The UAE Cabinet recently approved a proposal by Sultan bin Saeed Al Mansouri, Minister of Economy, to extend the grace period for compliance with certain aspects of the new UAE Commercial Companies Law (Federal Law No. 2 of 2015) ("New Law") by one year. As a result, companies now have until 30 June 2017 to adjust their positions and amend their memoranda of association in compliance with the New Law.
Article 374 of the New Law allowed existing companies a 12 month grace period during which they were required to "adjust their positions". This meant that companies essentially needed to amend any conflicting provisions in their current memoranda of association/agreement of incorporation by no later than 30 June 2016. As a result of the recent adjustment, the grace period has been extended to 30 June 2017. With the prior deadline fast approaching, this announcement will come as a relief to many companies, particularly given the ramifications of non-compliance - dissolution and a daily fine.
It is however important to note that the New Law, which came into force on 1 July 2015, remains applicable to commercial companies in the UAE. The extended grace period does not mean that companies no longer need to comply with the New Law for a further year. Where a new action is to be taken by a company which is not the subject matter of the company's existing memorandum of association, that action must be carried out in compliance with the New Law.
DLA Piper has been working closely with our clients over the past 18 months to ensure compliance under the New Law. To download a copy of our briefing note on the New Law click on the link below. Alternatively, please contact us to discuss aspects of compliance as they relate to your business.