UNITED ARAB EMIRATES Law and Practice Contributed by: Francesco Bulleri, Beshoy Mounir, Sultan Bahriddini and Noora Al Doseri, ADG Legal
vant payments, an obligation on the recipient to repay improperly received amounts, and potential liability for directors involved in approving or receiving such remuneration. In more serious cases (particularly where there is misconduct or breach of duty) regula - tory sanctions or other legal consequences may arise. In terms of disclosure, public joint stock compa - nies are subject to relatively extensive transparency requirements. This typically includes disclosure of directors’ remuneration in the financial statements, which are presented to shareholders and made avail - able to the market. Disclosure may cover aggregate remuneration, board fees and other benefits. In con - trast, disclosure requirements for LLCs are limited and generally confined to what is agreed contractually or required for accounting purposes. The relationship between a company and its share - holders in the UAE is based on the principle that the company is a separate legal entity, distinct from its shareholders. Shareholders do not manage the com - pany directly but exercise their rights collectively through the general assembly, primarily in relation to fundamental or reserved matters. In return, they ben - efit from economic rights (such as dividends) and gov - ernance rights (such as voting and information rights), subject to the company’s constitutional documents and applicable law. 4. Shareholders 4.1 Companies and Shareholders This relationship is governed by a combination of statutory provisions, the company’s constitutional documents (eg, memorandum of association) and, where applicable, contractual arrangements such as shareholders’ agreements. UAE law sets out core shareholders’ rights, including the right to attend and vote at general assemblies, receive dividends (where declared) and inspect certain company records. These rights may be supplemented or refined contractually, particularly in joint venture or closely held companies, where shareholders often agree on enhanced protec - tions such as veto rights, reserved matters and exit mechanisms.
The extent of regulation varies depending on the com - pany’s legal form. In public joint stock companies, shareholder rights and protections are more exten - sively regulated, including rules on general assem - blies, disclosure, minority protection and related-party transactions. In LLCs, there is greater contractual flexibility, and the relationship between the company and its shareholders is more heavily shaped by the memorandum of association and any shareholders’ agreement. As regards transparency, the availability of public records of shareholders depends on the type of com - pany and jurisdiction. For public joint stock compa - nies, shareholder information is generally maintained through share registers and, in the case of listed com - panies, through market infrastructure, with certain dis - closures made publicly in accordance with securities regulations. In contrast, for LLCs and most private companies, shareholder registers are maintained internally or with the relevant licensing authority, but are not typically publicly accessible. In financial free zones such as the DIFC and ADGM, companies are required to maintain registers of share - holders, and certain corporate information may be publicly available through public registries. 4.2 Role of Shareholders As a general principle, shareholders in the UAE do not participate in the day-to-day management of a com - pany. Management authority is vested in the board of directors or managers, depending on the company’s legal form, while shareholders exercise their influence indirectly through their rights at the general assembly. Shareholders are primarily involved in fundamental or reserved matters, such as appointing and remov - ing directors or managers, approving financial state - ments, approving dividends, and approving significant corporate actions (eg, amendments to constitutional documents, capital changes, mergers or liquidation). Outside these matters, operational and strategic decisions are typically delegated to the board and/or executive management. As a matter of law, shareholders cannot generally interfere directly in management or bind the company
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