The Ministry of Economy said it has extended compliance with the new commercial companies law by one year to allow more than 220,000 firms to complete adjustments that have been delayed because of difficulties overcoming red tape.
The new law is expected to boost capital markets in the UAE because it will lower the minimum requirement for companies to sell shares to the public to 30 per cent of company equity instead of 55 per cent. It also includes measures that will boost corporate governance and encourage entrepreneurship.
“The new deadline is in line with Government efforts to facilitate business, enhance the role of the private sector, and to achieve a smooth transition,” the Ministry of Economy said.
The extension was made after companies and various authorities, including the Securities and Commodities Authority and departments of economic developments across the country, said that some businesses have had difficulties in getting various approvals to comply with the new law.
Companies established before the new law, under article No 374, had initially been given from July 1, 2015 to June 30, 2016 to come into compliance with the new law. Those that do not comply with the new deadline will be fined Dh2,000 a day, the ministry said.
The UAE’s private-sector firms include 219,735 limited liability companies, 162 public joint stock companies and 60 private joint stock companies.
Included in the new law is the introduction of the concept of a sole founder to UAE commercial law. An individual can now establish a private or limited liability company, a move that is likely to boost entrepreneurship.
However, the law does not relax restrictions on foreign ownership, which remains capped at 49 per cent. Officials had previously indicated support for allowing majority foreign ownership, but the measure was scrapped after disagreement between government departments.
mkassem@thenational.ae
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