The UAE Legal Company Frame work: A Guide on new laws

Company Laws under the supervision of federal authorities of the UAE define how an organization must operate and go into detail on how businesses should be handled to prevent defaults that could harm a business venture’s ability to operate effectively. To ensure accountability and transparency, the law is essential.

You have a duty as a responsible businessperson to abide by the laws that

  • Control your company
  • Safeguarding consumer, labor, and rights to intellectual property
  • Safeguard the environment, human health, and safety
  • Control the free zone where your company is located.

In order to keep up with the changes that have occurred and to entice investors, the UAE hasreleased the new Commercial Companies Laws. In this blog, we’ll discuss the board of directors’ liability, shareholders’ claims, and board member compensation.

Liabilities of the board of directors

According to the New Law, any actions of fraud, misuse of authority, or disregard for the terms of this law or the business’s statute will subject the board members and executive management to liability towards the business, the shareholders, and third parties.

Any clause that states otherwise will be regarded as invalid. The general manager, executive manager, or CEO of the company, along with their deputies holding senior executive positions, will represent the executive management.

Other members of the upper management who have been appointed personally to their positions by the company’s board of directors will also represent the executive management. If an error results from a unanimous decision made by the board, then all of the members are liable as stated above.

Nevertheless, members who disagreed with a decision that was made by the majority and covered by responsibility would not be held accountable if their disagreement was recorded in the meeting minutes. If it can be demonstrated that a board member was either unaware of the choice or aware of it but failed to resist, then the person’s absence from the meeting during which it was made will not release him from culpability

If a choice made by the executive management is the cause of the error, then it will be their responsibility as previously stated. The chairman, board members, and executive management personnel of the company shall all be immediately removed from their positions, ipso jure, upon the delivery of a court ruling demonstrating that they have engaged in fraudulent or abusive acts, concluded transactions involving conflicts of interest, or violated the provisions of this legislation or the decisions made in its execution.

Moreover, the candidature of any such individual for membership in the governing board of directors of any state-chartered joint This Law shall control the terms and conditions of a member’s office on the board of directors of the company. SCA will call an executive session to elect an entirely new board in the event that every board member is dismissed.

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