The following information is applicable to a Limited Liability Company (LLC) in the United Arab Emirates
Extension of deadline to amend your constitution
As you may be aware from our previous newsletters, existing companies are required to amend their constitution to comply with the provisions of Federal Law No (2) of 2015 concerning Commercial Companies (the New CCL) or they will face severe consequences. The UAE Cabinet has extended the deadline for existing companies by one year. Companies are now required to amend their memorandum and articles of association by 30 June 2017. The reasoning for this extension of time was that a number of companies had requested the extension due to difficulties of not only holding general assemblies but also the considerable time required to complete the statutory amendments and obtain government approvals.
While companies have been given breathing room to implement the changes necessary, it is still vital for companies to do so. This extension does not negate the penalties applicable for a failure to amend your company’s constitution. The regulators are still empowered to impose hefty fines on managers, directors, CEOs and officers for any failure of companies to comply. In case of late adjustment, companies will still be fined AED 2,000 per day following the expiry date. Also, should any entity governed by the New CCL fail to comply with its terms by 30 June 2017, it will be deemed to be dissolved.
How can we help?
The clock has been reset and while the date of 30 June 2017 is over a year away, our experience over the last few months has shown us that companies normally wait till the last minute to implement these changes necessary. While the Government has graciously granted an extension in order to facilitate business and achieve a smooth transition into the implementation of the New CCL, we expect reputable companies to give this compliance issue priority now. There seems little point in leaving things to the last minute more than once!