The new draft Companies Law as approved by the Federal National Council introduces some incremental reforms to the existing Companies Law , but mostly maintains the fundamental framework and features of the old provisions.
Whilst the New Law introduces some new concepts and approaches, most of the essential features of the Existing Law are maintained. Despite media speculation, the New Law applies the same conservative approach in relation to foreign ownership restrictions under the Existing Law, so foreign investors are limited to 49%. Also, the New Law does not allow sell-downs in IPO deals.
By the same token, the majority of board seats, including the chairman of the board, of public joint stock companies must be held by UAE nationals. Founders of public joint stock companies continue to be restricted by a lockup period of two years under the New Law, which defeats sell-down exist options in IPOs. Also, the New Law has not reformed the governance of limited liability companies through introducing a proper board of directors’ structure, but has maintained the old form of governance by “managers”. However, the restriction on the number of managers under the Existing Law has been lifted under the New Law.