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The UAE has introduced significant updates to its Companies Law, bringing in new rules that impact business owners, investors, and entrepreneurs. These changes make company structuring easier, reduce compliance burdens, and create more growth opportunities.
Key Changes in UAE Business Regulations: New UAE Companies Law
1. Easier Company Structuring
● Public Joint Stock Companies (PJSCs) can now issue shares at a discount, subject to shareholder approval.
● PJSCs can now split into multiple businesses, which was previously not allowed. This makes restructuring simpler and more flexible.
2. Updates for Limited Liability Companies (LLCs)
● New Governance Rules: If an LLC board’s term expires and no new board is appointed, the company can continue operating for six months before the authorities intervene.
● Supervisory Board Requirement: LLCs with 15 or more partners must now appoint a Supervisory Board to oversee financial reports and compliance.
● Reduced Reserve Requirement: Businesses are now required to allocate only 5% of net profits to reserves, instead of the previous 10%.
3. Corporate Social Responsibility (CSR) Expansion
Companies now have greater flexibility in contributing to CSR initiatives. The previous restrictions on donations and operational timelines have been removed, allowing businesses to allocate funds towards social causes more freely.
4. M&A, IPO, and SPAC Reforms
● Mergers & Acquisitions (M&A) rules are now more streamlined, allowing businesses to issue shares at a discount or premium to attract investors.
● The IPO process has been updated, making it easier for companies to go public.
● Special Purpose Acquisition Companies (SPACs) now have a legal framework, allowing businesses to merge with private companies and list on the stock exchange.
Why These Changes Matter for Entrepreneurs
These updates make business setup and expansion more attractive and flexible in the UAE.
Entrepreneurs should ensure compliance with the new regulations to avoid penalties and take full advantage of new opportunities.
For expert guidance on setting up your business, contact us today!
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