19th June 2016
UAE companies have been granted an extension of one year to comply with the new Commercial Companies Law, Federal Law No. 2 of 2015, which came into effect on 1st July 2015. Originally, it was stated that existing UAE-registered companies had one year in which to comply or face being dissolved. However, the UAE Cabinet has granted an extension to 30th June 2017. According to a statement issued by the Ministry of Economy, 'the new deadline is in line with government efforts to facilitate business, enhance the role of the private sector, and to achieve a smooth transition to the new Companies Act'.
What do Abu Dhabi and Dubai companies need to do to comply?
At the time the law came into effect, we published an overview of the changes, CLICK HERE. However, we strongly advise that all companies should seek legal advice based upon their own situation.
In essence, companies need to update their Memorandum of Association (MOA) and Articles of Association (AOA) in line with the new law. It should also be noted that companies are now required to maintain up-to-date financial accounts in line with international accounting standards, which must be audited annually or face a AED50,000 fine.
What happens if companies don't act?
Since the law came into effect in 2015, it has been widely published that companies failing to adopt the required changes will be dissolved. However, according to Article 357 of the new law, for those companies failing to adjust in time, fees of AED2,000 per day will be incurred.
It is understood that this affects nearly 220,000 Limited Liability Companies (LLCs) across the UAE.
Written by Jenny Hunt, Founding Partner & CEO
Gateway Group Of Companies, Abu Dhabi & Dubai, UAE
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