New law on shareholder claims

According to the New Law, any shareholder who experiences harm as a consequence of one of the business’s officers acting in contravention of the Law’s requirements may sue the firm, its governing body, and senior management before the appropriate court.

Upon the issuance of a final judgment by the appropriate court, whether in favor or in opposition to the shareholder (the plaintiff), the company’s shareholder shall have the right to claim from the company all legal costs that he has spent, which have been included in the judicial and attorney’s fees paid in the lawsuit, provided that:

  •         He provides documentation to back up those legal costs.
  •         The shareholder’s (plaintiff’s) complaint is not frivolous, intended to harass the responding party or the firm and the shareholders it represents, or brought with the intent to extort money from them or to lower the value of their shares on the stock market.

Alterations to board member compensation

The company’s statute must specify how to determine the board members’ compensation in accordance with the New Law, as long as it doesn’t exceed 10% of the fiscal year’s net profits after deducting all depreciation and reserves. Whenever the company’s statute permits it and subject to the general assembly’s approval of payment of these fees, a board member may, as a special case and subject to the regulations announced by the SCA in this regard, be paid a lump sum fee not to exceed Dirham Two Hundred Thousand (AED 200,000) at the conclusion of the fiscal year in the following circumstances:

  1. a) The business’s inability to turn a profit.
  2. b) The salary and fees cannot be combined if the Company makes profits and the board member’s share of that profit is less than Dirham Two Hundred Thousand (AED 200,000).

The board of directors’ compensation shall be reduced by any fines assessed against the company as a result of the board’s failure to comply with the legislation or the company’s statutes during the preceding fiscal year. The general assembly is forbidden to reduce the board’s compensation if it determines that the fines were not the result of the board’s default or error.


We believe that the New Law related to Commercial Organizations has prepared the existing adaptable investment environment for a surge of fresh capital while also setting the stage for it to adapt to the requirements of upcoming enterprises in the area.

Corporate transactions like asset holding agreements, mergers alongside demergers, public deals, etc. will likely increase as a result of the creation of new corporate vehicles like the Special Purpose Acquisition business and Special Purpose Vehicle because the newly developed regulations will likely foster such activities.

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