Postponement of Anti-concealment Law

The UAE Companies Law (8/1984) concerning commercial companies (as amended) provides for seven types of entity through which business may be conducted in the United Arab Emirates. This excludes free zone entities which may be established in any of the UAE free zones and which generally require further licensing onshore in the United Arab Emirates in order to conduct business outside of the free zone in which they have been established. Of the seven entities, the limited liability company (LLC) is the form most commonly adopted by foreign investors in order to conduct business in the United Arab Emirates. However, pursuant to Article 22 of the Companies Law, no fewer than 51% of the shares of an LLC must be held by a UAE national or a company wholly owned by UAE nationals. As a consequence, a foreign investor is unable to own 100% of an LLC. Whereas in certain other jurisdictions this problem of a foreign investor having to cede control of its LLC to a UAE national could be solved by issuing different classes of share, the Companies Law does not allow for different classes of share. Article 227 of the Companies Law specifically states that the share capital of LLCs must consist of equal shares and Article 245 provides that each shareholder must have a number of votes equal to the number of shares it owns or represents.

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