UNITED ARAB EMIRATES Law and Practice Contributed by: Yasser Omar and Laryssa Perkins, Hadef & Partners LLC
• Shareholders having pre-emptive rights on the issue of new shares, which cannot be altered by the company’s governing documents (Article 199). • Shareholders holding at least 5% of the share capi - tal have the right to: (a) submit an application to the SCA (or the competent authority) where the concerned shareholder(s) deem that the company’s affairs are or have been conducted in a manner detrimental to the interests of the company’s shareholders or some of them, or that the company intends to perform an act or to omit an act in such a way that would be prejudicial to its shareholders (Article 164); (b) request to list certain topics on the agenda of the general assembly (Article 182 (2)); and (c) request the SCA to issue a decision to stay decisions passed by the general assembly of the company which are to the detriment of the shareholders or in favour of a certain class of shareholders or which bring a special benefit to the board members or others (Article 193). • Shareholders holding at least 10% of the share capital have the right to: (a) request the board of directors to call a general assembly (Article 176 (1)); and (b) request the Minister (for LLCs) or the SCA (for PJSCs) to order an inspection of the company in respect of serious breaches attributed to the board members or the auditors upon perform - ing their duties provided for in the CCL or the company’s memorandum or articles of associa - tion where there are reasons that suggest the occurrence of such violations (Article 342). For PJSCs listed in the UAE, the Governance Guide also provides, for example, shareholders holding at least 5% of the share capital with the right to review the company records and documents relating to relat - ed party transactions and to file a lawsuit before the competent court to cancel the related party transac - tion. Free Zones The specific protection available for minority share - holders in a free zone company will vary depending on the free zone in which the company is incorporated and operating. For example, for ADGM entities, the
Companies Regulations 2020 provide pre-emptive rights on issues of shares subject to certain excep - tions, exclusions and disapplication provisions (Arti - cle 520), certain matters (ie, amending the articles of association, share rights or share capital) to be resolved by a special resolution (ie, at least 75% of the voting share capital), and the right for sharehold - ers holding: • at least 5% of the share capital to require the direc - tors to call a general meeting (Article 320 (2)); • at least 10% of the share capital to require the company to obtain an audit of its accounts for a financial year where the company is not otherwise required to undertake an audit (Article 448); and • at least 15% of the class of shares in question to apply to the court to have a variation to the rights of that class cancelled. 4.3 Disclosure and Reporting Obligations There are no specific disclosure obligations for FDI in the UAE. However, general disclosure requirements apply to all persons making, holding or disposing of In the case of private companies, as mentioned in 3.2 Regulation of Domestic M&A Transactions , any transfer of shares has to be lodged by the compa - ny with the relevant DED or free zone authority. The information required in such lodgement (including the new shareholder’s identity and shareholding) will be reflected, for example, in the company’s commercial licence (for mainland companies) and in the public electronic register (for financial free zone companies, In the case of any shareholding in a UAE company (mainland or free zone) listed on a main stock market in the UAE, there are additional disclosure and report - ing obligations pursuant to the relevant market rules and, in the context of the ADX and DFM, the decisions of the SCA. For example, under Decision of the Chair - man of the SCA Board No 3 of 2000 on the Disclosure and Transparency Regulation (as amended), a natural or legal person must notify the relevant market imme - diately upon holding 5% or more of the company’s unless exempted). Listed Companies shares in companies. Private Companies
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