The UAE Commercial Companies Law: Recalled To Life

UAE Federal Law No. 13 of 1988 enacts various amendments to the UAE Commercial Companies Law, Federal Law No. 8 of 1984 ("the Companies Iaw"), and brings that law into effect as amended after a suspension of several years. The amendments took effect upon publication in the Federal Official Gazette on 8 January 1989, and they provide for a two-year grace period from the effective date for existing companies to comply with the provisions of the law as amended. The amendments themselves do not represent major substantive changes to the law as previously enacted. Their principal purpose is to transfer primary authority for the establishment and supenision of UAE companies of all kinds from the Federal Government to authorities in the individual Emirates. From the point of view of most businessmen, therefore, the greatest significance of the amendments is not their specific provisions, but rather the fact that they appear to signal the likely implementation of the provisions of the Companies Law generally. If so, this will dramatically alter the forms of business available to local pariies and to joint ventures between foreign companies and local parties. In particular, the Companies Law provides for the routine establishment of companies having limited liability, whereas formerly, in the absence of any relevant statute, limited liability companies could be formed only by a decree from the Ruler of an individual Emirate, which had become increasingly difficult to obtain. As a practical matter, therefore, most foreign firms have engaged in joint ventures in the UAE in the form of partnerships with local individuals or entiiies. However, under the Companies Law the partnership form of business is reserved for UAE nationals only. As a result, existing joint venture partnerships will apparently be required to adjust their present structures to conform to the requirements of the law.