UNITED ARAB EMIRATES Law and Practice Contributed by: Francesco Bulleri, Beshoy Mounir, Sultan Bahriddini and Noora Al Doseri, ADG Legal
through individual actions. That said, they may influ - ence management in several ways. First, through the appointment and removal of directors or managers, shareholders can shape the composition of the gov - erning body responsible for decision-making. Second, certain matters are reserved to shareholders under applicable law, while additional approval rights and controls may also be agreed contractually, particu - larly through shareholders’ agreements and consti - tutional documents. These arrangements commonly include lists of “reserved matters” requiring share - holder approval before the company may take certain actions, such as entering into significant transactions, incurring debt above an agreed threshold or changing its business activities. In joint ventures, it is common for shareholders to agree on enhanced governance rights, including veto rights, quorum requirements and escalation mecha - nisms. While these do not amount to direct manage - ment, they effectively allow shareholders to approve or block key decisions and thereby exert significant influence over the company’s direction. 4.3 Shareholder Meetings Shareholder meetings are generally required under UAE law, although the level of formality and frequency depends on the company’s legal form and applicable regulatory framework. In both joint stock companies and LLCs, an annual general assembly is typically required to be held within a specified period following the end of the financial year. The purpose of this meeting is to consider and approve key matters such as the company’s financial statements, directors’ or managers’ reports, auditor’s report, dividend distribution and the appointment or reappointment of auditors. The calling and conduct of shareholder meetings are governed by statutory provisions and the company’s constitutional documents. Key requirements generally include the following. • Notice: meetings must be convened with prior notice to shareholders, specifying the date, time, location and agenda. Only matters included on
the agenda may be considered, subject to limited exceptions. • Quorum: a minimum level of shareholder participa - tion is required for the meeting to be valid. Quorum thresholds vary depending on the type of company and the nature of the resolution. • Voting: resolutions are typically passed by a speci - fied majority of votes, with voting rights proportion - ate to shareholding (unless otherwise provided). Higher approval thresholds apply to fundamental decisions. • Representation: shareholders may attend in person or appoint proxies, subject to any restrictions in the law or constitutional documents. • Minutes and record-keeping: proceedings must be properly documented and resolutions recorded in accordance with applicable requirements. In public joint stock companies, the framework is more formalised, with detailed rules governing notice periods, disclosure, participation and regulatory over - sight. In LLCs, the process is generally more flexible and may, in some cases, allow for written resolutions in lieu of meetings, depending on the constitutional documents and applicable law. 4.4 Shareholder Claims Shareholders in the UAE may bring claims against the company and/or its directors on a number of legal bases, depending on the nature of the alleged wrong - doing and whether the loss is suffered by the com - pany or by the shareholders personally. A key distinction is between claims brought on behalf of the company and claims brought by shareholders in their own capacity. As a general principle, where the alleged wrongdoing results in loss to the company (for example, mismanagement, breach of duty or misuse of assets), the claim is one for the company to pursue against its directors. That said, shareholders may, in certain circumstances, initiate such claims where the company fails or refuses to act, particularly in joint stock companies. Shareholders may also bring direct claims where they have suffered personal loss as a result of unlawful conduct. This may include claims arising from:
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