Understanding UAE's Corporate Laws: FAQs on Federal Decree-Law (32) of 2021 Answered

Federal Decree-Law No. (32) of 2021 signifies a crucial stride towards modernising UAE's commercial regulations

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Pavitra Shetty

Published on April 22, 2024, 11:48:26


corporate law, uae corporate law, federal decree law 32

Federal Decree-Law No. (32) of 2021, enacted on 20/09/2021, revolutionises the regulatory framework for commercial entities in the United Arab Emirates.

This law emphasises governance, shareholder protection and economic growth, setting high standards for corporate operations.

Here are your FAQs based on Federal Decree-Law No. (32) of 2021 which we have covered.

What is Federal Decree-Law No. (32) of 2021 About?

This decree law pertains to commercial companies in the United Arab Emirates, aiming to regulate various aspects such as governance, shareholder rights protection, foreign investment facilitation, and corporate social responsibility.

Which Companies Fall Under the Jurisdiction of this Decree-Law?

The Decree law applies to commercial companies established within the UAE. Additionally, its provisions extend to foreign companies establishing their head office, branch, or representative office in the UAE for conducting business activities.

Are there any Exemptions to the Application of this Decree-Law?

Yes, certain companies are exempted, including those wholly owned by the Federal or Local Government, companies operating in specific sectors like energy, and entities exempted under special federal laws or Cabinet decisions.

How Can Companies Exempted from this Decree-Law Adjust their Situation if they Engage in Certain Activities?

Exempted companies may need to adjust their status if they sell shares to the public, offer shares for public subscription, or list their shares on financial markets within the UAE.

What are Special Purpose Acquisition Companies (SPACs) and Special Purpose Vehicles (SPVs) Mentioned in the Decree-Law?

SPACs are public joint-stock companies approved by the Authority with the sole purpose of acquiring other companies, while SPVs are entities established to segregate obligations and assets for specific financing operations. Both types have special provisions outlined in the decree-law.

Who Oversees the Implementation of this Decree-Law?

The Ministry of Economy, along with other relevant authorities such as the Securities and Commodities Authority, plays a role in enforcing the provisions of this Decree-Law.

How Does this Decree-Law Contribute to the Development of the UAE's Economic Landscape?

By establishing clear regulations on governance, shareholder protection and foreign investment, this Decree-Law aims to enhance the business environment, bolster economic capabilities and align with global standards.

What are the Objectives Outlined in Article 2 of the Decree-Law?

The objectives include fostering development in the business environment, enhancing corporate governance, protecting shareholder and partner rights, promoting foreign investment inflow and encouraging corporate social responsibility.

How are Strategic Partners Defined within the Context of this Decree-Law?

Strategic partners refer to those who provide beneficial support to a company in terms of technical, financial, operational, or marketing aspects, as outlined in the provisions of the Decree-Law.

How are Decisions Made within Joint-stock Companies According to the Decree-Law?

Special decisions within joint-stock companies require a majority vote of shareholders who collectively own at least three-quarters of the shares represented in the general assembly meeting.

Federal Decree-Law No. (32) of 2021 signifies a crucial stride towards modernising UAE's commercial regulations. By prioritizing transparency and facilitating investment, this law paves the way for a vibrant and sustainable business environment.

Its implementation underscores the UAE's commitment to fostering economic development and attracting global enterprises

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