The Ministry of Economy recently issued Ministerial Resolution 694/2016, which waives the requirement for limited liability companies (LLCs), joint liability companies and limited partnerships (collectively, the exempt companies) to amend their memoranda of association, as per the new Companies Law (Federal Law 2/2015).
Previously, the Companies Law stipulated that failure to amend the memoranda of association of mainland companies in order to bring them into line with the new Companies Law before the compliance deadline of June 30 2017 would result in the deemed dissolution of the company and the imposition of a fine of Dh2,000 per day of default.
The resolution applies only to LLCs, joint liability companies and limited partnerships. As such, joint stock companies must still amend their memoranda of association to align them to the new Companies Law.
The resolution states that new companies that are incorporated following the resolution coming into force must conform their memoranda of association to the Companies Law.
The resolution further states that the memoranda of association of exempt companies will continue to be valid and that any inconsistent provision will be deemed amended and replaced by the new Companies Law. In effect, this means that in the event of any conflict between a company's existing memorandum and articles and the new Companies Law, the new Companies Law will prevail.
The resolution will be a relief to many exempt companies, which were finding it difficult to bring their partners together to sign updated memoranda of association. That said, it is advisable for exempt companies to amend their memoranda of association in due course for ease of reference. In addition, memoranda of association will need to be updated to avail of the benefits stemming from the optional and commercially advantageous provisions in the new Companies Law, such as a shorter notice period for convening a general meeting and the flexibility to send such notice through means other than by way of registered post (eg, email or fax).
For further information on this topic please contact Franco Grilli, Priyasha Corrie or Sarra Alsamarrai at Fichte & Co by telephone (+971 4 43 57 577) or email (firstname.lastname@example.org, email@example.com or firstname.lastname@example.org). The Fichte & Co website can be accessed at www.fichtelegal.com.
This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.