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Federal Decree-Law No. 32 of 2021 regarding commercial companies

His Highness Sheikh Khalifa bin Zayed Al Nahyan, President of the State (may God protect him), has approved Decree-Law No. 32 of 2021 regarding commercial companies, which aims to enhance the openness of the business climate in the country in a way that supports the national economy, and focuses on providing a dynamic and advanced investment environment that enables investors to implement Vital projects for the economy, attracting foreign companies, stimulating local investments, and attracting foreign investments to the country's economic sectors.

Among the most important amendments contained in the new decree-law:

1- Allowing the establishment of companies for the purposes of acquisition or merger SPAC, and special purpose companies SPV, and setting a legal framework for these new legal forms and excluding them from some provisions of the Companies Law, through a decision issued by the Securities and Commodities Authority that regulates the work of these forms of companies and ensures their effectiveness and feasibility economic growth and enhances its impact on the business environment.

- The company established for the purpose of acquisition or merger SPAC: It is the public shareholding company that the Authority has approved to classify as a company established for the purpose of acquisition or merger, without any other purpose, in accordance with the provisions of the decision issued by the Authority in this regard.

- Special Purpose Company (SPV): It is the company established with the aim of separating the obligations and assets associated with a particular financing operation from the obligations and assets of the person who founded it and is used in credit operations, borrowing, securitization, issuing bonds and transferring risks associated with insurance, reinsurance and derivatives operations in accordance with the provisions of the decision issued by the Authority regulating this activity.

2- Abolishing the maximum and minimum percentage of the founders’ contribution to the company’s capital at the time of the public offering, as well as canceling the limitation of the subscription period by law and leaving the two matters to what is specified in the subscription prospectus.

This came in the definition of the public shareholding company in Article 105 of the new decree-law, where the phrase “The Council of Ministers, upon the proposal of the Minister and after coordination with the local authority, may issue a decision with the minimum and maximum percentage that must be subscribed by the founders.”

And in Clause No. 1 of Article 117, “1- The founders must subscribe to shares of the company’s issued capital within the limits of the percentage specified in the prospectus, before calling for public subscription in the remaining shares of the company, taking into account the requirements of the Authority in this regard.”

3- Not requiring the nationality of the members of the board of directors and leaving the organization to what the shareholders decide in electing the members of the board in accordance with the terms and conditions set by the competent authority.

4- Allowing the company to transform into a public joint stock company and sell its shares or offer new shares for public subscription without being restricted to a certain percentage, by following the price-building mechanism for the security.

Article (129) (stock price construction)

Subject to the provisions of Articles (279,117) of this Decree-Law, the Authority may issue a decision regulating the mechanism of depression based on the price-building of securities, and the parties wishing to follow this method shall abide by the provisions and procedures stipulated in the decision issued by the Authority in this regard.

Article (277) (Transformation into a PJSC)

Subject to the provisions of Article (275) of this Decree-Law, for the company to be transformed into a public joint stock company, the following is required: 1. That the value of the issued shares or shares have been paid in full, or that the partners' shares have been fully paid. 2. That a period of no less than two fiscal years for the company has elapsed. 3. To issue a crude decision or something equivalent to converting the company into a public joint stock company. 4. Compliance with the other conditions issued by a decision of the Authority's Board of Directors.

5- Allow companies to divide and create legal rules governing the division operations, in a way that contributes to diversifying the company’s activities and fields of work and increasing its projects and growth opportunities.

Articles (294,295,296,297,298)

Chapter III (Company division)

Where a new chapter was added in the new decree-law consisting of five articles, stipulating the conditions and procedures for dividing the company and the types of division (horizontal division or vertical division).

6- Allowing companies to determine the nominal value and the percentage of offering.

Article 209

Nominal value of the share(public joint stock companies)

The first and third items in Article were changed to “1- The share shall have a nominal value, in accordance with the value specified in the company’s articles of association.3- Subject to Clause (1) of this Article, the company may, by virtue of a special resolution and after the approval of the Authority, divide the nominal value of the share.

7- Finding financing solutions for companies by issuing other classes of shares.

Article (231)

1.The company, after the approval of the Authority, may issue negotiable bonds or sukuk, whether they are convertible or not convertible into shares in the company with equal values ​​for each issue.

2.The bond or deed shall remain nominal until its full value is paid.

3.Bonds or sukuks may not be converted into shares unless this is stipulated in the prospectus or issuance conditions. If it is decided to convert bonds or sukuks that are not obligatory to convert into shares, the owner of the bond or sukuk alone has the right to accept the conversion or receive the nominal value of the bond or instrument.

4.As an exception to the provisions of Articles (196, 199, 200, 201) of this Decree-Law, the company, pursuant to the special decision issued approving the issuance of bonds or sukuk convertible into shares, may increase its capital by converting those bonds or sukuk into shares in its capital.

8- Allowing branches of foreign companies licensed in the country to transform into a commercial company with UAE citizenship.

Where the decree-law mentioned in Chapter Nine (Foreign Companies)Applicability of the law to foreign companies, the conditions for their practice of their establishment, and the procedures for registering foreign

companies in the country.

Articles 335 to 339.


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