual employment con - tract. The DIFC and the ADGM each maintain their own separate employment legislation, 4. Employment Law 4.1 Nature of Applicable Regulations
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