The second part of the project law on federal companies in the UAE, along with the notes of Dr. Hisham Fawzi:
Excellency, the Chairman:
“.3 The company may retain an electronic copy of the originals of any documents and papers deposited and preserved with it according to the controls issued by a decision of the Minister.”
Reason for introducing this clause: This clause was added to accommodate international indicators regarding the ease of corporate operations by facilitating shareholders’ recourse to litigation and the speedy availability of information and documents during trials. It also aligns with the governance principle within the framework of rapid information exchange to preserve shareholders’ rights without delay. The amendment came to complement and confirm the provisions of the Electronic Transactions and Commerce Law.
Dr. Hisham Mohamed Fawzi: (Legal Advisor to the Council)
Excellency, the President, the matter is simple, and the answer is in Article (331), which states: “Except for the mutual termination company, do not hear in denial and no legal excuse once the three years have elapsed lawsuits arising before the liquidator due to liquidation acts and lawsuits arising before partners or managers of the company or board members or auditors due to their functions,” so the period is three years and it is very reasonable for a five-year period to retain records, thank you.
Excellency/Sultan Juma Al Shamsi:
The Proposed Text: “If agreed in the company contract to deprive one of the partners of profit or exempt him from loss … We want to add the following … Or receiving a fixed benefit for his share in the company” If they lost or earned, he is committed to a fixed interest rate, thank you.
Excellency, the President:
Please, the legal advisor.
Dr. Hisham Mohamed Fawzi: (Legal Advisor to the Council)
The truth is that this addition does not harm, and it is called “the condition of the lion,” meaning that profit or a fixed percentage can be stipulated, so it can be useful, and it is also permissible to hear the opinion of the ministry, thank you.
Excellency, the President:
Please, the government advisor.
Dr. Hisham Mohamed Fawzi: (Legal Advisor to the Council)
My point is that this is void, we affirm the void, meaning this is a third case of void, and Your Excellency says void, and we say the same thing too, thank you.
Excellency, the President:
Please, Your Excellency the Minister.
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Dr. Hisham Mohamed Fawzi: (Legal Advisor to the Council)
Excellency, this means that we must include other cases as well, thank you.
Excellency, the President:
If the Ministry’s point of view is that profit also includes these, please, the government advisor.
Dr. Ayman Hekal: (Legal Advisor at the Securities and Commodities Authority)
Excellency, sometimes there are joint-stock companies that issue types of shares eligible for them, so when we come to joint-stock companies, we find a text saying that the Cabinet may issue other types of shares other than ordinary shares, and these shares may be eligible for a fixed interest. The share may give a fixed interest but cannot sell the share. There are other types of shares that conflict with this article, so if we find an issue that it is prohibited or void to obtain a fixed interest, it means that I will not allow – basically – a certain type of shares to be issued, so we cannot add this issue to the article, thank you.
Excellency, the President:
So, brothers, do you agree with this item as it is without amendment?
(Agreement)
Excellency, the rapporteur:
Article (29) became Article (41)
Illustrative profits
“.1 It is not permissible to distribute illustrative profits to partners or shareholders, and the board of directors or whoever acts on its behalf is responsible before the partners or shareholders and the company’s creditors for this action.”
Dr. Hisham Mohamed Fawzi: (Legal Advisor to the Council)
Excellency, the first item talks about illustrative profits, the second item talks about distributing profits contrary to the provisions of the law, even if they are actual profit numbers because they are supposed to enter the legal reserve, and the third item says “does not deprive the partners or shareholders of profits …” So the best title for the title is “Company Profits” and not “Illustrative Profits,” and thus it is possible to amend the title here from “Illustrative Profits” to “Company Profits,” thank you.
Excellency, the President:
Does the Council agree to this proposal for the article title?
(Agreement)
Excellency, the rapporteur:
Article (41) became Article (47)
Access to records maintained by the registrar
“Subject to the provisions of this law, the interested parties may request from the registrar the following: .1 A copy of the data contained in the records maintained by the registrar.”
Dr. Hisham Mohamed Fawzi: (Legal Advisor to the Council)
This is a legal term, Excellency President, and the stakeholders are exactly like this, and the ministry determines them under the supervision of the judiciary if there is a problem, thank you.
Rapporteur:
Article (47) became Article (42)
Fees payable to the Ministry and the Authority
“The Council of Ministers issues, based on the proposal of the Minister and in coordination with the Ministry of Finance, a decision on the fees due to be paid by companies for the activities carried out by the Ministry and the Authority within the framework of implementing the provisions of this law.”
Dr. Hisham Mohamed Fawzi: (Legal Advisor to the Council)
Excellency, the clear answer to that is that the Constitution clearly states that taxes are by law, which are the amounts received by the state without performing any service, while fees may be based on a law, and the Constitution Article is clear on that, and the law allowing the imposition of the fee has been issued, so the law must set the rule and allow the administrative entity to impose it, and this is what happened in this article, and therefore the article is sound and constitutional, thank you.
Rapporteur:
Article (11) became Article (11)
Competing business for company business
“.1 The joint partner is not allowed without the (consent) of the remaining partners to practice for himself or for others an activity that competes with the company or to be a joint partner in another company.”
Dr. Hisham Mohamed Fawzi: (Legal Advisor to the Council)
Excellency, the consent is a condition for survival, and this condition when forming the company cannot be, and at any time he cannot be, so at the time of forming the company, he cannot be a joint partner at all, and after the formation of the company, he cannot enter into another company and be a joint partner, because the guarantee will decrease by (21%), because he has become a guarantor for another company and thus you want to protect the guarantee, thank you.
Rapporteur:
“.2 The manager is not allowed to engage in an activity similar to the company’s activity without written permission from all partners renewed annually.”
Dr. Hisham Mohamed Fawzi: (Legal Advisor to the Council)
The truth is that this issue will face us in many articles, so you cannot put a title for each article covering all the items listed under the article, so we put a title covering most of the items that agree in the field of the title, thank you.
Excellency, the President:
And now, does the Council agree to this item as provided by the government?
(Agreement)
Rapporteur:
Article (14) became Article (11)
Acceding partner
“If a partner joins the company, he is responsible with the remaining partners in solidarity for all his money about the company’s obligations before joining it, provided that the company discloses them to him in advance as he is also responsible with the remaining partners in solidarity for all his money about the company’s obligations following his joining it and any agreement between the partners, including the disclosure mentioned otherwise is not admissible against others.”
Dr. Hisham Mohamed Fawzi: (Legal Advisor to the Council)
Excellency, this is a correct note, the meaning is clear, “and every agreement between the partners otherwise” applies to all “is not admissible against others,” and thank you.
Excellency, the President:
And now, does the Council and the government agree on the article with this amendment?
(Agreement)
Rapporteur:
“.1 If the company consists of two partners and one of them withdraws, the other partner may within six months from the date of withdrawal registration in the commercial register enter a new partner or more into the company instead of the withdrawn partner, otherwise the company is considered dissolved as a matter of law.”
Dr. Hisham Mohamed Fawzi: (Legal Advisor to the Council)
The withdrawal, Your Excellency President, “unless he has registered the withdrawal” is the recall, as it does not record the commitments and registers the withdrawal, thank you.
Rapporteur:
Article (15) became Article (12)
Situations in which the company is dissolved
“.1 The company is dissolved in any of the following situations: (a) The agreement of the partners is to dissolve it, provided that the agreement of all partners is obtained and the decision is not made more than two months after the date of conclusion of the agreement to dissolve it.”
Dr. Hisham Mohamed Fawzi: (Legal Advisor to the Council)
Excellency, this is a correct note, “between the partnership” does not come and if the contract or document cannot be subject to the state, and if it is not also a document, the person who joins is not named, thank you.
Rapporteur:
Article (16) became Article (12)
Cancelling the company
“.1 The company is cancelled by a decision of the court, and the reasons for the cancellation and the distribution of its assets shall be established by the law.”
Dr. Hisham Mohamed Fawzi: (Legal Advisor to the Council)
This is a legal term, Excellency, and this is the reason, and if there is a problem, the court will be in charge, thank you.
Rapporteur:
Article (18) became Article (15)
Preparation of the final account
“.1 The partners shall prepare a final account within a maximum period of three months from the date of dissolution of the company and its announcement, and this account must be published in two local newspapers, and the partners shall bear the costs thereof.”
Dr. Hisham Mohamed Fawzi: (Legal Advisor to the Council)
This is a legal term, and “and the partners are responsible” is a financial term, and thank you.
Rapporteur:
Article (19) became Article (16)
Representation of the company after dissolution
“.1 After the dissolution of the company, the partners may not engage in any transaction that leads to the completion of the dissolution process and the distribution of its assets, except for transactions necessary to complete the dissolution process, and the partners are prohibited from carrying out acts of competition, either directly or indirectly, with the company.”
Dr. Hisham Mohamed Fawzi: (Legal Advisor to the Council)
This is a legal term, Excellency President, and the company is a financial term, and thank you.
Rapporteur:
Article (20) became Article (17)
Distribution of the remaining company funds
“.1 After the liquidation of the company’s assets and the payment of its debts, the remaining funds shall be distributed among the partners in proportion to their shares, unless the contract provides otherwise.”
Dr. Hisham Mohamed Fawzi: (Legal Advisor to the Council)
And the phrase “and the partners are responsible for it” is a financial term, and thank you.
