Upcoming Company’s Act in UAE
The much awaited Commercial Companies Law in UAE may be enacted by the end of the year. The reports are in accordance with the UAE Minister of Economy Sultan Bin Saeed Al Mansouri’s statement to the media. The new law will further strengthen the economy by boosting the investors’ confidence.
The law was passed in the Federal National Council after one of the lengthiest discussion in the history of FNC in May. The law is said to be published in the official gazette by the end of the year and after three months thereon the law will be enacted.
There will be no significant change in the emiratisation policy. The emiratis will continue to hold 51% stake in the companies. The board of publicly held companies will also see a higher participation by the locals.
The corporate social responsibility has also found room in the law. The council passed allowing companies to contribute to such noble cause of up to two percent of the average profits prior to any such contribution is made. The council also authorized the Cabinet to make any changes to regulate the CSR activities.
The bill has emphasized on fair trade and transparency by enforcing harsh punishment of up to AED 10 million fines and imprisonment of up to six months for manipulating the market or transactions creating artificial price. The law ensures that country does not give room for monopolies.
The maintenance of accounts also finds greater emphasis in the new law. The misrepresenting of any financial details also carries a hefty fine of AED 500,000 thousand, imprisonment of up to three years, or both.
The law would also ensure penalizing the distribution of dividends or profit in violations of the provisions of the law. The law also brings about caution for the liquidators who try to go against the company’s interest.
With the new law there will be better employee incentives and a loyal workforce for the employers. The law will thus bring more transparency and therefore more business to the region.
With the economy bouncing back from the recession, the company law will be another step from the government to ensure that the business grows consistently in the region. Hence, let us hopefully await the final result when this company act comes to effect!