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Staff Writer, TLR

Published on July 14, 2023, 17:41:00


Federal DecreeLaw 322021 Commercial Companies regulates management company law

Federal Decree-Law No. 32/2021 On Commercial Companies regulates the management of a company, the law states that a Manager or a member of the board of the Limited Liability Company is a pillar of the company and its most important employee.

 Article 47 of the Law provides for the dismissal of the manager; the manager may be dismissed by the company's memorandum of association or the employment contract that brought him on board. If no such term is specified, he may be dismissed by the general assembly or by submitting a justified lawsuit to a judge, depending on the circumstances, such as if he failed to prepare the company's annual balance sheet, profit and loss statement, annual report on business activity, or fraudulent acts.

 As per Article 92, there must be a general assembly and its invitation to convene must be given by the manager to all the partners, at least once a year, within the first four months after the end of the company's fiscal year, the general assembly must be called by invitation from the management or the board of managers. The general assembly typically reviews the budget when it meets at least once a year, or at the request of one or more partners who control at least 10% of the capital of the company. All of the partners must attend the general assembly of the Limited Liability Company.

 The corporation must receive a written request to review the accounts or invite the general assembly to meet as previously specified to do so. According to Article 27, every partner or shareholder in a company is entitled to a free copy of the most recent audited financial statements, the most recent audit report, and, if the firm is a holding company, a copy of the financial statements of the group. Within ten days of the request's filing date, the Company must answer.

 As per Article 51, the manager shall be liable for the damages caused due to any negligence or error committed by the manager upon the performance of his job or due to his failure to carry out his work with due care. A Manager who was chosen by the company's memorandum of association may be dismissed by shareholders in limited liability companies in case of failure of the manager to do his job efficiently and with due care, and a new Manager may be appointed through a shareholder resolution at a general assembly meeting.

 Managers need to remember that their role as a manager is to ensure that certain deliverables are being met in keeping with the company's strategic direction and when they fail to do so, because of a lack of ability or bad judgment, the companies need to fulfil their obligations by dismissing them.

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