Cabinet Resolution No. (77) of 2022 Concerning Limited Liability Companies (economy and business law)

Article (1)  
Definitions  
For the purpose of applying the provisions of the present Resolution, the following words 
and expressions shall have the meanings assigned thereto respectively, unless the context 
requires otherwise:  
State (UAE)  : The United Arab Emirates.  
Ministry  : The Ministry of Economy.  
Minister  : The Minister of Economy.  
Competent 
Authority  : The local authority in charge of corporate affairs in the 
relevant emirate.  
Company  : A limited liability company.  
General Meeting  : Comprising the Company’s owner in case of a sole 
proprietorship or all partners in case that the Company is 
owned by several partners.  Cabinet Resolution of 20 22 Concerning Limited Liability Companies  2 
 Director  : A director authorized to manage the Company, duly 
appointed by virtue of the memorandum of association, a 
separate agreement, or a decision by the general meeting 
or otherwise.  
Board  : Board of directors.  
Registrar  : The Companies’ registrar, who is appointed by the 
Minister and who carries out his duties in the Ministry.  
Governance  : A set of controls, standards and procedures that achieve 
corporate discipline in the Company’s management, as 
per the international standards and techniques, by 
delineating responsibilities, duties, and scope of powers.  
Relevant Parties  : Any of partners, general manager, board of directors or 
members of the supervisory board, as the case may be, or 
the executive management or employees of the Company, 
whenever they have transactions or contracts with the 
Company constituting any conflict o f interests.  
Business Day  : A normal business day of the relevant Competent 
Authority.   
Decree -Law  : Federal Decree -Law No. (32) of 2021 on Commercial 
Companies.

Article (2)  
Applicability of the Resolution  
The  provisions of the present Resolution shall apply to limited liability  companies with 
regard to  the following:  
1. Procedures of the Company’s incorporation and management  in case of a sole 
proprietorship.  Cabinet Resolution of 20 22 Concerning Limited Liability Companies  3 
 2. Regulating the cases in which the provisions presc ribed for joint -stock compan ies are 
not applicable to the Company.

Article (3)  
Provisions Governing the Incorporation of  a Limited Liability  
Sole Proprietorship  
1. The terms and conditions for the incorporation of a limited liability sole proprietorsh ip 
shall hereby be established.  
2. Subject  to the provisions of Clause (1) above, the Competent Authority shall set the 
standards, terms,  and conditions  of the incorporation of a limited liability sole 
proprietorship , pertaining to matters where no particular provision is stipulated 
herein.  
3. A limited liability sole proprietorship  shall have a name derived from its object or its 
owner’s name followed by the abbreviation “L.L.C”  (a sole proprietorship).  
4. A sole natural or legal person may incorporate  a limited liability sole proprietorship or  
own the entire shares of an existing  limited liability company to be a limited liability 
sole proprietorship.

Article (4)  
Memorandum of Association of a Limited Liability Sole Proprietorship  
1. The  memorandum of associat ion of a limited liability sole proprietorship shall 
particularly include the following details:  
a. The Owner’s f ull name, nationality, date o f birth and place of residence . 
b. The Company’s name, a ddress, trade name (if any) and objects . 
c. The Company’s headquarters and branches (if any) . 
d. The Company’s capital  estimated value and method of estimation . 
e. The Company’ s commencement and expiry date s (if any) . Cabinet Resolution of 20 22 Concerning Limited Liability Companies  4 
 f. The Company’s management method,  along with indicating the names of  
authorized signatories authorized to sign on beh alf of the Company and their 
scope of powers . 
g. Commencement and expiry  of the fiscal year . 
h. Percentage  of profit and loss distribution (if any) . 
i. Any other details identified by the Competent Authority.  
2. If the Company’s memorandum of associa tion includes the name of the Director(s) , 
the full name, nationality, place of residence and powers shall be indicated.

Article (5)  
Procedures for Incorporating a Limited Liability Sole Proprietorship  
The following procedures shall apply to the incorporation of a limited liability sole 
proprietorship:  
1. An incorporation application shall be submitted to the Competent Authority on the  
approved form, accompanied by the required documents, and the prescribed fees 
shall be paid.  
2. The Competent Authority  may request the adjustment or completion  of any details or 
documents, pursuant to the provisions of the Decree -Law and the resolutions issued 
thereunder.  
3. The Competent  Authority shall issue its decision on the application for incorporating 
a limited liability sole proprietorship within (5) f ive Business Days from the date of 
submission of the application , completion of information and documents or 
introduction of adjustments. In case of rejection of the application, the rejection shall 
be reasoned; however, the expiry of the above time limit for decision on the 
application shall constitute an indication of rejection of the application.  
4. If the application is reject ed based on any of the case s referred to in Clause (3) above, 
the applicant or  his representative  may file a grievance before the Competent 
Authority within (15) fifteen Business Days. If the grievance  is rejected or not decided Cabinet Resolution of 20 22 Concerning Limited Liability Companies  5 
 on within (15) fifteen Business Days from the submis sion date thereof, the applicant 
may appeal the  same before the Competent Court, within (30) thirty days from the 
date of being notified of the rejection or the lapse of  such t ime limit, as the case may 
be.  
5. If the incorporation application is approved, the Competent Authority shall register  
the limited liability sole proctorship in the Commercial Registry and issue a trade 
license thereto.  
6. The Competent Authority  shall provide  the Registrar with a copy of the Company’s 
trade license and memora ndum of association via the electronic networking, as per 
the controls set by the Minister in this regard.

Article (6)  
Details  and Documents Required to be Retained at the Headquarters of a 
Limited Liability Sole Proprietorship  
A limited liability sole  proprietorship shall ret ain at its headquarters the following:  
1. A copy  of the memorandum of association and any updates or  amendments 
introduced thereto . 
2. A statement  of cash amounts and the nature and value of assets owned by 
shareholder s and the date of ownership . 
3. Any  other details , documents or records prescribed by virtue of the provisions of the 
Decree -Law and the impleme nting  resolutions thereof . 
4. Any other details or documents identified by the Competent Authority.

Article (7)  
Management of a Limited Liability Sole Proprietorship  
1. Subject  to the provisions related to  limited liability companies set forth in the Decree -
Law, a limited liability sole proprietorship  shall be man aged by one or more 
Director(s), as decided by the Owner in the Memorandum of Association.  Cabinet Resolution of 20 22 Concerning Limited Liability Companies  6 
 2. The Ge neral Meeting shall appoint the aforesaid Company’ s Director(s ) unless  the 
appointment is made  in the memorandum of association or  under a separate 
agreement.  
3. In case of multiple Director (s), the Owner may appoint th e board members and 
ident ify in their appointment decision  their number  and  capacities , including 
chai rman, vice -chairman,  and members.  
4. The  term of office of the Director(s) shall be identified in the appointment decision.  
5. The  powers of the Director or administrative/financial board s and other boards shall 
be identified in the memorandum of association or the appointment decision, 
includ ing the powers adequate to conduct the Company’ s business, take necessary 
actions to  preserve  its funds and work honestly and faithfully.  
6. If a Board member’s position becomes vacant, the Board may appoint an altern ative 
member;  provided that the appointment shall be presented at the first General 
Meeting  to approve the appointment or appoint another member, unless the 
memorandum of association provides for otherwise.

Article (8)  
Meetings of the Board  
1. The B oard shall hold its meetings as defined in the memorandum of association.  
2. The  Board ’s decision s shall be passed by the  majority of votes of attendees 
represented at the meeting. In the event of a tie, the meeting ’s chairman shal l have the  
casting vote, unless the memorandum of association provides for otherwise.  
3. Before  the Board calls for any Gener al Meeting, the Board shall hold its me eting at 
least (30) thirty days before the date of the General Meeting, and shall notify the 
shareholders , after the Board meeting is over , of the Board ’s decisions by virtue of a 
detailed notice.  The Owner shall b e notified of the date proposed for the General 
Meeting , agenda and topics  included in the agenda of the General Meeting.  Cabinet Resolution of 20 22 Concerning Limited Liability Companies  7 
 4. Details of the topics considered,  and decisions  taken, including any reservations of 
members  or dissenting opinions, shall be record ed in t he Board meeting minutes, 
which shall be signed by the members who attended the meeting and the meeting 
rapporteur.  If a member refrains from signing the minutes, h is objection s hall be 
recorded in the minutes and the objec tion reasons shall be mentioned if expressed. 
The  Board meeting  minutes shall be kept by the B oard rapporteur.

Article (9)  
Identifying  the Functions and Duties of the Executive Management  
The Board or the Director authorized  to manage a limited liability sole proprietorship, as 
the case may be, shall preserve its rights , exercise care as a prudent person would exercise  
and carry out all actions consistent with the Company’ s object and powers conferred on  
them .

Article (10)  
Governance  
A limited liab ility sole proprietorship shall create a corporate Governance and discipline  
system , as per the professional norms and in a manner  consistent with the nature of a sole 
proprietor ship, which shall be approved by the Owner, either directly or through a 
General Meeting.

Article (11)  
Accounts of the Company  
1. The  Company shall prepare regular accounts, as per the international accounting 
standards and p rinciples, so as to reflect a true and fair image about the Company’ s 
profits or losses for the fiscal year and the Company’s positions at the end of the fiscal 
year and  shall adhere to any requirements set forth in the Decree -Law and the 
resolutions issued in implementation thereof.  Cabinet Resolution of 20 22 Concerning Limited Liability Companies  8 
 2. The Company shall apply the international accounting s tandards and principles when 
its interim and annual accounts ar e prepared and  shall identify distributable profits.

Article (12)  
Appointment of the Auditor  
1. A sole proprietorship shall have one or more auditor (s) to be appointed and their  
remuneration shall be fixed by the General Meeting. The auditor shall  be registered 
with the Ministry and licensed by the Competent Authority to practice the  profession .  
2. The auditor shall be a ppointed for o ne renewable year through which he shall audit  
accounts of  the fiscal year.  
3. The  auditor shall practi ce his duties from the end of such  General Meeting to the end 
of the subsequent Annual General Meeting  (AGM ) and  shall comply with the 
provisions set forth in the Decree -Law and the resolutions issued in implementation 
thereof.

Article (13)  
Powers of the Auditor  
The auditor may, at all times, access all the Company’s infor mation, entries, books, 
records, documents and o ther papers . The auditor may ask for clarifications he deem s 
necessary  to per form his duties, and may also verify assets, rights,  and obligations. If the 
auditor is unable to practice  his powers and perform his duties, he shal l record  the same  
in a report to be presented to the Board or the Company’s Director, as the case may be. I f 
the Board or the Company’s Director, as t he case may be, fails to enable the auditor to 
perform his duties, the auditor shall send a copy of the repo rt to the O wner. If the auditor 
then is unable to perform his duties, his report sha ll be sent to the Competent Authority 
or be presented to the General Meeting.  
 
 Cabinet Resolution of 20 22 Concerning Limited Liability Companies  9

Article (14)  
Approval of the Balance Sheet  
1. Subject to article (94) of the Decree -Law, the Director,  or the Board, as the case may 
be, shall, after the balance sheet and the profit and loss statement are drawn up, obtain 
the approval of the Owner of the balance sheet and the profit and loss statement 
audited by the auditor , within the four months subsequent to the end of the fiscal year.  
2. If the Owner fails to approve the balance sheet and the profit and loss statement 
within the time limit specified in Clause (1) above, the Director or the Board , as the 
case may be, shall submit an application to the Competent Authority , within (7) seven 
days to be calculated from th e expiry date of the time limit set out in Clause (1) above , 
to call the Owner to consider the approval  of the balance sheet, the profit and loss 
statement and the powe rs mentioned in article (94) of the Decree -Law. The 
Competent Authority shall obli gate the Owner to decide on the approval, within a 
period not exceeding (1 0) ten days from the date on which the Owner  is notified . A 
copy of the balance sheet shall be lodged with the Competent Authority, in accordance 
with t he time limits prescribed by the Competent Authority .

Article (15)  
Annual Report of the Auditor  
1. The auditor shall present to the General Meeting a report containing the details and 
information set forth in the Decree -Law.  
2. The auditor shall attend the General Meeting  and shall read out his report at the 
General Meeting , explaining any obstructions or interventions by the Board which he 
faced while performing his duties. The  auditor’s report shall be independent  and 
neutral. The auditor shall give an opinion at the meeting on all matters related to his 
duties, particularly the Company’s balance sheet,  along with his observations on the 
Company’s accounts and financial position and any violations therein. The a uditor 
shall be responsible for  the validity of the data set out in his report. The  Owner may, Cabinet Resolution of 20 22 Concerning Limited Liability Companies  10 
 during the General Meeting, discuss the auditor’s report and seek his clarification on 
the matters mentioned therein.

Article (16)  
Sale of Shares  and Admission of Partners  
The following conditions shall apply to the sale of shar es or the admission of partners into 
a limited liability  sole proprietorship:  
1. The Competent Authority’s prior approval  of sale  shall  be obtained.  
2. Where no particular provision is stipulated in the present Resolution , all the terms, 
conditions and criteria of a limited liability Company  shall apply  in so far as being 
consistent with the nature of a limited liability sole proprietorship .  
3. If the ownership of shares is transferred  by inheritance, the Company shall remain 
effective for a temporary period  until the status is adjusted;  meanwhile, heirs shall 
appoint a per son who will manage the Company on their behalf, within a period not 
exceeding (6) six  months from the date of death. If the inheri tance proceeding s are 
completed, a limited liability sole proprietorship shall be conver ted into a limited 
liability company and  the shares shall be registered so as to achieve the same.  
4. A sole proprietorship  form shall cease when partners are admitted, and the Company 
then shal l be governed by the provisions of limited liability companies .

Article (17)  
Call ing for a General Meeting  
1. The General Meeting shall be h eld at the call of the Director or the Boar d of directors 
at least one time a year, within the four months subsequent to the end of the fiscal 
year. The General Meeting shal l be held at the place and time identified in the notice 
of meeting, subject to the provisions of the sole proprietorship.  
2. The Director or the Board, as the case may b e, may call for a  Gene ral Meeting, as they 
deem necessary.  Cabinet Resolution of 20 22 Concerning Limited Liability Companies  11 
 3. The Competent Authority, auditor or shareholder may submit an application to the 
Director or the Board, as the case may be, to call for a  General Meeting. In such case, 
the Director,  or the Board, as the case may be, shall call  for a  General Meeting within 
(5) five business  days from the date of submission of the  application. The General 
Meeting shall be held within a period of not less than (21) twenty -one days and not 
more than (30)  thirty days from the  date of call for the  meeting.  
4. If the General Meeting is called for before the meetin g date within a period less than 
the period set out in article (93) of the Decree -Law, the  call for a  General Meeting shall 
be deemed valid if approved by the shareholder.

Article (18)  
Distribution of Profits  
Subje ct to the provisions of a sole proprietorship , the Company shall deposit  cash 
dividends to the shareholder  as provided by  the memorandum of association.  The  
deposition of cash dividends may  not exceed  (30) thirty days from the date on which the 
approval of such dividends is issued.

Article (19)  
Introduction  of Items to the General Meeting Agenda  
Subject to the provisions of sole proprietorship s, the foll owing procedures shall apply to  
the introduction of any new item  to the General Meeting agenda:  
1. The introduction shall be in writing via an appl ication to be submitted and signed by 
the shareholder.  
2. Any  risky topics may be introduced by the auditor, the Director, the Board or otherwise  
to the General Meeting, accompanied by the supporting documents and information. 
The  provisions prescribed for regulating items and results of the General  Meeting shall 
apply to such introduction.   
 Cabinet Resolution of 20 22 Concerning Limited Liability Companies  12

Article (20)  
Deals  with the Relevant Parties  
Subject to the provisions of sole proprietorship s, the Company may conclude  deals with 
the Relevant Parties only in  any of  the following cases:  
1. Approval of the Director or the Board, as the case may be, if the deal amount is less  
than (5%) of the Company’s capital.  
2. Approval of the General Meeting by virtue of a special decision where the deal value 
is more than (5%) of the capital. The  Relevant Party may not vote on the General 
Meeting decision  issued with regard to such deal.  
3. The Director or  the Board, as the case may be, shall duly maintain regular accounting 
books t o reflect a true and fair image on the Company’ s business position and clarify 
its transactions. Such book s shall be maintained according to the internationally 
recogniz ed and applicable  accounting principles. The s hareholder may examine the 
accounting books and any documents related to a deal  concluded by the Company 
with a Relevant Party.

Article (21)  
Application  of the Provisions of Limited Liability or Joint -Stock 
Compan ies as Consiste nt with the Nature of Sole Proprietorship s  
Where no particular provision is provided herein , the general provisions of  limited liability 
compan ies and the provisions of joint -stock companies shall apply to limited liability sole 
proprietor ship s, in such  a manner not contradict ing with the nature of limited liability sole 
proprietorship s.  
  
 
 
 
 Cabinet Resolution of 20 22 Concerning Limited Liability Companies  13

Article (22)  
Provisions Governing Case s Where No Particular Provision on the 
Company is Provided and  Whose Nature is Inconsistent  with Joint -Stock 
Compan ies  
The follow ing cases shall be governed according to the standards and provisions 
prescribed therefor, as follows:  
1. Board Membership :  
The following provisions shal l apply to the board membership:  
a. Members  of the board of directors  shall be elected through the General Meeting 
by secret ballot unless  the Company’ s memorandum of association provides for 
otherwise.  
b. The  board of directors’ membership shall be terminated in any of the following 
cases:  
1. Death . 
2. Removal  from membership under a decision by the General Meeting . 
3. Resignation a ccepted by the General Meeti ng, without prejudice to the legal 
liability in that respect . 
4. Failure to disclose the direct conflict of interests , unless the General Meeting 
approves that the member  will remain in place and attend meetings , without 
having the deliberation or voting right, as long as a conflict  of interest exists . 
5. There is n o maximum period for membership in other boards of directors.  
2. The Relevant Parties, Deals and Transactions:  
a. Any  transactions or deals with the Relevan t Parties shall be presented to the 
General Meeting for approval if they exceed  (3%) of the Company’ s capital, and if 
less, such competence shall be vested in the board of direc tors or the board of 
executives if the Company has no board of directors , or in the g eneral  manager if 
the Company has no board of executives.  Cabinet Resolution of 20 22 Concerning Limited Liability Companies  14 
 b. Subject to Clause (a) above, the General Meeting may increase or decrease the 
aforesaid percentage, as per the  decision -making mechanism prescribed in the 
General Meeting.  
c. The Company shall create an automatically updated  register  in which contracts  
and  deals or transactions  to which any Relevant Part y is a party  or in which he has 
an interest.  
d. The Relevant Parties shall promptly disclose any of the transactions or contracts 
referred to in this Article.  
e. The Relevant Parties from among partners or the Board of Directors shal l not 
part icipate in deliberations or vot ing on decisions  on any transactions or contracts, 
as long as the conflict of interest exists.  
f. The Company shall include the transactions and contracts with the Relev ant 
Parties in the annual report and present the same  to the General Meeting.

Article (23)  
Monitoring the  Implementation of the  Resolution  
The Competent Authority  shall monitor the implementation  of the present Resolution.

Article (24)  
Publication and Entry into Force  
The present Resolution shall be published in the Official Gazette and  shall enter into force 
as of the day following the date  of its publication .   
 
Mohammed bin Rashid Al Maktoum  
Prime Minister   
Issued by Us:  
On: 18 Muharram 1444 AH  
Corresponding to: 16 August 2022 AD