Federal Decree Law No. (32) of 2021 on Commercial Companies (economy and business law)

Article (222 )  
Failure to Record Details in the Share Register  
If the name of any person or the number of the shares held by such person is not entered in 
the Company's shareholder register, or in case of any unjustified failure or delay to record 
the fact that a person is no longer a shareholder, the aggrieved person or any shareholder of 
the Company may request that the Company amend the particulars of the register, and the 
Company may reject the request for amendment. In such case, the aggrieved person shall 
then be entitled to resort to the courts.  
  
Article  (223 )  
Shareholder's Rights  
1. A shareholder in a Joint Stock Company shall have:  
A. All rights attaching to the share, particularly the right to a share of the profits and assets of the Company upon liquidation and to attend meetings of the General Assembly and vote on its resolutions, all in accordance with the terms and conditions provided by this Decree Law and the AOA of the Company.  
B. A right of access to the books and records of the Company and any documents 
pertaining to any of the Company's deals made with a Related Party with permission 
from the board of directors or pursuant to a resolution of the General Assembly or as  
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       provided by the AOA of the Company.  
2. The court may require the Company to provide specific information to a shareholder as 
long as this does not conflict with the interests of the Company.  
3. Any resolution of the board of directors or the General Assembly of the Company that 
would prejudice a shareholder's rights under this Decree Law or the AOA of the 
Company or increase his obligations shall be invalid.  
  
Article (224 )  
Financial Aid  
1. It shall not be permitted for the company or any of its subsidiaries to provide financial aid 
to any person to enable them to hold any securities issued by the company. Financial aid 
shall, in particular, include the following:  
a. Providing loans.  
b. Providing gifts or donations.  
c. Providing the assets of the company as a security.  
d. Providing a security or guarantee for the obligations of a Third Party.  
e. Using any of the company's reserves, funds or profits for settling any of the obligations 
of such a person.  
2. Financial aid shall not include any securities, undertakings or compensations provided by 
the company to any underwriter during any offering of or subscription for the company's shares.  
3. Notwithstanding the provisions of Clause [1] of this Article, it shall be permissible for 
companies, which are licensed by the Central Bank to engage in financing business, to 
provide loans to any person to enable them to hold any securities issued by such 
companies. This shall be on condition that the loans it grants do not contain any preferential conditions not granted to its other clients, and without contradicting the 
Central Bank's applicable legislation and regulations.  
  
  
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       Article (225 )  
Strategic Partner's Contribution  
1. Notwithstanding the provisions of Articles [197, 199, 200 and 201] of this Decree Law, 
the Company may, under a special resolution, increase its Capital by bringing in a 
Strategic Partner. The board of directors of the SCA shall pass a resolution setting out the 
conditions and procedures for adding the Strategic Partner as a shareholder of the 
Company.  
2. The board of directors of the Company shall present to the General Assembly a study on 
how the Company would stand to benefit by bringing in the Strategic Partner as a 
shareholder in the Company.  
3. The SCA and the Competent Authority shall reject the Strategic Partner's contribution to 
the Company if such contribution would contravene the laws or regulations of the State 
or adversely affect the public interest.  
  
Article (226 )  
Conditions of Strategic Partner's Contribution  
1. Within three months of the date of the resolution to include a strategic partner as a 
shareholder of the company, the company's board of directors shall offer the shares to the 
strategic partner, subject to any conditions or controls set forth by the SCA in this regard.  
2. If the board of directors fails to offer the new shares to the strategic partner within the 
three -month period as set forth in Clause [1] of this Article or if the strategic partner fails to 
subscribe to such shares within a period not exceeding thirty [30] days of the date such 
shares were offered to the partner, the resolution by the General Assembly to increase the 
capital of the company to enter a strategic partner shall be deemed void ab initio.  
 
  
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       Article (227 )  
Capitalization of Cash Debts  
1. Notwithstanding the provisions of Articles [197, 199, 200 and 201] of this Decree Law, 
the Company may, under a special resolution, increase its Capital through the 
capitalization of its cash debit.  
2. The board of directors of the Company shall present to the General Assembly a study on 
the necessity to capitalize on such cash debits.  
3. Cash debits under this Decree Law are debits payable to the Federal Government, Local 
Governments, public authorities and corporations in the State, and banks and finance 
companies.  
4. The board of directors of the SCA shall issue a resolution on the procedure and the 
conditions of capitalization of cash debits.  
  
Article (228 )  
Share Incentive Schemes for Company Employees  
1. Notwithstanding the provisions of Articles [201, 200, 199 and 197] of this Decree Law, 
the Company may by Special Resolution increase its Capital in order to implement a 
share incentive scheme for its employees.  
2. The board of directors of the Company shall present the employee share incentive scheme 
to the General Assembly.  
3. Company Directors are not allowed to participate in the employee share incentive 
scheme.  
4. The board of directors of the SCA shall issue a resolution on the mechanism and the 
conditions of implementation of the employee share incentive scheme.  
  
Article (229 )  
Share Certificates  
1. Unless, after its incorporation, the company has listed its shares on any of the financial 
markets in the State, the board of directors shall, within three months of the date of  
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       registration of the company in the Commercial Register with the Competent Authority, 
issue share certificates instead of notifications of share allotment.  
2. Share certificates shall be signed by at least two directors, stating the name of the 
shareholder, the number of the shares subscribed to them, the method of payment for the shares' value, the amount paid of such value, the date of payment, the serial number 
of the certificate, the numbers of the shares held by the shareholder, the issued capital of 
the company, the headquarters and the term of the company and the date of the resolution authorizing the incorporation of the company. Such certificates shall 
substitute the shares. The share certificates may be issued, signed and kept electronically 
in accordance with the controls issued by the SCA in this regard.  
3. If the value of the share is to be paid in instalments, the obligation of the company to 
deliver the share certificate shall be deferred until the value of the shares has been paid 
in full. It shall not be permitted for shares that represent the in -kind contributions to be 
delivered until the ownership of such in -kind contributions has been transferred to the 
company.  
  
Article (230 )  
Loss or Destruction of Shares, Bonds or Sukuk Certificates  
1. If a share, bond or Sukuk certificate is lost or destroyed, the holder of the certificate in 
whose name the shares, bonds, or Sukuk are registered may request a new certificate in lieu of the lost or destroyed certificate. The owner shall publish the reference numbers of 
the lost or destroyed certificates and their quantity in two daily local newspapers, one of 
which is published in Arabic.  
2. If no opposition is filed with the Company within 30 days after publication, the Company 
shall issue to the holder of the former certificate a new certificate stating that it is in lieu 
of the lost or destroyed certificate. The new certificate shall grant its holder all rights and 
impose on him all obligations as were associated with the lost or destroyed certificate.  
  
  
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       Article (231 )  
Issuance of Bonds or Sukuk  
1. It shall be permissible for the company –  based upon prior approval of the SCA –  to issue 
negotiable bonds or Sukuk that are either convertible or non -convertible into shares in 
the company with equivalent values per each issue.  
2. The bond or Sukuk shall remain of a registered type until its value is paid in full.  
3. It shall not be permitted for bonds or Sukuk to be converted into shares unless the 
prospectus or issuance terms so provide. If conversion is decided for bonds or Sukuk 
which are not obliged to be converted into shares, the holder of the bond or Sukuk alone 
shall have the right to accept the conversion or to collect the nominal value of the bond or Sukuk.  
4. Notwithstanding the provisions of Articles [196], [199], [200] and [201] of this Decree 
Law, it shall be permissible for the company –  subject to the special resolution 
approving the issuing of bonds or Sukuk that are convertible into shares –  to increase its 
capital by converting such bonds or Sukuk into capital shares.  
  
Article (232 )  
Bonds / Sukuk Issuance Conditions  
1. The bonds or Sukuk or any other debt instruments shall be issued only based upon a 
special resolution by the General Assembly of the company. The company may delegate the board of directors to determine the date of issuing the bonds or Sukuk.  
2. The SCA shall issue a resolution to determine the conditions, controls and procedures of 
issuing the bonds, Sukuk or any other debt instruments.  
  
Article (233 )  
Capital Increase or Reduction after Issuance of Bonds or Sukuk  
Once a Special Resolution to issue convertible bonds or Sukuk has been passed, the Company may not, before the bonds or Sukuk are converted or paid for, reduce its Capital or 
increase the minimum dividends decided to paid to shareholders. Where a capital reduction  
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       is done on account of loss through the cancellation of shares or reduction of their nominal 
value, the Capital shall be reduced, as if the bondholders were shareholders.  
  
Article (234 )  
Profits of Bonds or Sukuk upon Conversion into Shares  
Shares received by the holders of bonds or Sukuk that have been converted into shares in 
the capital of the company shall have a share in the profits to be distributed for the fiscal 
year during which the conversion took place, unless the prospectus or issuance terms of 
such bonds or Sukuk provide otherwise.  
  
Article (235 )  
Maturity Date of Bonds and Sukuk  
The Company may not advance or defer the maturity date of bonds or Sukuk unless 
otherwise provided for in the resolution to issue the bonds or Sukuk and the prospectus. 
However, if the Company is dissolved for any reason other than merger, the holders of bonds and Sukuk may request to redeem their bonds or Sukuk before their maturity date. 
The Company may also give them this option. Either way, once they are redeemed, interest 
shall not be payable over the remaining period of the loan.  
  
Article (236 )  
Rights of Bond and Sukuk Holders  
The rights of holders of Company -issued bonds and Sukuk, which are not offered for public 
subscription, shall be set out in the agreement creating such bonds and Sukuk. Such 
agreement shall also include the procedure to be followed by the holders of bonds and 
Sukuk when holding meetings and appointing committees, voting rights and all the other 
related issues as well as the rules of their conversion into shares of Company stock if they 
are convertible .The SCA may issue a resolution governing the rights of the holders of bonds and Sukuk.   
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       Chapter Six 
Finance of Public Joint Stock Company   
Article (237 )  
Preparation of Fiscal Year's Accounts  
1. The board of directors of each Joint Stock Company shall prepare accounts for each fiscal 
year that include a balance sheet as at the data of the last day of the fiscal year and a 
profit and loss account.  
2. The accounts of the Company shall be prepared in accordance with the international 
accounting practices and standards. The accounts shall give a true and fair view of the profits or losses of the Company for the fiscal year and its affairs as at the end of the 
fiscal year and shall comply with any other requirements in this Decree Law and the 
relevant resolutions of the SCA.  
3. Financial statements shall be approved by being signed by the Directors or by the 
chairman and the auditor.  
  
Article (238 )  
Auditing of Fiscal Year's Accounts  
1. The auditor shall audit and prepare a report on the accounts for the fiscal year of the 
Company. The accounts shall be approved by the board of directors and presented to the 
General Assembly together with the auditor's report, within four [4] months of the end 
of each fiscal year of the Company.  
2. The Company shall provide the SCA and the Competent Authority with a copy of the 
accounts and the auditor's report within 7 days of the date of convening the General 
Assembly in which the accounts and the auditor's report were submitted.  
  
Article (239 )  
Accounting Practices and Standards  
The companies shall apply international accounting practices and standards when preparing  
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       their periodic and annual accounts and determining dividends.  
  
Article (240 )  
Publication of Annual Financial Statements  
The annual financial statements of the company shall be published according to the controls 
determined by the SCA and a copy thereof shall be deposited with both the SCA and 
Competent Authority.  
  
Article (241 )  
Statutory Reserve  
1. [10%] of the net profits of the Company shall be deducted each year and set aside to form 
a statutory reserve, unless the AOA of the Company provides for a higher percentage.  
2. The General Assembly may stop such deductions when the statutory reserve reaches 50% 
of the paid up capital of the Company, unless its AOA provides for a higher percentage.  
3. The statutory reserve may not be disbursed as dividends to the shareholders. However, 
reserves that exceed 50% of the Capital may be distributed as dividends in years in 
which the Company does not have sufficient net profits available for distribution at the 
percentage stated in the AOA.  
  
Article (242 )  
Voluntary Reserve  
The AOA of a Joint Stock Company may provide for the allocation of a certain percentage of 
net profits to create a voluntary reserve to be allocated for the purposes provided in the 
AOA. The voluntary reserve may not be used for other purposes except pursuant to a 
resolution of the General Assembly of the Company.  
  
 
  
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       Article (243 )  
Distribution of Profits 
1. The General Assembly of the Company shall determine the percentage of net profits to be 
distributed to the shareholders after deducting the statutory reserve and the voluntary 
reserve.  
2. A shareholder shall be entitled to his share of the profits in accordance with the guidelines 
laid down in a resolution of the SCA.  
3. Subject to Clause [1] of this Article, the AOA of the Company may provide for the 
distribution of annual, semiannual or quarterly profits.  
  
Article 244 Corporate Social Responsibility  
1. Subject to prior approval of the SCA, the company may, under a special resolution, decide 
to allocate a portion of its annual profits or cumulative profits for CSR purposes.  
2. The company shall disclose, on its website at the end of the fiscal year, whether or not it 
has performed its CSR duties.  
3. The auditor's report as well as annual financial statements of the company shall indicate 
the entity or entities benefitting from its CSR contributions.  
  
Chapter Seven   
Auditors of Public Joint Stock Companies   
Article (245 )  
Appointment of the Company's Auditor  
1. Every public joint stock company shall have one or more auditors to be nominated by the 
board of directors and approved by the General Assembly.  
2. The General Assembly shall appoint an auditing firm for a renewable one -year term, and it 
shall not be permitted for the board of directors of the company to be delegated in this 
respect. This shall be on condition that the auditing firm does not carry out the auditing in the company for more than six [6] consecutive fiscal years of the date it took over the 
auditing in the company. In this case, the partner responsible for the auditing in the  
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       company is required to be changed at the end of three [3] fiscal years. It shall be 
permissible for this auditing firm to be reappointed after the passage of at least two [2] 
fiscal years from the expiry date of its term of appointment. The founders of the 
company may, at the time of incorporation, appoint one or more auditing firms as approved by the SCA to perform its duties until the General Assembly's duties for the 
first fiscal year are completed.  
3. The General Assembly shall determine the remuneration of the auditor, and it shall not be 
permitted for the board of directors to be delegated in this respect, so that such fees are 
indicated in the company's accounts.  
  
Article (246 )  
Conditions Applicable to Auditors  
The board of directors of the SCA shall pass a resolution determining the controls for 
approving auditors for Public Joint Stock Companies. In particular, the auditor shall meet the 
following criteria:  
1. He shall be licensed to practice auditing in the State and shall have at least 5 years of 
experience in auditing Joint Stock Companies;  
2. He shall be a certified auditor registered with the SCA;  
3. He shall not be serving as both auditor and a partner of the company, nor may serve as a 
Director or in any technical, administrative or executive capacity with the Company;  
4. He shall not be a partner, agent, or second degree relative of any of the founders or 
Directors of the Company.  
5. He shall be an accredited auditor listed with the Central Bank if the Company is licensed 
thereby.  
6. He shall provide to the SCA a professional security if required by the SCA.  
 
Article (247 ) 
Issuance of Auditor's Report  
1. Subject to the provisions of the federal law regulating the audit profession, as amended,  
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       the auditor shall issue a report on the accounts audited by him. If the Company has more 
than one auditor, they shall assign the duties among themselves in order that each may 
submit a separate report based on his specific duties. The auditors shall then submit a 
common report for which they shall be jointly liable. Each auditor shall state his name on the report and shall sign it.  
2. The report shall indicate whether the accounts have been prepared in accordance with 
the provisions of this Decree Law and whether they give a fair view of the financial position of the Company.  
 
Article (248 ) 
Duties of Company's Auditor  
1. The auditor shall audit the accounts of the Company, inspect the balance sheet and the 
profit and loss account, review the Company's transactions with the Concerned Parties, 
and ensure the application of the provisions of this Decree Law and the AOA of the 
Company. The auditor shall submit a report on the result of such inspection to the 
General Assembly and forward a copy to the SCA and the Competent Authority.  
2. When preparing his report, the auditor shall verify the following:  
A. The accuracy of the accounting records kept by the Company.  
B. The extent of conformity of Company records with accounting records.  
3. The auditor may review all the records, paperwork and other documents of the Company. 
The auditor may require clarifications as he may deem necessary to perform his duties. 
The auditor may also verify the assets, rights and obligations of the Company.  
4. If no facilities are extended to the auditor to enable him to fulfill his responsibilities, the 
auditor shall note this in his report to the board of directors. If the board of directors fails to facilitate the auditing process, the auditor shall send a copy of the report to the SCA.  
5. A subsidiary and its auditor shall provide such information and clarifications as requested 
by the auditor of the holding company for the purposes of the audit.  
  
  
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       Article (249 )  
Confidentiality of Company's Information  
The auditor shall keep confidential all Company information that comes to his possession in 
the course of performing his responsibilities for the Company. The auditor shall not disclose 
such information to third parties or to the shareholders other than during the General 
Assembly, failing which, the auditor shall be dismissed, without prejudice to any civil or 
criminal liability.  
  
Article (250 )  
Securities Trading Prohibition Applicable to Auditor  
The auditor and his staff may not purchase Securities of the Company which he audits, sell 
such Securities directly or indirectly, or provide consultation to any person on such 
Securities, failing which, the auditor shall be dismissed, without prejudice to any civil or 
criminal liability.  
  
Article (251 )  
Notice of Offences and Violations  
1. The auditor shall notify the SCA of any violations of the provisions of this Decree Law or 
any violations which constitute a criminal offence, detected in the course of performing his duties for the Company, within 10 [ten] days of detecting the violation.  
2. If the auditor fails to comply with Clause [1] of this Article, the SCA may suspend the 
auditor from auditing Public Joint Stock Companies for up to a year or revoke his registration with the SCA, or refer him to the Public Prosecution if necessary. In all cases, the Ministry and the Competent Authority shall be notified accordingly.  
  
Article (251 )  
Contents of the Auditor's Report  
The auditor shall read out his report at the General Assembly Meeting in which the  
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       Company's balance sheet is considered. The report shall state whether the auditor has 
reviewed the information he deems necessary for the satisfactory performance of his duties 
and that the accounts were prepared in accordance with this Decree Law and reflect, in 
particular, the following:  
9. The position of the Company at the end of the fiscal year, particularly its balance sheet;  
9. The profit and loss account;  
9. The fact that the Company keeps regular accounts;  
9. Whether the Company has purchased any stake or shares during the fiscal year;  
9. The fact that the information contained in the board of Director's report is identical to the books and records of the Company;  
9. Deals giving rise to conflicts of interest and the Company's financial transactions with any of the Concerned Parties and the procedures taken in that respect;  
9. Whether, to extent of the information made available to the auditor, there were any violations of this Decree Law or the AOA during the fiscal year that would impact the activity or financial position of the Company, whether those violations still exist, and 
whether the Company was subject to any penalties as a result;  
9. Whether the Company was subject to any penalties due to violations of this Decree Law 
or the AOA of the Company during the fiscal year just ended and whether such 
violations still exist; and  
9. With respect to the accounts of a group, the financial position shall be described by the 
auditor at the end of the fiscal year and the profit and loss account of the holding 
company and its subsidiaries, including the consolidated statements as a whole as they 
relate to the related parties in the holding company.  
  
Article (253 )  
Removal of Auditor  
1. The Company may, under a resolution of the General Assembly, remove the auditor.  
2. The chairman shall notify the SCA of the resolution dismissing the auditor and the reasons 
for such dismissal, within 7 [seven] days of the resolution to dismiss.   
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       Article (254 ) 
Resignation of Auditor  
1. The auditor may resign during his term of office by serving a written notice upon the 
Company and the SCA. Such notice shall terminate his audit mandate with the Company 
as of the date when the notice is given or any later date stated in the notice.  
2. An auditor that resigns for any reason shall file with the Company and the SCA a 
statement giving reasons for his resignation. The Company's board of directors shall call the General Assembly to convene within 10 [ten] days of the date of resignation to 
consider the reasons for resignation and to appoint another auditor and determine his 
fees.  
  
Article (255 )  
Liability of Auditor  
The auditor shall be liable vis -à-vis the Company for his audit and the accuracy of the 
information in his report and for damages suffered by the Company due to acts performed by the auditor during the course of his duties. If there is more than one auditor, each of them 
shall be liable for his own fault that caused the damage.  
  
Article (256 )  
Liability Lawsuit against Auditor  
A liability lawsuit instituted against the Company's auditor shall be time barred upon the lapse of one year of the date of the General Assembly Meeting at which the auditor's report 
was read. However, if the act attributed to the auditor is a criminal offence, the liability 
lawsuit shall lapse only when the criminal case lapses.  
  
 
 
  
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       Part Five  
Private Joint Stock Companies   
Article (257 )  
Incorporation of Private Joint Stock Company  
1. A private joint stock company is a company where the number of the shareholders is at 
least two. The capital of the company shall be divided into shares with the same nominal 
value, to be paid in full without offering any shares for public offering. This shall be by 
signing the MOA and complying with the provisions of this Decree Law in connection with registration and incorporation. A shareholder in the company shall be liable only to 
the extent of their share in the company's capital.  
2. Notwithstanding the minimum limit of the number of shareholders as set forth in Clause 
[1] of this Article, it shall be permissible for a legal person to incorporate and hold a 
private joint stock company. The holder of the company's capital shall only be liable for 
its obligations to the extent of the capital of the company as set out in its MOA. The 
name of the company shall be followed by the phrase "Private Joint Stock – One Person 
Company (OPC)". The provisions of the private joint stock company as set forth in this 
Decree Law shall apply to this legal person, to the extent that does not conflict with the 
nature of such company. The Minister shall issue a resolution on the procedures of 
incorporation and management of the One Person Company (OPC) private joint stock 
company consistent with its nature.  
  
Article (258 )  
Capital  
1. The issued Capital of the Company shall not be less than [AED 5,000,000] five million 
dirhams and shall be paid in full. Such limit may be amended by a resolution of the 
Cabinet based upon the proposal of the Minister.  
2. Private Joint Stock Companies existing and registered with the Ministry prior to the date of 
entry into force of this Decree Law shall be excluded from the minimum Capital set out 
under Clause [1] of this Article.   
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       Article (259 ) 
Founders Committee 
1. The founders shall choose from among themselves a committee consisting of at least two 
members to complete the company incorporation procedures and registration with the 
competent bodies. It shall be fully liable for the accuracy, validity and completion of all 
the documents, studies and reports provided to the relevant authorities in connection with the incorporation, licensing, registration and recording process of the company. In 
the event of One Person Company (OPC), the founder shall act as the committee.  
2. It shall be permissible for the Founders Committee to delegate one of its members or a 
third party to monitor and complete the incorporation procedures with the Ministry and 
the Competent Authority according to the controls established by the Ministry in this 
respect.  
  
Article (260 )  
Submission of Incorporation Application to the Competent Authority  
1. The Founders Committee shall submit the  incorporation application to the Competent 
Authority, together with the MOA and AOA of the Company, the economic feasibility 
study for the venture to be set up by the Company and the proposed timetable for execution.  
2. The Competent Authority shall consider the incorporation application and issue an initial 
approval or rejection of the application. The Competent Authority shall notify the Founders Committee within 10 [ten] Business days after filing a complete application or 
filing the required documents or particulars. If the Competent Authority does not issue 
an initial approval by the above deadline, then the incorporation application shall be 
deemed rejected.  
3. The Founders Committee may appeal, before the competent court, against the Competent 
Authority's decision rejecting the application, within thirty [30] business days of the date 
of being notified of the rejection decision or, if no decision has been issued, of the expiry 
date of the deadline under Clause [2] of this Article.   
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       Article (261 ) 
Submission of Incorporation Application to the Ministry  
1. An incorporation application shall be filed with the Ministry, together with the Competent 
Authority's initial approval and the Company's MOA and AOA, the economic feasibility 
study for the venture to be set up by the Company, the proposed timetable for execution, 
and any approvals of the relevant authorities in relation to the application, according to the applicable requirements of the Ministry.  
2. The Ministry shall consider the incorporation application and notify the Founders 
Committee of its observations on the application and its supporting documents within 
10 [ten] business days of the date of filing the application or of the date of filing an 
assessment of the in -kind contributions, if any. The Founders Committee shall complete 
any deficiencies or make such amendments as the SCA may deem necessary to complete the incorporation application, within 10 [ten] Business days of the date of the notice, 
failing which the Ministry shall consider this as a waiver of the incorporation application.  
3. The Ministry shall send a copy of the application and its supporting documents to the 
Competent Authority within five [5] Business days of the date of filing a complete 
submission in order to be considered. The Ministry shall meet with the Competent 
Authority within five [5] Business days after sending a copy of the application to the 
Competent Authority. If the Competent Authority has any observations, the Ministry 
shall notify the Founders Committee which then has five [5] Business days to complete 
any deficiencies or make such amendments as the Competent Authority may require to 
complete the incorporation application, failing which the Ministry may consider this as a 
waiver of the incorporation application.  
4. Following the Ministry's approval, the Competent Authority shall issue a resolution to 
grant the license.  
  
Article (262 )  
Share Register Secretariat  
1. Private Joint Stock Companies shall maintain a register showing the names of the  
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       shareholders, number of shares held by each shareholder and any transactions on the 
shares. The register shall be delivered to the Share Register Secretariat.  
2. The SCA shall, in coordination with the Ministry, issue a resolution to regulate, supervise 
and monitor the work of the Share Register Secretariat.  
  
Article (263 )  
Certificate of Incorporation  
1. The Founders Committee, or its representative, shall apply to the Ministry for an 
incorporation certificate to be issued to the Company. The application shall be 
accompanied by the following documents:  
A. A bank certificate confirming that the issued Capital of the Company has been 
deposited;  
B. The attested MOA and AOA of the Company;  
C. A copy of the resolution of the Competent Authority granting initial approval for a 
license;  
D. A statement listing the names of the Directors of the Company and a written 
declaration on their part attesting to the fact that their membership does not conflict 
with the provisions of this Decree Law and the resolutions issued in implementation hereof;  
E. A statement listing the names of the members of the Internal Sharia Supervisory Committee and the Sharia Controller if the Company conducts its business in 
compliance with the rules of Islamic Sharia;  
F. A certificate confirming that the register of shareholders has been delivered to the 
Share Register Secretariat; and  
G. Any other documents as required by the Ministry.  
2. Once all the documents listed in Clause 1 of this Article have been provided, the Ministry 
shall issue a certificate of incorporation for the Company within 2 [two] Business days of the date of filing a complete submission.  
3. The Company's registration with the Ministry shall be published in accordance with the  
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       guidelines laid down by the Minister, at the Company's expense.  
  
Article (264 )  
Business License of the Company  
1. The board of directors of the Company shall, within five [5] business days of the date of 
an incorporation certificate being issued by the Ministry, commence the process of 
registering the company with the Competent Authority.  
2. The Competent Authority shall record the Company in the commercial register and issue a 
business license for the Company within 3 [three] business days of the date of 
completion of the documents and payment of the fees.  
  
Article (265 )  
Transfer of Shares  
1. Title to shares shall be transferred by recording the transfer with the Share Register 
Secretariat. Such transfer shall be invoked vis -à-vis the Company or third parties only of 
the date of such registration with the Share Register Secretariat.  
2. A private joint stock Company may not register any transfer of its shares other than with 
the Share Register Secretariat.  
3. The Share Register Secretariat may decline to register a transfer of shares in any of the 
circumstances provided under Article [214.2] of this Decree Law.  
  
Article (266 )  
Restrictions on Transfer of Shares  
1. Shares of a private joint stock Company may only be transferred after the publication of 
the balance sheet and profit and loss account for at least one fiscal year of the date of 
registration of the Company in the commercial register maintained by the Competent 
Authority. The provisions of this Article shall apply in connection with a capital increase 
prior to the end of the restriction period.   
Federal Decree Law No. (32) of 2021 on Commercial Companies  117 
       2. During the restriction period, such shares may be pledged or transferred by way of sale by 
a shareholder to another shareholder or by the heirs of a shareholder [if deceased] to a 
third party or by the bankruptcy trustee of a shareholder to a third party or under a final 
judgment.  
3. The Minister may issue a resolution to extend or reduce the restriction period mentioned 
in Clause 1 of this Article such that it is between six [6] months to two [2] years.  
  
Article (267 )  
Application of the Provisions Governing the Public Joint Stock Company  
Save for the provisions on public subscription, and in respect of matters not specifically 
provided herein, all the provisions of this Decree Law concerning Public Joint Stock 
Company shall apply to the Private Joint Stock Company, and the term "Ministry" shall 
replace the term "SCA" wherever mentioned.  
  
Part Six  
Holding and Subsidiaries Companies and Mutual Funds  
Chapter One   
Holding Companies  
Article (268 )  
Definition of the Holding Company  
1. A holding company is a Joint Stock Company or a Limited Liability Company that sets up 
subsidiaries in the State or abroad or controls existing companies, by holding shares or 
equity stake enough to enable it to control the management of the Company or 
influence its resolutions.  
2. The name of the Company followed by the words "holding company" shall appear on all 
stationary, notices and other documents of the holding company.  
  
  
Federal Decree Law No. (32) of 2021 on Commercial Companies  118 
       Article (269 )  
Objects of the Company  
1. The objects of a holding company shall be limited to the following:  
A. To hold shares or equity stake in Joint Stock Companies and Limited Liability 
Companies;  
B. To provide loans, guarantees and finance to its subsidiaries;  
C. To acquire real estate  and movable assets for its activities and operations;  
D. To manage its subsidiaries; and  
E. To acquire intellectual property rights from patents, trademarks, industrial drawings 
and designs or franchise rights, and to lease the same out to its subsidiaries or to other companies.  
2. Holding Companies may only conduct their activities through their subsidiaries.  
  
Article (270 )  
Accounting Records to be Kept by Subsidiaries 
A holding company shall take appropriate measures to ensure that subsidiaries maintain adequate accounting records to enable the Directors or the board of directors of the holding 
company to verify that the financial statements and the profit and loss account comply with 
this Decree Law.  
  
Article (271 )  
Subsidiary  
1. A Company shall be classified as a subsidiary of a holding company under any of the 
following conditions:  
A. If the holding company holds a controlling interest in the Capital of the Company 
and controls the composition of its board of directors; or  
B. If the Company is a subsidiary of a subsidiary of the holding company.  
2. A subsidiary may not hold shares in its own holding company. Any allotment or transfer 
of any shares in a holding company to any of its subsidiaries shall be null and void.   
Federal Decree Law No. (32) of 2021 on Commercial Companies  119 
       3. If a Company that holds shares or equity stake in a holding company becomes a 
subsidiary of such holding company, such Company shall continue to be a shareholder 
in the holding company, provided that:  
A. The subsidiary shall no longer have voting rights at meetings of the board of 
directors of the holding company or at meetings of its General Assembly; and  
B. The subsidiary shall dispose of its shares in the holding company within 12 [twelve] 
months of the date of acquisition of the subsidiary by the holding company.  
  
Article (272 )  
Fiscal Year of the Holding Company  
The holding company shall, at the end of every fiscal year, prepare a consolidated balance 
sheet, profit and loss account, and cash flow statement for the holding company and all its 
subsidiaries and shall present a balance sheet, profit and loss account and cash flow 
statement to the General Assembly, together with relevant notes and information, in accordance with the internationally accepted accounting and auditing practices and 
standards.  
  
Chapter Two   
Mutual Funds   
Article (273 )  
Establishment of Mutual funds  
1. Mutual funds shall be established in accordance with the terms and conditions set out in a 
resolution of the SCA.  
2. Mutual fund licenses issued by the Central Bank prior the effective date of this Decree 
Law shall be exempt from Clause [1] of this Article.  
  
 
  
Federal Decree Law No. (32) of 2021 on Commercial Companies  120 
       Article (274 )  
Legal Personality of the Fund  
The mutual fund shall have its own legal personality, legal form and independent financial 
liability.  
  
Part Seven   
Conversion, Merger, Divestiture and Acquisition of Companies"  
Chapter One  
Conversion of Companies  
Article (275 )  
The Principle of Conversion  
Any Company may be converted from any legal form into another, provided that its legal 
personality is maintained, in accordance with the provisions of this Decree Law and the 
regulations and resolutions regulating the conversion of companies, as issued by the 
Ministry or the SCA within their respective areas of competence, in coordination with the 
Competent Authority.  
  
Article (276 )  
Conversion of a Company into any other Legal Form  
1. Subject to the provisions of Article [299] of this Decree Law, a Public Joint Stock Company 
may be converted into a Private Joint Stock Company subject to the following conditions:  
A. The approval of the joint committee set up by resolution of the Minister among the Ministry of Economy, the Securities & Commodities Authority and the Competent 
Authority, to consider the application for conversion to a Private Joint Stock 
Company;  
B. The completion of five [5] audited fiscal years of the date of registration in the 
commercial register as a Public Joint Stock Company. After filing an application for  
Federal Decree Law No. (32) of 2021 on Commercial Companies  121 
       conversion into a Private Joint Stock Company, the Company may not file an 
application for converting back into a Public Joint Stock Company except after the 
completion of 5 audited fiscal years of the date of registration in the commercial 
register as a Private Joint Stock Company; and  
C. A Special Resolution of the General Assembly approving the conversion by the 
majority vote of shares representing 90% of the Capital of the Company.  
2. Save for Public Joint Stock Companies, a Company may convert into a General 
Partnership, a Limited Partnership, a Limited Liability Company or a Private Joint Stock 
Company subject to the following conditions:  
A. A duly passed resolution to amend the MOA and AOA of the Company.  
B. The completion of at least 2 audited fiscal years of the Company of the date of its 
registration in the commercial register.  
C. Unanimous consent of the shareholders if the application is for conversion into a Joint Liability Company.  
D. Completion of the applicable incorporation and registration process for the proposed 
conversion.  
  
Article (277 )  
Conversion into a Public Joint Stock Company 
Subject to the provisions of Article [275] of this Decree Law, the following conditions apply 
for conversion into a Public Joint Stock Company:  
1. The issued shares or equity stake shall be fully paid up or the partners shall have fully 
paid up their shares;  
2. The completion of at least two [2] fiscal years;  
3. A Special Resolution or any similar act to convert the Company into a Public Joint Stock Company.  
4. Any other conditions set out under a resolution of the board of directors of the SCA.  
  
  
Federal Decree Law No. (32) of 2021 on Commercial Companies  122 
       Article (278 )  
Supporting Documents for Conversion into a Public Joint Stock Company 
1. Any Company may be converted into a Public Joint Stock Company, based on an 
application filed using the SCA's standard form and signed by the authorized signatory of 
the Company.  
2. The following documents shall be attached to the application:  
A. Amended MOA and AOA of the Company;  
B. A resolution of the General Assembly or an equivalent body of the Company in question to be passed by the majority required to amend the MOA or AOA of the 
Company, approving any required Capital increase and the Company's conversion into a Public Joint Stock Company. A resolution of the partners or shareholders on 
conversion shall include any changes in the MOA or AOA of the Company, as 
necessary, including the name of the Company;  
C. Approval of the Ministry and the Competent Authority for the conversion of the 
Company into a Public Joint Stock Company;  
D. A balance sheet of the Company prepared as at a date not more than six [6] months 
before the date of the application for conversion, in addition to a copy of an 
unqualified report by the Company's auditors on that balance sheet;  
E. A written statement by the Company's auditors that, in their opinion, at the balance 
sheet date, the amount of the Company's net assets was not less than the aggregate 
of its called -up Capital and undistributable reserves.  
F. A valuation of the in- kind contributions of the Company, prepared in accordance 
with the provisions of Article [118] of this Decree Law.  
G. A declaration by a manager or the board of directors, as the case may be, confirming that:  
a. A resolution of the General Assembly of the Company or similar body approving the 
conversion has been passed and that all the other requirements of this Decree Law 
have been met; and  
b. Between the balance sheet date and the date of the application for conversion, there  
Federal Decree Law No. (32) of 2021 on Commercial Companies  123 
       has been no material change in the financial position of the Company; and  
H. Any other documents as required by the SCA for conversion.  
  
Article (279 )  
Announcement of the Conversion Resolution 
1. The Company shall announce the conversion resolution in two daily newspapers issued 
in the State; one of which is published in Arabic, within five [5] days of the date of the 
conversion resolution, and shall notify the shareholders or the partners and the creditors 
by registered letter.  
2. The announcement and the notice to the shareholders/ partners and the creditors as per 
Clause [1] of this Article shall include a statement confirming that the Company's creditors and the holders of bonds and Sukuk, as well as any interested shareholders or 
partners, shall have the right to oppose the conversion at the headquarters of the 
Company.  
  
Article (280 )  
Objection to the Conversion Resolution  
1. A partner or shareholder that opposes the conversion resolution may withdraw from the 
Company and redeem the value of his equity stake or shares, by making an application in writing to the Company within fifteen [15] days after publication of the conversion 
resolution. The value of the shares or equity stake shall be paid according to their market 
or book value at the date of conversion, whichever is higher.  
2. The shareholders/ partners, the creditors of the Company and the holders of bonds and 
Sukuk and any interested parties shall have the right to file an opposition with the Company within thirty [30] days after receiving notice of the conversion resolution and 
forward a copy of the opposition to the Ministry or the SCA, as applicable, and the 
Competent Authority, stating the subject matter and grounds of opposition and 
particularizing the damage allegedly suffered by the opposing party due to the 
conversion.   
Federal Decree Law No. (32) of 2021 on Commercial Companies  124 
       3. If, for any reason whatsoever, the Company fails to resolve the opposition within thirty 
[30] days of delivery of a copy of the opposition to the Ministry or the SCA, as applicable, 
and the Competent Authority, the opposing party shall have recourse to the competent 
court.  
4. The conversion resolution shall remain suspended until the opposition is waived or is 
rejected by final judgment of the court or the Company settles the debt if due or provides 
sufficient security for payment of the debt if deferred.  
5. Failure to oppose the conversion resolution within the time limit provided under Clause 
[2] of this Article shall be deemed an implicit acceptance of the proposed conversion.  
  
Article (281 )  
Sale of Ratio of the Company's Shares and Increase of its Capital upon 
Conversion  
1. The company, wishing to convert into a public joint stock company after the SCA's 
approval has been obtained and a special resolution has been issued by its General 
Assembly, may sell its shares and / or offer new shares at a public offering according to 
the controls to be issued by the SCA in this respect.  
2. The SCA shall issue a resolution setting out the controls and conditions of sale and 
offering of the shares at a public offering when the company is converted into the legal form of a public joint stock company.  
3. The shareholders or partners of the company wishing to convert into a public joint stock 
company shall bear all conversion -related expenses and costs until the procedures of the 
company's conversion and registration as a public joint stock company are completed with both the SCA and the Competent Authority. Such expenses shall include, among others, the valuation of the company and all charges and fees of the parties involved in 
the offering process, so that the shareholders subscribing for the public joint stock 
company may not bear such fees.  
4. Notwithstanding Article [217.1] of this Decree Law, the cash or in -kind contributions of 
founders of the company may be transferred after the company is converted into a joint  
Federal Decree Law No. (32) of 2021 on Commercial Companies  125 
       stock company as of the date of its listing on the financial market in the State or the date 
of being registered in the commercial register with the Competent Authority in case the 
company is exempt from being listed.  
  
Article (282 )  
Notification of the Conversion Resolution  
Subject to the provisions of Article [276] of this Decree Law, the Company shall submit a 
copy of the conversion resolution to the Ministry or the SCA, as applicable, and the 
Competent Authority, together with:  
1. Details of Company assets, rights and obligations and their appraised value; and  
2. A statement that the opposition has been settled or has expired.  
  
Article (283 )  
Results of Conversion  
1. Upon conversion, each partner or shareholder shall have a number of shares or equity 
stake in the new Company equal to the value of his shares or equity stake in the Company prior to conversion. If the value of the shares or equity stake of a partner or 
shareholder is less than the minimum nominal value of the new shares or equity stake, 
the difference shall be made up in cash, failing which such partner or shareholder shall 
be deemed to have withdrawn from the Company. The value of his shares or equity stakes shall be paid according to their market or book value at the date of conversion, 
whichever is higher.  
2. Upon its conversion and re -registration under its new legal form, the Company shall 
maintain its legal personality and its rights and obligations existing before the conversion. Conversion shall not relieve the General Partners from the obligations of the Company prior to conversion, unless so agreed in writing by the creditors.  
  
  
Federal Decree Law No. (32) of 2021 on Commercial Companies  126 
       Article (284 )  
Annotation of Conversion  
1. Upon approval of the conversion resolution by the Ministry or the SCA, as applicable, and 
the Competent Authority, the Registrar shall be informed to update the records 
accordingly.  
2. The Competent Authority shall record the Company in the commercial register and issue a 
business license according to the new form of the Company. The conversion shall be 
effective of the date of issuance of the business license.  
  
Chapter Two   
Merger   
Article (285 )  
Merger  
1. Notwithstanding the provisions of Articles [199, 200 and 201], the Company may, under 
a special resolution of the General Assembly or an equivalent body, even during the 
course of liquidation, merge with any other Company under a contract made between 
the merged companies.  
2. Subject to the applicable rules of the Central Bank, if a merger involves companies 
licensed by the Central Bank, the Minister shall issue a resolution defining the method, 
conditions, and the procedure of merger for all companies, excluding Public Joint Stock 
Companies, for which the board of directors of the SCA shall issue a resolution.  
  
Article (286 )  
Merger Agreement  
The merger agreement shall set out the conditions and method of merger, particularly the following:  
1. The MOA and AOA of the merging Company or the new target company;  
2. The name and address of each Director or the proposed manager of the merging  
Federal Decree Law No. (32) of 2021 on Commercial Companies  127 
       Company or the new Company.  
3. The method of conversion of the shares or equity stake of the merged companies into 
shares or equity stake in the merging Company or the new Company.  
  
Article (287 )  
Presentation of the Merger agreement to the General Assembly  
1. The Directors or managers of every merged and merging Company shall present the draft 
merger agreement to the General Assembly or equivalent body for approval by the majority necessary to amend the MOA of the Company.  
2. The General Assembly shall be convened to consider the merger subject to the following 
conditions:  
A. The notice of General Assembly Meeting shall be accompanied by a copy or 
summary of the merger agreement;  
B. The merger agreement shall clearly state that any one or more of the shareholders holding at least 20% of the Capital of the Company who opposed the merger shall 
have the right to object to the merger before the competent court within thirty [30] 
Business days after approval of the merger agreement by the General Assembly or 
equivalent body.  
 
Article (288 ) 
Merger of Holding Companies and Subsidiaries  
1. A holding company may merge with one or more of its wholly owned companies as a 
single Company without entering into a merger agreement. Merger shall be effected by Special Resolution of those companies, passed by the majority necessary to amend the 
MOA of each Company.  
2. Two or more companies wholly owned by a holding company may merge into a single 
Company without entering into a merger agreement.  
3. In the case of a merger involving a holding company, the provisions on merger set out in 
this Decree Law and its implementing resolutions shall apply to its wholly owned  
Federal Decree Law No. (32) of 2021 on Commercial Companies  128 
       subsidiaries.  
  
Article (289 )  
Redemption of Shares' Value 
1. Save for joint stock companies, partners and shareholders who oppose the merger 
resolution may request to withdraw from the Company and redeem their shares, by 
making an application in writing to the Company within fifteen [15] business days of the 
merger resolution date.  
2. The withdrawn shares shall be valuated by mutual agreement. In the event of 
disagreement on such valuation, the matter shall be referred to a committee appointed by the Competent Authority for this purpose for all companies, before recourse is made 
to the courts.  
3. The undisputed value of the withdrawn shares shall be paid to their holders prior to 
completion of the merger, before the committee mentioned in the preceding Clause is 
approached concerning the disputed value.  
  
Article (290 )  
Notice of Merger Resolution to Creditors  
Every merging Company or merged Company shall notify its creditors within 10 [ten] 
business days after approval of the merger by the General Assembly. Such notice shall:  
1. State that the Company intends to merge with one or more specific companies;  
2. Be given in writing to each creditor of the Company to notify him of the merger;  
3. Be published in two daily local newspapers issued in the State, one of which is published 
in Arabic; and  
4. State that any of the creditors of the Company or the [merging and merged] companies, the holders of bonds and Sukuk and any stakeholder shall all have the right to oppose the merger at the headquarters of the Company, and to forward a copy of the opposition 
to the Ministry or the SCA, as applicable, within thirty [30] days of the date of the notice.  
   
Federal Decree Law No. (32) of 2021 on Commercial Companies  129 
       Article (291 )  
Opposition to Merger 
1. A creditor that gives notice of opposition to the Company under Clause [4] of Article [290] 
of this Decree Law without his claim being paid or settled by the Company within thirty 
[30] days of the date of the notice, may apply to the competent court for an order to 
suspend the merger.  
2. If, when considering the application to suspend the merger, the court finds that a merger 
would be unfairly prejudicial to the interests of the applicant, the court may order a 
suspension subject to such further conditions as the court may deem appropriate.  
3. The merger shall remain suspended until the opposition is waived or is rejected by final 
judgment of the court or the Company settles the debt if due or provides sufficient security for payment of the debt if deferred  
4. Failure to oppose the merger resolution within the time limit provided for in Article 
[290.4] of this Decree Law shall be deemed an implicit acceptance of the proposed merger.  
  
Article (292 )  
Approval of Merger  
1. Upon approval of the merger resolution by the Ministry or the SCA, as applicable, the 
Registrar shall be informed to update the records accordingly.  
2. The Competent Authority shall update its records to reflect the termination of the Merged 
Company and notify the Ministry or the SCA, as applicable.  
  
Article (293 )  
Results of Merger  
Merger shall entail that the merged company or companies shall cease to exist as a corporate entity and be succeeded by the merging company or the new target company in 
respect of all rights and obligations. The merging company shall be a legal successor of the merged Company or companies.   
Federal Decree Law No. (32) of 2021 on Commercial Companies  130 
       Chapter Three  
 Company Divestiture  
Article (294 )  
Company Divestiture 
1. Without prejudice to all legal rules and procedures regulating the incorporation of 
companies, the divestiture of the joint stock company under the provisions of this 
Decree Law shall take place by splitting the company's assets or activities and their 
corresponding obligations and equity into two or more independent, separately -run 
companies. Notwithstanding the provisions governing the incorporation of joint stock companies set forth in this Decree Law, the Ministry or the SCA, as the case may be, shall 
issue the conditions, controls and procedures to be observed by the companies in 
respect of divestitures.  
2. The parent company and the new company shall each have an independent legal 
personality.  
3. The new company shall replace the parent company in respect of its rights and obligations 
within the limits of the stake transferred thereto, unless otherwise agreed with the 
creditors in respect of their debts.  
 
Article (295 )  
Types of Divestiture  
1. The divestiture shall be horizontal when the shares of the new companies are held by the 
same shareholders of the parent company before the divestiture and at the same equity 
stakes. The divestiture shall, on the other hand, be vertical when it involves the 
separation of part of the assets or activities into a new subsidiary company that is owned 
by the parent company. In both instances, the division of assets and obligations shall take place based on the book value, unless the Ministry or the SCA, as the case may be, 
approves any different method of valuation according to the controls to be issued in this 
respect. In addition, the shareholders' equity, capital, reserves and retained earnings shall 
be divided based on a special resolution to be issued by the General Assembly of the  
Federal Decree Law No. (32) of 2021 on Commercial Companies  131 
       Company. The company that survives and continues to operate under the same legal 
personality shall be labeled as the "parent company", while each separate company 
arising out of the divestiture shall be labeled "divested (new) company".  
2. The divestiture shall be carried out through issuance of the shares of the parent company 
in light of the post - divestiture net assets of the company, either by amending the 
number of shares or the nominal value of the share, and issuing new shares for the 
divested (new) company in light of its share in the net assets of the parent company.  
 
Article (296 ) 
The company's board of directors shall draw up the detailed draft divestiture plan, particularly the assets and liabilities that belong to the parent company and the new 
companies resulting from the divestiture, for submission to the General Assembly, 
accompanied by the following:  
1. The reasons underlying the divestiture;  
2. The method of dividing the assets and liabilities;  
3. The nominal value of shares of the new companies resulting from the divestiture;  
4. A report indicating the auditor's opinion on the detailed draft divestiture plan;  
5. Default financial statements of the parent companies and the new companies resulting from the divestiture based on the value of assets, liabilities, equity, revenue and 
expenses of the activities divided for two years prior to the divestiture, and accompanied 
by a report of the auditor's opinion.  
6. The draft amendment of the parent company's MOA and AOA, as well as the draft amendment of the MOA and AOA of the new companies resulting from the divestiture.  
7. A memorandum of the opinion of an independent legal advisor indicating how far the 
divestiture conforms to the applicable legal rules and how far the company complies 
with all applicable legal procedures.  
8. The agreements related to the post -divestiture creditors' rights with both the parent 
company and the new company and all actions taken with regard to the holders of bonds of all types.   
Federal Decree Law No. (32) of 2021 on Commercial Companies  132 
       9. In all cases, the financial statements shall be accompanied by an unqualified report by 
the company's auditor. The time span between the date of the financial statements 
based on which the divestiture is approved and the date of approval resolution of the 
General Assembly shall not exceed one calendar year.  
The General Assembly's approval of the divestiture shall be issued under a special 
resolution, unless the company's AOA provides for a higher percentage.  
  
Article (297 ) 
The company's board of directors shall obtain no objection from the Ministry or SCA, as the 
case may be, on the method of divestiture and detailed divestiture plan, particularly the 
assets and liabilities that belong to the new companies resulting from the divestiture, the 
default financial statements of each new company resulting from the divestiture based on 
the assets, liabilities, equity and revenue and expenses of activities.  
  
Article (298 ) 
Shares of the parent company shall be issued after the amendment is made, while shares of 
the new company shall be issued after the same is registered with the Competent Authority. 
A note shall be recorded in the commercial register indicating the amendment of the parent 
company's capital and confirming that the target company is registered in the commercial 
register based on prior approval of the Ministry or SCA, as the case may be.  
  
Chapter Four   
Acquisition   
Article (299 )  
Acquisition  
1. Any person or an associated group –  as determined by the resolution issued by the SCA in 
this respect – purchasing or carrying out any act that may lead to the acquisition of 
shares or securities that are convertible into shares in the capital of a public joint stock  
Federal Decree Law No. (32) of 2021 on Commercial Companies  133 
       company incorporated in the State, which has offered its shares for public offering or is 
listed in a financial market in the State, shall be required to comply with the provisions of 
the resolution issued by the SCA on acquisition.  
2. It shall be permissible for the conditions and procedures issued by the SCA to regulate the 
acquisitions to include a condition stipulating that any person whose ownership in the 
capital has reached the percentage determined by the SCA shall have the right to 
obligate the minority shareholders to assign their shares in the acquired company in such a person's favor. In addition to a condition stipulating that the minority 
shareholders holding the percentage determined by the SCA are entitled to obligate any 
person whose ownership in the capital has reached the percentage determined by the 
SCA, to accept the shareholders' assignment of their shares to such a person, in exchange 
for a financial consideration that is compatible with the provisions of the resolutions 
regulating the conditions and procedures of acquisitions issued by the SCA. The SCA 
shall execute the transfer of ownership of the securities assigned.  
3. It shall be permissible for the company –  under a special resolution –  to increase its 
issued capital in order to acquire an existing company and to issue new shares for the partners or shareholders in this acquired company. The acquisition shall be excluded 
from the provisions of Articles [201], [200]and [199] of this Decree Law.  
 
Article (300 )  
Breach of Acquisition Rules and Procedures  
Without prejudice to the right of the aggrieved parties to have recourse to the courts, if it is established that any person has breached the provisions of Article [299] of this Decree Law 
or the resolution issued by the SCA in this respect, the SCA may impose any of the following 
administrative sanctions:  
1. To send a notice of the violation and grant the violator a time limit for correction 
according to the mechanism determined by the SCA.  
2. To deprive the violator of running for candidacy to membership of the board of directors 
of the target company of acquisition until the correction is made or the action 
determined by the SCA is taken.   
Federal Decree Law No. (32) of 2021 on Commercial Companies  134 
       3. To suspend or invalidate the membership of the violator if they are a director of the 
company.  
4. To deprive the violator of voting at the meetings of the General Assembly, within the extent of such violation.  
5. Any other administrative sanctions determined by the SCA.  
 
 
Article (301 )  
Publication of Acquisition Resolution  
The company shall publish the acquisition on both the company's website and the financial market's website, if the company is listed on a financial market in the State.  
  
Part Eight   
Termination of the Company's MOA  
Chapter One   
Reasons for Termination of Companies   
Article (302 )  
General Reasons for the Termination of Companies  
Subject to the provisions on termination of companies, a Company shall be dissolved for any of the following reasons:  
1. Expiration of the term specified in the MOA or AOA of the Company, unless such a term is renewed in accordance with the rules set out in either document;  
2. Fulfillment of the objects for which the Company has been established;  
3. The depletion of all or most of the Company's assets, making it impossible to beneficially 
invest the remainder;  
4. Merger in accordance with the provisions of this Decree Law;  
5. The unanimous agreement of the partners to terminate the term of the Company, unless 
the MOA provides that a specific majority shall suffice; or  
6. A court order is issued to dissolve the Company.   
Federal Decree Law No. (32) of 2021 on Commercial Companies  135 
       Article (303 ) 
Dissolution of General Partnership and Limited Partnership  
Without prejudice to the rights of third parties, and subject to the provisions of this Decree 
Law and the contracts between the partners, the General Partnership and the Limited 
Partnership shall be dissolved for any of the following reasons:  
3. The death, bankruptcy or insolvency of any of the partners of the Company or his loss of 
legal capacity, unless agreed otherwise in the MOA of the Company which may provide 
that the Company shall remain a going concern with the heirs of the deceased partner, 
notwithstanding that all or any of them are minors. If the deceased partner is a General 
Partner while the heir is a minor, the minor shall be a Limited Partner to the extent of his 
share in the estate of the deceased, and the continuation of the Company shall not be 
conditional on keeping the minor's assets within the Company.  
3. If the only General Partner withdraws from the Limited Partnership; or  
3. If, for a period of six [6] months, the General Partnership remains with a single partner without adjusting its legal affairs.  
  
Article (304 )  
Continuation of General Partnership or Limited Partnership by Mutual 
Agreement  
1. Where no provision is made in the MOA of the General Partnership or the Limited 
Partnership for it to continue with the remaining partners after the withdrawal or death of a partner or issuance of a judgment of interdiction or declaring his bankruptcy or 
insolvency, the partners may, within 60 days of the date of occurrence of any of the 
above events, resolve unanimously to continue the Company between themselves. The 
partners shall register their agreement with the Competent Authority within the 
above -mentioned 60 -day time limit.  
2. If the Company continues with the remaining partners, the share of the withdrawing 
partner shall be assessed according to the most recent inventory, unless the MOA of the 
Company provides for another method of valuation. The exiting partner or his heirs shall  
Federal Decree Law No. (32) of 2021 on Commercial Companies  136 
       have no share in any new equity of the Company save to the extent that it arises from 
transactions which preceded his exit from the Company.  
  
Article (305 )  
Court Judgment Dissolving General Partnership or Limited Partnership  
1. A court judgment may be issued to dissolve a General Partnership or Limited Partnership 
upon the request of a partner, if the court finds good cause for dissolution. A court 
judgment may also be made to dissolve the Company upon the request of a partner due 
to another partner's failure to honor his commitments.  
2. If the reasons for dissolution arise from the acts of a partner, a court order may be made 
for his withdrawal from the Company. In such case, the Company shall continue 
between the remaining partners and the exiting partner's share shall be excluded after 
being assessed according to the most recent inventory or by any other method the court 
may wish to follow.  
3. Any provision depriving a partner from exercising his right to dissolve the Company 
through court shall be deemed void ab initio.  
  
Article (306 )  
Dissolution, Liquidation or Suspension of Activities of a One Person 
Company (OPC)  
1. The One Person Company (OPC) shall be dissolved upon the death or termination of the 
founding natural or legal person. However, the One Person Company (OPC) shall not be 
terminated upon the death of the natural person if the heirs decide to continue the 
Company after adjusting its legal position in accordance with the provisions of this Decree Law. The heirs shall then select a person to manage the Company on their behalf, 
within six [6] months after the date of death.  
2. If the owner of a One Person Company (OPC) liquidates the Company or suspends its 
activities in bad faith prior to the expiry of its term or the fulfillment of the objects for 
which it was established as set out under its MOA, the owner shall be liable for its  
Federal Decree Law No. (32) of 2021 on Commercial Companies  137 
       obligations from his own assets.  
  
Article (307 )  
Death or Withdrawal of Partner of a Limited Liability Company  
The death of a partner in a Limited Liability Company or his withdrawal by a judgment of 
interdiction or declaring his bankruptcy or insolvency shall not lead to its dissolution unless 
so provided for in the Company's MOA. The share of the partner shall be transferred to his 
heirs and a legatee shall be considered an heir.  
  
Article (308 )  
Losses of Limited Liability Company  
1. If the losses of a Limited Liability Company reach 50% of the Capital, the managers 
thereof shall put the matter of dissolution before the partners at a General Assembly. A dissolution resolution shall be passed by the majority necessary to amend the MOA of 
the Company.  
2. If losses reach 75% of the Capital, partners holding 25% of the Capital may call for 
dissolution of the Company.  
  
Article (309 )  
Losses of Joint Stock Company  
1. If the cumulative losses of a joint stock company reach half of its issued capital, the board 
of directors shall within thirty [30] days of the date of disclosing the periodical or annual 
financial statements to the Ministry or the SCA, as applicable, call a meeting of the 
General Assembly within thirty [30] days of the date of call, to take a decision on the 
meeting of the General Assembly. If it is not possible for this assembly to issue a decision, 
all interested parties may file a lawsuit before the competent court requesting to dissolve and liquidate the company according to the provisions of the Law.  
2. When inviting the General Assembly to convene according to the provision of Clause [1]  
Federal Decree Law No. (32) of 2021 on Commercial Companies  138 
       of this Article, the board of directors of the company is required to take into 
consideration the following:  
a. If the board of directors recommends the continuation of activity of the company's activity, the call shall be accompanied by the approved restructuring plan and report of auditor. The restructuring plan attached to the call shall include the feasibility 
study, plan of debt settlement and the time schedule for execution.  
b. If the board of directors recommends the dissolution and liquidation of the company 
prior to its prescribed term, the call shall be accompanied with the auditor's report, 
the company liquidation plan and its schedule approved by the board of directors of 
the company and its financial consultant, and nominating one or more liquidators as 
approved by the SCA.  
3. The board of directors shall supervise the execution of the restructuring plan and notify 
the SCA of each report every three [3] months with the results of the execution of this 
plan and its compliance with the schedule. It may, upon the approval of the SCA, appoint a financial consultant to assist it in preparing and executing the plan. The SCA may 
disqualify the financial consultant and appoint another if the consultant does not carry 
out the duties entrusted to them.  
  
Article (310 )  
Deregistration of the Company  
1. Without prejudice to the situations provided for in this Decree Law or in any other law, if 
the Ministry, the SCA or the Competent Authority, each according to its respective 
jurisdiction, confirms that the Company has ceased to conduct its business or that it conducts its business in violation of this Decree Law and its implementing resolutions, 
the Ministry, the SCA or the Competent Authority, each according to its respective jurisdiction, shall notify the Company that it will be deregistered within three [3] months 
of the date of the notice, unless good excuse is furnished.  
2. If, after the three [3] months period specified in Clause 1 of this Article, the Ministry, the 
SCA or the Competent Authority, each according to its respective jurisdiction, receives  
Federal Decree Law No. (32) of 2021 on Commercial Companies  139 
       confirmation that the Company's operations remain suspended, or that the Company 
has not shown good cause for the suspension, the matter will be referred to the 
competent court for the Company to be put into liquidation.  
3. The liability of the Directors, managers, shareholders and partners of the Company that is 
deregistered in accordance with the provisions of this Article shall continue as if the 
Company had not been dissolved.  
 
Article (311 ) 
Suspension of the Company's Registration  
1. Without prejudice to the cases set forth in this decree law or any other law, if the Ministry, 
SCA or Competent Authority, within their respective areas of competence, is convinced 
that the company has ceased to carry on its business or that the company has been 
carrying on its business in violation of the provisions of this decree law and the 
implementing resolutions hereof, the Ministry, SCA or Competent Authority, as the case 
may be, notify that the its registration will be suspended and that its license will be 
suspended within three [3] months of the notice date, unless the company furnishes an 
acceptable excuse.  
2. The Ministry, SCA or Competent Authority, as the case may be, shall deregister the 
company in case the suspension of registration continues for three [3] years, as of the registration suspension notice.  
  
Article (312 )  
Notice of Dissolution to Competent Authority and Registrar  
1. The entity responsible for managing the Company shall notify the Competent Authority 
and the Registrar of any event giving rise to the dissolution of the Company.  
2. If the partners agree to dissolve the Company, the agreement shall include the method of 
liquidation and the name of the liquidator.  
3. Upon dissolution or liquidation of the Company, no partner or shareholder shall be 
entitled to a share of its capital until its debts have been paid.   
Federal Decree Law No. (32) of 2021 on Commercial Companies  140 
       Article (313 ) 
Registration of Dissolution of the Company  
The managers, board chairman or liquidator of the Company, as applicable, shall have the 
dissolution of the Company recorded in the commercial register maintained by the 
Competent Authority and shall publish a notice of its dissolution in two daily local 
newspapers; at least one of which is published in Arabic. The dissolution of the Company shall become effective vis -à-vis third parties only as of the date of such registration.  
  
Chapter Two   
Liquidation of Company and Distribution of Assets  
Article (314 )  
Provisions Applicable to Liquidation  
Unless the MOA or AOA of the Company provides a specific procedure for liquidation or the 
partners agree otherwise upon the dissolution of the Company, the provisions of this Decree 
Law shall apply in the event of liquidation of the Company.  
  
Article (315 )  
Termination of Powers of Managers or Board of Directors  
The powers of the managers or the board of directors shall cease to exist upon dissolution of the Company. However, they shall continue to discharge their responsibility to manage the 
Company and shall act as liquidators vis -à-vis third parties until such time as a liquidator is 
appointed. The management of the Company shall remain during the period of liquidation, 
to such extent, and with such powers as the liquidator may deem necessary to discharge his 
duties as liquidator.  
  
Article (316 )  
Appointment of Liquidator  
1. Liquidation shall be conducted by one or more liquidators appointed by the partners or by  
Federal Decree Law No. (32) of 2021 on Commercial Companies  141 
       resolution of the General Assembly or equivalent body. The liquidator cannot also be an 
auditor for the time being of the Company and shall not have audited its accounts in the 
5 years immediately preceding his appointment.  
2. If the liquidation is based on a court order, the competent court shall specify the method 
of liquidation and appoint a liquidator. In all case, the liquidator's duties shall not 
terminate upon the death of a partner or a declaration of his bankruptcy, insolvency or 
interdiction, even if the liquidator was appointed by the partners.  
  
Article (317 )  
Multiple Liquidators  
If there is more than one liquidator, their acts shall be valid only if there is unanimous 
consent, unless the document appointing them provides otherwise. This condition shall not 
be effective vis -à-vis third parties until it is entered in the commercial register.  
  
Article (318 )  
Resolution Appointing a Liquidator  
The liquidator shall enter the resolution appointing him and the agreement of the partners 
or the resolution of the General Assembly concerning the method of liquidation or the 
relevant court order in the commercial register. The liquidator's appointment or the 
liquidation method shall not be effective vis -à-vis third parties until it is entered in the 
commercial register. The liquidator's fee shall be specified in the document appointing him or else shall be determined by the competent court.  
  
Article (319 )  
Removal of Liquidator  
1. The liquidator shall be dismissed in the same way as he was appointed. Any resolution or 
court order to dismiss a liquidator shall provide for the appointment of a new liquidator.  
2. A liquidator's dismissal shall be entered in the commercial register and shall not be  
Federal Decree Law No. (32) of 2021 on Commercial Companies  142 
       effective vis -à-vis third parties except of the date of such entry.  
  
Article (320 )  
Inventory Check of Assets and Liabilities of Company  
The liquidator shall, immediately after his appointment, conduct an inventory check of all 
the assets and liabilities of the Company. The managers or the chairman shall provide the 
liquidator with the assets, accounts, ledgers and documents of the Company.  
  
Article (321 )  
Preparation of List of Assets and Liabilities of the Company 
The liquidator shall prepare a detailed list of the assets and liabilities of the Company and its 
balance sheet, and sign it together with the managers or the chairman of the Company. The 
liquidator shall keep a record to document all transactions related to liquidation.  
  
Article (322 )  
Duties of the Liquidator  
The liquidator shall do all that is necessary to preserve the assets and rights of the Company 
and collect its receivables from third parties. The liquidator shall deposit the monies received 
into a bank for the account of the Company in liquidation immediately upon collection. 
However, the liquidator may not request the partners to pay the balance outstanding upon 
their shares other than as required for the liquidation and subject to equal treatment of the 
partners.  
  
Article (323 )  
Liquidator's Representation of the Company  
The liquidator shall do all acts necessary for the liquidation and in particular represent the Company before the courts, pay Company debts and sell movable assets and real estate of 
the Company at a public auction or by any other means, unless the document appointing  
Federal Decree Law No. (32) of 2021 on Commercial Companies  143 
       the liquidator provides for a specific method of sale. However, the liquidator may not sell 
the assets of the Company all at once without prior permission from the partners or the 
General Assembly of the Company.  
  
Article (324 )  
Notice of Liquidation to Creditors  
All debts of the Company shall become immediately payable upon its dissolution. The 
liquidator shall notify all the creditors by registered letter with acknowledgment of receipt of 
the commencement of the liquidation, inviting the creditors to present their claims. The 
notice shall be published in two local daily newspapers, one of which is published in Arabic. 
The notice of liquidation shall in all cases give creditors at least 30 days of the date of the 
notice to present their claims.  
  
Article (325 )  
Settlement of Company's Debts  
If the assets of the Company are not sufficient to settle all debts, the liquidator shall pay part 
of the debt, without prejudice to the rights of preferred creditors. Every debt arising from the 
liquidation shall be satisfied out of Company funds ahead of any other debts.  
  
Article (326 )  
Depositing Debts with the Court Treasury 
If some creditors fail t o present their claims, their debts shall be deposited with the treasury 
of the competent court. Amounts sufficient to cover disputed debts shall also be deposited, 
unless the creditors in respect of those debts obtain adequate security or it is resolved to 
postpone the distribution of Company assets until the dispute over those debts has been 
settled.  
  
  
Federal Decree Law No. (32) of 2021 on Commercial Companies  144 
       Article (327 )  
New Business Activities of the Company  
The liquidator may not commence new business activities of the Company except those 
required to complete a prior activity. If the liquidator undertakes any new activity not 
required for liquidation, he shall be liable to the extent of his assets for such activities. If 
there is more than one liquidator, they shall be jointly liable.  
  
Article (328 )  
Liquidation Period  
The liquidator shall complete his mandate within the period specified in the document 
appointing him. If no such period is stated, any partner may bring the matter to the 
competent court for a liquidation period to be determined. The liquidation period may only be extended by resolution of the partners or by Special Resolution of the General Assembly, 
as the case may be, once a report from the liquidator has been reviewed explaining why the 
liquidation was not completed on time. If the liquidation period had been determined by the 
competent court, it may not be extended without the court's consent.  
  
Article (329 )  
Submitting Temporary Account Statement on Liquidation  
The liquidator shall, on a quarterly basis, submit to all the partners or to the General 
Assembly a temporary statement of account on liquidation activities. The liquidator shall 
furnish the partners with the details and information they request on the status of 
liquidation. The liquidator shall, within one week of their approval by the General Assembly, notify the partners within [21] days to collect their dues, based on an announcement to be 
published in two daily local newspapers,; one of which is published in Arabic.  
  
 
  
Federal Decree Law No. (32) of 2021 on Commercial Companies  145 
       Article (330 )  
Final Account of Liquidation  
1. The liquidator shall, upon completion of liquidation work, submit to the partners or to the 
General Assembly or the competent court a final account of the liquidation which shall 
terminate upon approval of the final account.  
2. The liquidator shall record the completion of the liquidation in the commercial register 
maintained by the Competent Authority. The completion of liquidation shall not be 
effective vis -à-vis third parties except of the date of such entry. The Company shall be 
removed from the commercial register maintained by the Competent Authority.  
Article (331 ) 
Acts of the Liquidator  
The Company shall be bound by acts performed by the liquidator in the context of 
liquidation insofar as they are carried out within the scope of his mandate. No liability shall 
attach to the liquidator in respect of such acts.  
  
Article (332 )  
Liability of the Liquidator  
The liquidator shall be liable if the Company's affairs are mismanaged in the liquidation. The 
liquidator shall also be liable for any damage incurred by third parties due to professional 
errors in connection with the liquidation services provided.  
  
Article (333 )  
Distribution of Company's Assets  
1. Assets of the Company resulting from liquidation shall be distributed among the partners 
after settlement of its debts. Upon distribution, each partner shall receive an amount equal to his capital contribution and the balance of Company assets shall be divided 
among the partners in accordance with their respective share of profits. If a partner does 
not claim his share, the liquidator shall deposit it with the treasury of the competent  
Federal Decree Law No. (32) of 2021 on Commercial Companies  146 
       court.  
2. If the net assets of the Company are insufficient to cover the full value of the partners' 
shares, the loss shall be distributed among them at the rate specified for the distribution 
of losses.  
  
Article (334 )  
Time Bar for Liability Lawsuit  
1. In case of the denial and lack of legitimate excuse, legal proceedings arising as a result of 
the liquidator carrying out his functions and claims arising as a result of partners, 
managers, Directors or auditors of the Company carrying out the duties of their office 
shall be time barred after the expiry of three [3] years, unless the law provides for a 
shorter time bar.  
2. The aforesaid time bar shall start of the date when the completion of liquidation is 
entered in the commercial register in the former case, and of the date when the act 
giving rise to liability occurred in the latter case.  
3. If the act attributed to any such persons is a criminal offense, the liability lawsuit shall not 
be time barred until the prescription of the criminal case.  
  
Part Nine  
Foreign Companies   
Article (335 )  
Foreign Companies Governed by this Decree Law  
Without prejudice to the special agreements between the Federal Government, any Local 
Government or their affiliates and any foreign companies, the provisions of this Decree Law, 
excluding the provisions on incorporation, shall apply to foreign companies that have 
transactions or administrative headquarters in the State.  
  
  
Federal Decree Law No. (32) of 2021 on Commercial Companies  147 
       Article (336 )  
Practice of Foreign Company's Business  
1. Save for foreign companies licensed to operate in free zones in the State, foreign 
companies may not conduct any operations in the State or set up an office or branch 
therein without having been issued an appropriate license by the Competent Authority 
with the approval of the Ministry listing the activities for which the Company has been 
licensed.  
2. If a foreign Company or its office or branch conducts operations in the State prior to 
completion of the formalities set out in this Decree Law, the persons conducting such 
operations shall be jointly and severally liable therefor.  
  
Article (337 )  
Foreign Company Registration Procedures 
1. No foreign Company may conduct its operations in the State unless it has been entered in 
the Ministry's foreign companies register in accordance with this Decree Law and until 
the Company has obtained the approvals and licenses required by the laws of the State.  
2. The procedure for registration in the foreign companies register and guidelines for 
preparation of the accounts and balance sheets of branches of foreign companies in the 
State shall be set out in a resolution of the Minister. The office or branch of a foreign 
Company shall be considered its domicile for the purposes of its operations in the State 
which operations shall be governed by the laws of the State.  
3. The Ministry shall issue resolutions on the supporting documentation needed to apply for 
registration. Such resolutions may specify requirements and conditions for managing and closing the branch or office of a foreign Company.  
4. When the branch of a foreign Company is closed, the Ministry shall strike off the name of 
the branch or office from the foreign companies register maintained by the Ministry.  
  
 
  
Federal Decree Law No. (32) of 2021 on Commercial Companies  148 
       Article (338 )  
Balance Sheet of Foreign Company  
Save for representative offices, foreign companies and their branches shall have an 
independent balance sheet and profit and loss account and shall have an auditor registered 
on the roster of practicing auditors in the State. Foreign companies and branches shall 
annually submit to the Competent Authority and the Ministry a copy of the balance sheet 
and final accounts, together with the auditor's report and a copy of the final accounts of its 
holding company, if any.  
  
Article (339 )  
Representative Offices  
1. Foreign companies may establish representative offices to conduct market studies and 
research production prospects without undertaking any commercial activity.  
2. The implementing decisions of this Decree Law shall determine the aspects of oversight to 
be exercised by the Ministry and the Competent Authority over such offices.  
 
Part Ten   
Oversight and Inspection of Companies  
Article (340 )  
Oversight of Companies 
1. Subject to the jurisdiction of the Central Bank, the Ministry, the SCA and the Competent 
Authority, each according to its respective jurisdiction, shall have the right to monitor 
joint stock companies and inspect their activities, books or any documents or records at 
their branches and subsidiaries in the State and overseas or in the possession of their 
auditors or any other Company related to the Company being inspected. They may, together with the inspection committee, seek the assistance of one or more experts with 
technical and financial experience in the matter and purpose of the inspection, to verify 
the Company's compliance with this Decree Law and its implementing resolutions and 
the Company's AOA. To that end, the inspectors may, at their own discretion, request  
Federal Decree Law No. (32) of 2021 on Commercial Companies  149 
       any details or information from the board of directors, the CEO, the managers or the 
auditors of the Company.  
2. The Ministry, the SCA or the Competent Authority, as the case may be, may call for the 
dissolution of the Company if incorporated or if it conducts business in violation of this Decree Law. The competent court shall decide such request as a matter of urgency.  
  
Article (341 )  
Inspection Regulations  
The  Minister shall issue inspection regulations for Private Joint Stock Companies, while the 
board of directors of the SCA shall issue inspection regulations for Public Joint Stock 
Companies. The regulations shall set out inspection procedures and the powers and duties 
of inspectors.  
  
Article (342 )  
Application for Company Inspection  
1. Subject to the provisions of Articles 333 and 334 of this Decree Law, shareholders holding 
at least 10% of the Capital of the Company may request the Ministry or, as applicable, the SCA to order an inspection of the Company in connection with alleged serious 
violations of the duties of Directors or auditors under this Decree Law or the Company's 
AOA provided there is probable cause to believe that a violation has been committed.  
2. The application for inspection shall include:  
a. Evidence that the applicants have good cause to justify taking such steps.  
b. An undertaking stating that the shareholders filing the application shall deposit their 
shares and that the shares shall remain deposited until the application has been 
decided.  
3. The Ministry or, as applicable, the SCA may, upon hearing the statements of the applicants 
and the Directors or members of a similar body and the auditors at a closed meeting, 
order an inspection of the activities, books or any documents or records with another 
Company related to the Company being inspected, or in the possession of its auditor,  
Federal Decree Law No. (32) of 2021 on Commercial Companies  150 
       and may appoint for such purpose one or more experts at the expense of the applicants 
for inspection.  
  
Article (343 )  
Facilitation of Inspectors' Work  
Subject to the provisions of Article [340] of this Decree Law, the Chairman, CEO, Director 
General, personnel and auditors of the Company shall give the inspection team access to the 
books, minutes of meeting [board of directors, committees and General Assembly], records, 
documents and paperwork of the Company and provide them with the necessary information and clarifications.  
  
Article (344 ) 
Inspection Report  
1. Subject to the provisions of Articles 342 and 341 of this Decree Law, the inspectors shall, 
after completing their inspection, submit a final report to the Minister [Private Joint Stock 
Companies] or to the chairman of the SCA [Public Joint Stock Companies]  
2. If the Ministry or, as applicable, the SCA establishes any violations that would constitute a 
criminal offense involving Directors or auditors, it shall call the General Assembly to 
convene. In such case, the meeting shall be chaired by a representative of the Ministry or 
the SCA, as the case may be, holding the office of CEO or comparable office, to consider 
the following:  
A. The removal of Directors and filing of a liability lawsuit against them; and  
B. The dismissal of auditors and filing of a liability lawsuit against them.  
3. The resolution of the General Assembly shall be valid in the circumstances described in 
Clause [2] of this Article if approved by a majority of those present after excluding the share of the Director whose removal is under consideration or the share of the corporate 
entity he represents.  
   
Federal Decree Law No. (32) of 2021 on Commercial Companies  151 
       Article (345 )  
Publication of Inspection Findings  
If the Ministry or the SCA, as applicable, is convinced that the allegations attributed by the 
applicants for inspection to the Directors or the auditors are not true, the Ministry or the SCA 
may order that the results of the inspection be published in a daily local newspaper in Arabic 
at the expense of the applicants for inspection, without prejudice to any civil or criminal 
liability.  
Part Eleven  
Offences and Penalties  
Article (346 )  
Providing Information that is False or Contrary to Law  
A penalty of imprisonment sentence ranging from six [6] months to three [3] years and / or a 
fine between AED [200,000] two hundred thousand dirhams and AED 1,000,000 [one 
million dirhams] shall be imposed on whoever deliberately inserts in the MOA or AOA of a 
Company, a shares or bonds prospectus, or in any other Company documents any 
information that is false or contrary to this Decree Law. The penalty shall also be imposed on 
whoever knowingly signs or circulates such documents despite those facts.  
  
Article (347 )  
Overvaluation of In- Kind Contributions  
A person who, in bad faith, valuates the in -kind contributions of founders or shareholders 
above their actual value shall be liable to imprisonment sentence for a term between six [6] 
months and three [3] years and / or a fine between AED 200,000 [two hundred thousand 
dirhams] and AED 1,000,000 [one million dirhams].  
  
Article (348 )  
Distribution of Profits or Interests in Violation of the Law 
Any manager or Director that distributes to shareholders or others profits or interest in  
Federal Decree Law No. (32) of 2021 on Commercial Companies  152 
       violation of the provisions of this Decree Law or the MOA or AOA of the Company, and any 
auditor that approves such distribution despite his knowledge of the violation, shall be liable 
to imprisonment sentence for a term between six [6] months and three [3] years and / or a 
fine between AED 50,000 [fifty thousand dirhams] and AED 500,000 [five hundred thousand dirhams].  
  
Article (349 )  
Concealment of True Financial Position of the Company  
Any manager, director, auditor or liquidator that deliberately gives false information in the balance sheet or profit and loss account or in a financial report or omits material facts from 
such documents for the purpose of concealing the true financial position of the Company 
shall be liable to imprisonment sentence for a term between six [6] months and three [3] 
years and / or a fine between AED 100,000 [one hundred thousand dirhams] and AED 
500,000 [five hundred thousand dirhams].  
  
Article (350 )  
Misstatement of Facts in Inspection Report  
A penalty of imprisonment sentence ranging from three [3] months to two [2] years and / or a fine between AED 10,000 [ten thousand dirhams] and AED 100,000 [one hundred 
thousand dirhams] shall apply in respect of:  
1. Any person appointed by the Ministry, the SCA or the Competent Authority to inspect a Company, who deliberately misstates facts in the inspection report or deliberately omits 
material facts that may affect the results of inspection; and  
2. A chairman, Director, CEO or Director General of a Company that deliberately withholds 
documents or information from inspectors after the Ministry or the SCA has imposed the 
applicable fine in this regard, Under the Regulations on Administrative Sanctions for Acts Contrary to the Provisions of this Decree Law of the Cabinet.  
  
  
Federal Decree Law No. (32) of 2021 on Commercial Companies  153 
       Article (351 )  
Intentional Harmful Action Against Company by Liquidator  
Any liquidator that intentionally takes harmful action against a Company or its shareholders, 
partners or creditors shall be liable to imprisonment sentence for a term between three [3] 
months and three [3] years and / or a fine between AED 50,000 [fifty thousand dirhams] 
and AED 500,000 [five hundred thousand dirhams].  
  
Article (352 )  
Issue of Securities in Violation of this Decree Law  
Whoever issues shares, subscription receipts, interim certificates or bonds or offers them for 
trading in violation of this Decree Law shall liable to imprisonment sentence for a term 
between three [3] months and two [2] years and / or a fine between AED 100,000 [one hundred thousand dirhams] and AED 500,000 [five hundred thousand dirhams].  
  
Article (353 )  
Providing a Loan, Guarantee or Security  
A penalty of imprisonment sentence for up to three [3] months and / or a fine between AED 100,000 [one hundred thousand dirhams] and AED 500,000 [five hundred thousand 
dirhams] shall apply in respect of:  
2. Any Director of a Joint Stock Company that obtains for himself or for his wife or relatives 
up to the second degree a loan, guarantee or security from the Company where he is a 
Director, in violation of this Decree Law, and shall be required to return such loan, guarantee or security.  
2. The chairman, Director, CEO or Director General of a Joint Stock Company that agrees to provide a loan, guarantee or security to a Director of the Company or to his wife or 
relatives up to the second degree, in violation of this Decree Law.  
  
  
Federal Decree Law No. (32) of 2021 on Commercial Companies  154 
       Article (354 )  
Disclosure of Company's Secrets  
A penalty of imprisonment sentence for up to six [6] months and / or a fine between AED 
50,000 and AED 500,000 [five hundred thousand dirhams] shall apply in respect of:  
1. Any person that uses information or particulars obtained from the founding committee at any stage of incorporation of the Company, legal or financial consultants, the 
subscription manager, the underwriter or the parties participating in the incorporation or 
their nominees.  
2. A chairman, Director or other employee of the Company who uses or discloses Company 
secrets or deliberately attempts to cause harm to the business of the Company.  
  
Article (355 )  
Manipulating Securities Prices  
The chairman, Director or other employee of a Company who participates, directly or 
indirectly, with any entity involved in any activities or transactions intended to influence the 
prices of Securities issued by the Company shall be liable to imprisonment sentence for a 
term of up to six [6] months and / or a fine between AED 1,000,000 [one million dirhams] 
and AED 10,000,000 [ten million dirhams].  
  
Article (356 )  
More Severe Penalties  
The penalties provided for in this Decree Law shall be without prejudice to any more severe 
penalty provided for in any other Law.  
  
Article (357 )  
Criminal Proceedings  
Any criminal proceedings for the offences committed by the Company under this Decree Law shall be instituted against its legal representative.   
Federal Decree Law No. (32) of 2021 on Commercial Companies  155 
       Article (358 ) 
Judicial Officer Capacity  
Officers nominated by a resolution of the Minister of Justice in agreement with the Minister 
and in coordination with the SCA or the Competent Authority, as applicable, shall have the 
capacity of a judicial officer for reporting any violations of the provisions of this Decree Law 
and its executive regulations and resolutions, within their respective areas of competence.  
  
Part Twelve  
Transitional and Final Provisions   
Article (359 )  
Adjustment of Affairs  
1. Existing companies that are subject to this Decree Law shall have one year of the date of 
entry into force of this Decree Law to adjust their affairs. Such a time limit may be 
extended for a further period of similar duration by a resolution of the Cabinet based 
upon the proposal of the Minister.  
2. Without prejudice to the penalties provided for in this Decree Law, any Company that fails 
to comply with the provisions of Clause [1] of this Article shall be considered dissolved in accordance with this Decree Law.  
  
Article (360 )  
Delegation  
Based upon the proposal of the Minister and the approval of the Competent Authority, the 
Cabinet may delegate to the competent authorities any of the powers of the Ministry 
contained in this Decree Law.  
  
Article (361 )  
Guidelines for Company Incentives  
The Cabinet shall issue the guidelines for encouraging companies to perform its corporate  
Federal Decree Law No. (32) of 2021 on Commercial Companies  156 
       social responsibility and implementing its phases.  
  
Article (362 )  
Regulations of Administrative Penalties  
The Cabinet shall issue the Regulations on Administrative penalties for acts committed in 
violation of the provisions of this Decree Law, its Executive Regulations and the resolutions 
issued in implementation of the Decree Law, based on the proposal of the Minister -  within 
six [6] months of the day following its publication, according to the following controls:  
1. The administrative fine shall not be less than AED 100 [one hundred dirhams] and shall 
not exceed AED 10,000.00 [ten million dirhams].  
2. The administrative fine shall be doubled if the same administrative offence is repeated 
but may not exceed AED 20,000.00 [twenty million dirhams].  
  
Article (363 )  
Issuance of Executive Regulations and Resolutions  
The executive regulations and resolutions of Federal Law No. [2] of 2015 concerning 
commercial companies shall continue in full force and effect to the extent that they are not 
in conflict with this Decree Law, until such time as the Ministry and the SCA issue, within 
their respective areas of competence, regulations, rules and resolutions to implement this 
Decree Law.  
  
Article (364 )  
Repeals  
The above -cited Federal Law No. 2 of 2015, as well as any provision that goes against or 
conflicts with the provisions of this Decree Law, shall all be repealed.  
  
 
  
Federal Decree Law No. (32) of 2021 on Commercial Companies  157 
       Article (365 )  
Publication and Entry into Force  
This Decree Law shall be published in the Official Gazette and shall enter into force as of 
January 02, 2022 AD. 
 
 
Khalifa Bin Zayed Al Nahyan  
UAE President  
 
Issued by us at the Presidential Palace in Abu Dhabi  
On: 13 Safar 1443 AH  
Corresponding to: 20 September 2021