CORPORATE COMPLIANCE

(as per UAE Company Law 8 of 1984)

Index: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. Synopsis Types of companies/legal forms Salient features of LLC Memorandum of Association Other documentation of LLC Management of LLC Supervision board Statutory annual reports General Meeting Invitation and Agenda of General Meeting Minutes of General Meeting Statutory audit and appointment of Auditors

Compliance with the UAE Company Law 8 of 1984

PREAMBLE
It is undeniable that current financial rescission has inclined the local and international businesses to focus more on the liquidity levels, potential risks and compliance issues. On the other hand, the governments of many developed countries have become more proactive in terms of development and implementation of up-to-date risk mitigation and risk management mechanisms. They are trying to protect and maintain their economies not only via the modification of the financial and commercial regulations but also through creation of additional attractive benefits and opportunities for potential investors and current businesses. The UAE is not an exception and it is constantly updating its legal, economic, social and IT sectors as per international standards. As far as UAE Companies legislation is concerned, has also become a matter of hot debates. The officials and the representatives of [private sector present more and more comments and suggestions on modification of commercial procedures and policies within the region to create more transparent, credible and protective business environment. However, not only the legislative database and related policies but also compliance monitoring procedures and anti money laundering mechanisms are expected to be modified (or developed and applied , where required) considerably. Therefore, Horwath Mak is happy to provide you with our presentation that may be useful for your current business purposes, and would help you to avoid any commercial compliance risks as well as subsequent costs or losses in business value.

Compliance with the UAE Company Law 8 of 1984

UAE Company Law 8 of 1984

1. Synopsis: The Company Law 8 of 1984 (hereinafter - the Law) consists of 329 articles. The Law is applicable to UAE businesses, excluding: companies incorporated in UAE Free Zones financial and insurance businesses (applicable to LLCs) oil/gas businesses operating in the field of drilling, excavation, marketing and transport companies operating in the field of producing electricity, gas and water desalination and the relative activities such as transport and distribution.

Compliance with the UAE Company Law 8 of 1984

UAE Company Law 8 of 1984

2. Types of companies/legal forms (Article 5): Limited Liability Companies General Partnership Commandite Joint Venture Public Joint Stock Companies Private Joint Stock Companies Commandite Limited by Shares

Compliance with the UAE Company Law 8 of 1984

Limited Liability Companies (LLC):

3. Salient features of LLC (Articles 22, 218, 220, 227, 230 and 255): LLC is the association of minimum 2 and maximum 50 partners. Each partner is only liable to the extent of their share in the equity capital. The partners participation should not be represented by negotiable certificates. Local partner (UAE National) shall have at least 51% of total equity capital (not applicable to businesses owned by the GCC Nationals). LLC cannot carry out insurance and banking services, and investment of funds for the account of others. Minimum paid-up equity capital amount: AED 300,000. Shares shall be comprised of AED 1,000 each and must be indivisible. LLC shall create statutory reserve and inject 10% of net profit on annual basis. If the reserve is equal to of the capital, the partners may suspend the injection. Public subscription for raising capital is not permitted.

Compliance with the UAE Company Law 8 of 1984

Limited Liability Companies (LLC):

4. Memorandum of Association (Article 11): Memorandum of Association and its subsequent amendments (hereinafter the MoA) shall be registered in the Register of Commerce. Otherwise it is deemed to be invalid with regard to the third parties. If the non-registration has resulted in any damage incurred by the LLC, the partners or third parties, the managers or its board members shall be jointly liable for indemnity.

Compliance with the UAE Company Law 8 of 1984

Limited Liability Companies (LLC):

5. Other documentation (Articles 21, 228 and 229): All contracts, correspondence, discharge receipts and announcements issued by the LLC shall contain (i) its name; (ii) hind; (iii) head office address; (iv) serial number as per the Register of Commerce; and (v) authorized capital & paid-up capital. Register of partners prepared as per relevant requirements shall be maintained by the LLC at its head office. The managers shall be jointly liable for the register of the partners and the credibility of its contents. Each January of a respective year, the LLC shall submit the particulars of the partners register to the Ministry of Economy and Commerce, and the Concerned Authority.

Compliance with the UAE Company Law 8 of 1984

Limited Liability Companies (LLC):

6. Management board (Articles 225 and 235): Management of LLC shall be performed by the person(s) called as the managers (partners or outsiders). Managers of the LLC shall apply for its entry in the Register of Commerce. Maximum number of managers is 5 persons. Managers shall be appointed under the MoA; or a separate contract for a limited or unlimited period. In case of failure to appoint the managers, they shall be appointed by the General Assembly of partners.

Compliance with the UAE Company Law 8 of 1984

Limited Liability Companies (LLC):

7. Supervision board (Articles 238) In case the LLC has more than 7 partners, supervision of the LLC shall be carried out by the Supervision board. The board shall contain at least 3 partners. The Supervision board shall be appointed by the MoA for a limited period. The Supervision board shall inspect the accounting books and documents, and carry out stocktaking of treasury, goods, financial papers and documents in support of the entitlements of the LLC. The Supervision board may also instruct the managers to submit the report on their activities, and control the budget, annual reports and distribution of the profits. The Supervision board shall at least in 15 days before its convention submit a report to this effect to the General Assembly of partners.

Compliance with the UAE Company Law 8 of 1984

Limited Liability Companies (LLC):

8. Statutory annual reports (Articles 240 and 241) The managers are responsible for preparation of the financial statements (i.e. balance sheet and profit & loss account) and annual report on activities and financial position of the LLC. Financial statements of the LLC shall be prepared within 3 months from the end of a financial year. Audited financial statements shall be submitted by the managers to the Ministry of Economy and Commerce, and Concerned Authority within 10 days from the date of approval.

Compliance with the UAE Company Law 8 of 1984

Limited Liability Companies (LLC):

9. General Meetings (Article 244 , 245, 246 and 248): LLC shall conduct a General Meeting comprised of all partners. The Meeting shall convene at the Invitation of the managers at least once per year within 4 months preceding the end of a financial year at a venue and date fixed in the MoA. Every partner has a right to attend the Meeting either in person or by proxy. The managers shall invite the General Assembly of partners to hold a Meeting if same be requested either by the Supervisory board or by a number of partners holding at least 1/4 of the equity capital.

Compliance with the UAE Company Law 8 of 1984

Limited Liability Companies (LLC):

10. Invitation and Agenda of General Meeting (Article 244 and 246): Invitations to the General Meeting shall be addressed by registered mail to each partner at least 21 days before the date of Meeting. The Invitation must include (i) agenda; (ii) venue; and (iii) date/time of the Meeting. In turn, the Agenda shall cover the following aspects: receive of (i) the annual managers report on the activities and financial position of LLC; (ii) the supervisory report; and (iii) the auditor's report. approval of the balance sheet and profit & loss account dividends subject to distribution appointment of the manager or the supervisory board members, and approval of their remunerations other issues within their jurisdiction as per provisions of the Law or the MoA

Compliance with the UAE Company Law 8 of 1984

Limited Liability Companies (LLC):

11. Minutes of General Meeting (Articles 249 and 250): Proper summary of the Minutes of all General Meeting deliberations shall be duly prepared by responsible person of LLC. Together with the General Meeting Resolutions the Minutes shall be entered in special register (minutes book) kept at the head office of the LLC. Partners (in person or by proxy) are authorized to inspect the special register as well as balance sheet, profit & loss account and annual report of the LLC. Resolution passed in the Meeting is deemed to be valid if passed by a number of votes representing at least 50% of the capital, unless otherwise stipulated by the MOA .

Compliance with the UAE Company Law 8 of 1984

Limited Liability Companies (LLC):

12. Statutory audit and appointment of auditors (Articles 150 and 253): LLC must appoint/re-appoint the auditors (who is accredited in the UAE) at the Annual General Meeting.* Management of the LLC shall present the annual managers report and audited financial statements to the partners, and then to the UAE relevant authorities. The auditor(s) shall attend the General Meeting to present their view on issues relating to their assignment (in particular with regard to the balance sheet) and read out the report (prepared as per the Law) before the attendees.

* Essential requirement for all UAE businesses, including the prospective registrants (licensees), www.dubaided.gov.ae

Compliance with the UAE Company Law 8 of 1984

Horwath Mak auditors and business advisors

About us We are pioneering auditor and business advisory firm with over 28 years of experience in the Middle East region. We are part of Crowe Horwath International, a global network of firms serving the globe from over 430 office locations across 88 countries worldwide with over 25,000 partners and staff. Crowe Horwath International is ranked the 9th largest accountancy network in the world, while Horwath Mak is one of the leading audit and business consultancy firms in the United Arab Emirates. We are the world leading consultant in the Hospitality, Tourism and Leisure sector. We have 13 offices within the UAE, two in the Sultanate of Oman and Iran, one each in London, India and Azerbaijan. We are always willing to add value to our clients business by combining our global capabilities with local business knowledge and skills. We are the best alternative.

Compliance with the UAE Company Law 8 of 1984

Horwath Mak auditors and business advisors

Our services Today, Horwath Mak has emerged as one of top ten multidisciplinary practices in the region. We have a reputation for rendering comprehensive portfolio of the requested quality services to our clients operating in public and private sectors. Our portfolio includes the following types of professional services:** Audit & Assurance Business Advisory Risk Management (including Compliance Audit, Review and Due Diligence) Corporate Finance (including Business Valuation, Due Diligence and Feasibility Studies) Hospitality Tourism & Leisure (Including Planning & Development, Asset Management, Operational Advisory and Financial Restructuring) Family Office Services (including Process Improvement, Planning and Restructuring) Taxation Company Formation and Intellectual Properties Executive Resourcing (Recruitment)
** In addition, we also have strong credentials with local and regional businesses and financial institutions, and are happy to provide our assistance to our clients and potential investors who are looking for relevant business for investment purposes and/or funds.

Compliance with the UAE Company Law 8 of 1984

Horwath Mak auditor and business advisor

Our contact details Saad Maniar - Managing Partner (FCCA) D: +971 4 323 0340 F: +971 4 323 0341 M: +971 50 551 7590 E: saad@horwathmak.com www.horwathmak.com We are happy to be of service,

Compliance with the UAE Company Law 8 of 1984

Horwath Mak auditor and business advisor

Disclaimer This presentation has been prepared to provide an understanding of general aspects on the UAE corporate compliance issues. All information presented herein is based on public sources. While efforts have been made to avoid errors or omissions in this publication, any mistake, error or discrepancy noted may be brought to the notice of our office. Detailed advice should be obtained before taking action, or refraining from taking action, as a result of information in this publication, as Horwath Mak its UAE offices, overseas offices or ancillary offices will not be responsible for any damage or loss of action to anyone, of any kind, in manner there from. It is therefore strongly recommended that potential clients contact Horwath Mak or any of its offices to obtain the most recent information and appropriate professional business advisory or audit service.