Notes of Counselor Dr. Hisham Fawzy on the Federal Law Draft Regarding Companies in the UAE – Part Three
Chairman:
“.2 Except for the transfer of a partner’s share by inheritance or by court order, the company must rectify its status within three months from the date of notification; otherwise, the company shall be considered dissolved, and the partners therein shall be jointly and severally liable for the company’s debts and obligations arising from the date of the increase in the number of partners.”
There is an amendment; the term “bequest” has been deleted from this clause as it was considered an exception as a type of voluntary transfer of ownership. Therefore, the amendment is solely the deletion of the word “bequest.”
Dr. Hisham Mohamed Fawzy (Legal Counsel to the Council):
Your Excellency, we indeed proposed this text to the committee, and it is useful because individuals can transfer ownership voluntarily. For example, I can sell to fifty people and take them to court, and we proposed the idea to the committee, but it did not receive acceptance. However, it is beneficial, thank you.
Chairman:
So the proposal is: “Except for the transfer of a partner’s share by inheritance or by final court order, it relates to involuntary transfer of ownership,” finalized, linked to a person who has debts, thereby being arrested and receiving a court order, and the Ministry was unwilling to intervene in these details, so they did not accept this proposal, and the matter ended with its rejection…
Chairman:
Okay, now, counselor, tell us the sentence so that we can place it with this clause.
Dr. Hisham Mohamed Fawzy (Legal Counsel to the Council):
“Except for the transfer of a partner’s share by inheritance or by final court order relating to involuntary transfer of ownership,” thank you.
Chairman:
Okay, we finished with the bequest, and now, counselor, why was it canceled?
Dr. Hisham Mohamed Fawzy (Legal Counsel to the Council):
Combining final and stayed is not allowed; the word “stayed” suffices.
Chairman:
The word “stayed” means the end of matters, and as for canceling the bequest?
Dr. Hisham Mohamed Fawzy (Legal Counsel to the Council):
Let us finish with the matter. Point, Your Excellency; as for involuntary transfer of ownership, is it approved or not?
Chairman:
Not approved.
Dr. Hisham Mohamed Fawzy (Legal Counsel to the Council):
As for the bequest, it remains a voluntary act, Your Excellency, because you choose the bequest, which means you can leave fifty people a bequest; you do not choose death but choose the bequest, so if the number of partners increases in the sale, if they are increased, you must rectify your status. Therefore, the bequest takes on the effect of the sale and the Committee’s view is correct, thank you.
Chairman:
That is, by deleting the bequest? So, does the Council and the Government agree to delete the word “bequest”?
(Agreement)
Chairman:
“.2 Each partner may request the return of the share provided in item (1) of this article within thirty days of the director being notified of the agreed price, and in the event of disagreement on the price, the share is valued by one or more technical and financial experts knowledgeable about the share’s subject chosen by the competent authority upon request submitted by the retrieval applicant at their expense.
There is an amendment: deleting the letter “و” [waaw] at the beginning of the phrase, in addition to improving the formulation by adding the word “on the value” instead of “on the price.”
Dr. Hisham Mohamed Fawzy (Legal Counsel to the Council):
Your Excellency, for a limited liability company, it is not a monetary company and it is not a personal company. It is a blend between the two, where it collects on one end the funds and on the other end the people, and aspects of the people’s company in it include the impossibility of dealing with the provisions unless the partners grant them an opportunity to be reclaimed. Therefore, we were particularly careful about the expressions where we said the case of disagreement over value, not price, and thank you.
Article (29) became Article (21)
The post of manager in the company is free
“.1 Unless the company’s founding contract or appointment decision stipulates otherwise, the general assembly dismisses the manager by decision, whether the manager is a partner or non-partner, and the court may dismiss the manager based on a request by one or more partners in the company if the court finds a valid reason for dismissal.”
Without amendment.
Chairman:
Thank you, Brother Rashid, please, Mr. Counselor, with regard to the responsibility of managers in the company, there is the appointment contract, and Brother Rashid says, “Unless the company’s founding contract or the appointment contract”?
Dr. Hisham Mohamed Fawzy (Legal Counsel to the Council):
Yes, so that it is consistent with the second item.
Article (94) became Article (29)
Powers of the Supervisory Board
“The supervisory board shall examine the company’s books and documents, and may require managers at any time to submit a report on their management. This board monitors the budget, annual report, and profit distribution, and provides a report on this matter to the general assembly of the partners at least five days before its meeting.”
Without amendment.
Dr. Hisham Mohamed Fawzy (Legal Counsel to the Council):
Regarding the proposal of Mr. Member Rashid Al-Sharaqi, we believe that the text as it is is better. The text says, “The supervisory board shall examine the company’s books and documents, and may require managers at any time to submit a report on their management …” This sentence is clear as it is, followed by “… This board monitors the budget …” In monitoring, this action is legal and “this board” is the legal agent, and so it is important to mention here, and for this reason, the formulation received is better.
As for the authorization and it is, “The supervisory board shall examine or authorize whoever sees fit to examine the company’s books …” It is a good idea, Mr. President, and thank you.
Chairman:
The sentence needs re-formulation, so we are not going to say, “The supervisory board shall examine or authorize the books …” How would he authorize the books, so it must be reformulated if you want to include this meaning, please, Mr. Counselor.
Dr. Hisham Mohamed Fawzy (Legal Counsel to the Council):
The text should read: “The supervisory board shall examine or authorize others to examine the company’s books…” Thank you.
Chairman:
Thank you, Brother Counselor, for your clarification.
