UNITED ARAB EMIRATES Law and Practice Contributed by: Francesco Bulleri, Beshoy Mounir, Sultan Bahriddini and Noora Al Doseri, ADG Legal
such as the DIFC and the ADGM – independent direc - tors are typically required. These directors are expect - ed to be free from relationships that could impair their judgement, and play a key role in enhancing transpar - ency, protecting minority shareholders and strength - ening governance standards. In joint stock companies, boards are also common - ly supported by board committees, such as audit, nomination and remuneration committees, each with specific delegated responsibilities. Members of these committees – often led by independent or non-exec - utive directors – focus on specialised areas such as financial reporting and controls, board composition and succession, and executive compensation. Overall, while roles may overlap in smaller or closely held companies, there is an increasing trend in the UAE towards clearer delineation of responsibilities and stronger governance frameworks, particularly in regulated and investor-driven environments. 3.3 Board Composition Board composition requirements in the UAE depend on the company’s legal form and whether it is subject to regulatory oversight, with more prescriptive rules applying to public and regulated entities and greater flexibility for private companies. In public joint stock companies, the composition of the board is subject to detailed statutory and regu - latory requirements. These typically include a mini - mum and maximum number of directors, election by shareholders for a fixed term, and compliance with corporate governance regulations issued by the regu - lator. Boards are generally required to include a mix of executive, non-executive and independent direc - tors, with independent directors forming a specified proportion of the board. Additional requirements may apply in relation to gender diversity, expertise and the establishment of board committees (such as audit and remuneration committees), which must themselves meet independence and composition criteria. In contrast, LLCs are subject to far fewer manda - tory composition requirements. UAE law allows sig - nificant flexibility in structuring management, which may consist of a sole manager or multiple managers
forming a board of managers. There are no statutory requirements for independent directors, board com - mittees or specific expertise, and the composition is largely determined by the memorandum of associa - tion and any shareholders’ agreement. In mainland LLCs, where the number of shareholders reaches 15 or more, a supervisory board is required to be appoint - ed to oversee management. In practice, composition in LLCs is often driven by commercial considerations, particularly in joint venture arrangements where share - holders seek board representation and veto rights. In financial free zones such as the DIFC and ADGM, companies operate under frameworks more closely aligned with common law legal frameworks. While pri - vate companies generally retain flexibility, regulated entities (such as financial services firms) are subject to more robust governance requirements, includ - ing expectations around board size, independence, expertise and the establishment of board commit - tees. Regulators in these jurisdictions place particular emphasis on the fitness and propriety of directors, as well as the overall effectiveness of the board. Across all types of entities, it is common for consti - tutional documents and shareholders’ agreements to supplement statutory requirements by prescrib - ing board composition, nomination rights, quorum thresholds and reserved matters. There is also a grow - ing trend in the UAE towards enhanced governance standards, including increased focus on independ - ence, diversity and sector-specific expertise, particu - larly in investor-backed and regulated environments. 3.4 Appointment and Removal of Directors/ Officers The appointment and removal of directors or officers in the UAE are governed by a combination of statutory provisions and the company’s constitutional docu - ments, with the level of formality depending on the company’s legal form. In joint stock companies, directors are typically elect - ed by shareholders at a general assembly for a fixed term, often through a cumulative voting mechanism designed to enhance minority representation. Share - holders also have the authority to remove directors, usually by way of an ordinary resolution, subject to
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