Union Properties to discuss company continuity at general meeting following 2021 loss

The ratio of the developer's accumulated losses exceeded 68% of its share capital

The developer swung to a net loss of $263m in 2021 after its senior management was accused of fraud and misappropriation. Photo: The National

Dubai developer Union Properties will discuss the continuity of the company at its upcoming annual general meeting, after the ratio of the company's losses last year exceeded half of its share capital.

A special resolution regarding the matter has been added to the meeting's agenda, Union Properties said in a statement on Thursday to the Dubai Financial Market, where its shares are traded.

The developer swung to a net loss of Dh966.76 million ($263m) in 2021 from a net profit of Dh200.98m the previous year after it rectified the value of its property portfolio that “had been inflated in prior years”, it said last week.

According to the UAE federal law on commercial companies, if the accumulated losses of a joint stock company reach half of its issued capital, the board of directors must, within 30 days from the date of disclosure, convene the general meeting to "consider a decision regarding the continuity of the company's activity or to dissolve the company prior to the expiry of its term".

"The ratio of the accumulated losses to the capital amounted to 68.3 per cent and therefore the approval of the annual general assembly for the continuation of the company's activities is required," Union Properties said. The meeting is set to be held on April 22.

Union Properties' shares were down 1.53 per cent to 26 fils on the DFM at 12.40pm UAE time.

Union Properties began facing problems last year after the Securities and Commodities Authority, the UAE's markets regulator, filed a complaint against its senior executives in October, accusing them of forgery, abuse of authority, fraud and damage to the interests of the company.

A new board was appointed in December, and a complete financial and accounting review was conducted by a third party, which uncovered "widespread fraud and misconduct by the company’s former management involving forgery, misappropriation of funds and various other financial violations", Union Properties alleged.

It is currently in the process of restructuring all its operations, it said last week.

The developer, which posted a 6 per cent rise in revenue from contracts with customers last year, swung to a loss after it booked Dh1.11 billion in losses from the valuation of its properties compared with a Dh743.6m gain the previous year. A new valuation firm found that the carrying value of its property portfolio “had been inflated in prior years".

Union Properties also faced an impairment of Dh154.64m relating to investments in quoted funds and quoted equities, which are suspected to have been misappropriated by the company’s former officials, the developer said.