UNITED ARAB EMIRATES Law and Practice Contributed by: Francesco Bulleri, Beshoy Mounir, Sultan Bahriddini and Noora Al Doseri, ADG Legal
ments (such as shareholders’ agreements), which may impose enhanced quorum requirements, veto rights or escalation mechanisms, particularly in joint venture or closely held company structures.
Across all structures, the board operates collectively, with authority exercised through resolutions passed at meetings or by written resolution. The specific composition, appointment process, term and internal governance of the board are determined by a combi - nation of statutory requirements and the company’s constitutional documents. 3.2 Board Members The roles of board members in the UAE generally align with internationally recognised governance principles, although the level of formality and regulation varies depending on the company’s legal form and whether it is listed or regulated. At a general level, all directors owe duties to the com - pany, including duties of care, diligence and loyalty, and are collectively responsible for overseeing the company’s management, setting its strategic direction and safeguarding its interests. Directors are expected to act in good faith, avoid conflicts of interest and ensure compliance with applicable laws and the com - pany’s constitutional documents. The chairman of the board plays a central leadership role, and is responsible for organising and presid - ing over board meetings, setting the board agenda, and ensuring that the board functions effectively. The chairman often acts as the primary interface between the board, shareholders and executive management, and may have a casting vote where provided for in the company’s constitutional documents. Executive directors are typically involved in the day- to-day management of the company in addition to their board responsibilities. They provide operational insight to the board and are typically part of the senior management team (eg, CEO or general manager). Non-executive directors are not involved in the daily operations of the business and instead provide inde - pendent oversight, strategic input and constructive challenge to executive management. Their role is par - ticularly important in monitoring performance, risk and governance. In larger or regulated entities – particularly public joint stock companies and entities in financial free zones
3. Directors and Officers 3.1 Board Structure
The structure of boards of directors in the UAE var - ies depending on the company’s legal form and the applicable regulatory framework, but generally follows a single-tier board model. In joint stock companies (particularly public joint stock companies), the board of directors is a formal govern - ing body composed of a specified number of direc - tors (typically within a statutory range), elected by the shareholders for a fixed term. The board must include a mix of executive, non-executive and independent directors, with independence requirements and gov - ernance standards more strictly regulated – particu - larly for listed entities. The board is usually supported by specialised committees, such as audit, nomination and remuneration committees, which play a key role in oversight and governance. In LLCs, which are the most common corporate form in the UAE, there is greater flexibility. Management may be vested in a sole manager or multiple manag - ers, and where there are several managers a “board of managers” may be established. Unlike joint stock companies, there is generally no mandatory require - ment for independent directors or formal board com - mittees, and the structure is largely driven by the memorandum of association and any shareholders’ agreement. In free zone jurisdictions such as the DIFC and ADGM, board structures are more closely aligned with com - mon law jurisdictions. Companies are typically required to have at least one director, and govern - ance frameworks often encourage (and in some cases require) the inclusion of independent directors and the establishment of board committees, particularly for regulated entities.
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