In 2021, the UAE announced the largest legal reform in its history by introducing a raft of new laws. The announcement came during the 50th anniversary of the UAE, as part of the government’s ‘towards the next 50’ national strategy. Over 40 new laws are included in the reform, many of which align the UAE towards international best practice.
Law: New UAE Commercial Companies Law – Federal Law by Decree No. 32 of 2021.
Effective as of: 2 January 2022.
Summary: The new Commercial Companies Law (Federal Law No. 32 of 2021) seeks to further enable foreign investment and ownership, general corporate governance and increased focus on public market activity, including the introduction of new corporate vehicles, being Special Purpose Vehicles (SPVs) and Special Purpose Acquisition Companies (SPACs), aligning with those already available in the UAE’s financial freezones. Both public and private companies are affected by the new law – public joint stock companies (PJSCs) will benefit from more control and flexibility over IPO processes and procedures, whilst private, limited liability companies (LLCs) will be subject to certain corporate governance changes, which will need to be reflected in their revised memorandum of association within a year of the new law’s effect.
The last two years have fostered a global shift in the way business is conducted in the UAE through significant legislative change, with the new law (and its preceding legislative changes in 2020 and 2021) playing a major role in this.
The main takeaways:
- Consolidation of foreign investment regulations from previous legislative changes.
- New corporate governance/regulatory requirements for PJSCs and LLCs.
- New regulations (and corporate vehicles) to increase flexibility for public offerings, M&A and financing transactions.
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