UNITED ARAB EMIRATES Law and Practice Contributed by: Yasser Omar and Laryssa Perkins, Hadef & Partners LLC
Sector-Specific Companies operating in certain industries may also be subject to additional governance requirements. For example, banks and other financial institutions licensed by the CBUAE must also comply with any governance regulations or rules issued by the CBUAE, including Central Bank Circular No 83 of 2019 on the Corporate Governance Regulation for Banks and the underlying standards issued pursuant to that Circular, which aim to ensure the soundness of banks in the UAE and contribute to financial stability and consumer protection. 4.2 Relationship Between Companies and Minority Investors Alongside statutory minority shareholder protections, the rights of minority shareholders tend to be pro - tected through shareholder agreements, which may include board rights and a list of reserved matters which require the minority shareholders’ consent, and in the memorandum and articles of association. Mainland For mainland LLCs, some of the statutory minority shareholder protections in the CCL include pre-emp - tive rights on the transfer of shares to third parties, the right for a partner holding at least 10% of the share capital to request the manager to call a general assembly and the requirement for any amendment to the share capital of an LLC or its memorandum of association to be approved by partners holding at least 75% of the shares represented in a general meeting (noting general meetings require a quorum of partners holding at least 50% of the shares, unless the memorandum of association specifies a higher percentage). The CCL, by virtue of the 2025 CCL Amendment Law, now permits the inclusion of tag-along and drag-along clauses in the memorandum or articles of association for limited liability companies and private joint stock companies. For mainland PJSCs, some of the statutory minority shareholder protections in the CCL include the fol - lowing:
Controls of Private Joint Stock Companies and the Rules of Governance (the “MOE Merger and Govern - ance Rules”). If the companies are public joint stock companies (PJSCs), the merger is also subject to the SCA M&A Rules. Additionally, if one of the companies involved in the merger is licensed by the CBUAE, the merger will also be subject to additional requirements as set out by the CBUAE. 4. Corporate Governance and Disclosure/Reporting 4.1 Corporate Governance Framework Mainland For mainland companies the key corporate govern - ance rules and requirements are set out in the CCL. The Minister may also issue decisions regulating the governance for companies other than PJSCs, such as the MOE Merger and Governance Rules which apply to private joint stock companies. For PJSCs listed in the UAE, the SCA Board of Direc - tors have issued corporate governance rules under Decision of the Chairman of the SCA Board No 03/RM of 2020 Concerning Approval of Joint Stock Compa - nies Governance Guide (the “Governance Guide”) to regulate PJSCs in the UAE. The principles and objec - tives of the corporate governance rules are centred around the pillars of accountability, fairness, disclo - sure, transparency and responsibility. The Governance Guide covers concepts such as board composition, directors’ duties, management of conflicts of interest and related parties, shareholder rights, risk management, compliance and audit, and disclosure obligations. However, the Governance Guide does not apply to foreign companies listed in the UAE, financial free zone companies or free zone
companies. Free Zones
The specific governance rules applicable to a free zone company will vary depending on the free zone in which the company is incorporated and operating in.
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