The UAE cancels citizenship requirements for members of companies’ boards of directors and allows the establishment of acquisition companies. The move is part of a series of amendments to Commercial Companies’ Law aimed at facilitating business and attracting investment into the Gulf state.

The UAE Ministry of Economy said that the UAE will now allow the establishment of companies for the purpose of acquisition or merger.

The ministry added that other amendments include allowing branches of foreign companies to transform into Emirati commercial companies and cancelling citizenship requirements for members of companies’ boards of directors.

As per the previous laws only Emiratis were allowed to be in the position of chairman and the majority of the board members.

Emirates News Agency reported yesterday that the Ministry of Economy, in cooperation with the Securities and Commodities Authority (SCA), held an extensive media briefing to introduce three of the new economic laws that underwent largest legislative amendments of their kind in the history of the UAE and approved by His Highness Sheikh Khalifa bin Zayed Al Nahyan, President of the UAE, on 27th November 2021.

In total, amendments were made to more than 40 laws with an aim to further enhance the UAE's economic environment, investment and commercial infrastructures and to support the security and stability of the society, keeping pace with the country's future growth aspirations.

The updates include a number of new provisions that support the shift towards the new economic model in the country in accordance with the principles of economic openness, flexibility and proactiveness, and in line with the goals of the fifty. The law amendments include development of financing solutions for companies and restructuring operations and finding solutions to the challenges facing business activities in the country.

Most prominent provisions and amendments to the law:

• Allow the establishment of companies for the purposes of acquisition or merger, and SPVs, and establish a legal framework for these new legal forms and excludes them from some provisions of the Companies Law through a decision issued by the SCA to regulate the work of these forms of companies; ensure their effectiveness and economic feasibility; and enhance growth and positive impact on the business environment.
   
• Abolish the maximum and minimum percentage of the founders' contribution to the company's capital at the time of the public offering, and cancel the legal limitation of the subscription period, and leaving the two matters to what is specified in the prospectus.
   
• Eliminate the requirement for the nationality of the members of the board of directors and uphold the organization shareholders' decisions in the election of board members, in accordance with the terms and conditions set by the competent authority.
   
• Allow companies to transform into a public joint stock company and sell its shares or offer new shares in a public subscription without being restricted to a certain percentage, by following the price-building mechanism of the security.
   
• Allow companies to divide and create legal rules governing division operations, thus contributing to diversifying the company's activities and fields of work and increasing its projects and growth opportunities.
• Allow companies to determine the face value, and to determine the percentage of the offering.
• Find financing solutions for companies through the issuance of other types of shares.
• Allow branches of foreign companies licensed in the country to transform into a commercial company with UAE citizenship.

He pointed out that the new legislation represents key drivers for enhancing the flexibility of the economic climate, stimulating innovation, developing the intellectual property system, and increasing the country's attractiveness to companies, investors, entrepreneurs, talents and innovators from around the world in vital and strategic sectors.

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