UAE Company Formation / Licensing LawCabinet Resolution No. (77) of 2022 Concerning Limited Liability Companies

Article (1) Definitions For the purpose of applying the provisions of the present Resolution, the following words and expressions shall have the meanings assigned thereto respectively, unless the context requires otherwise: State (UAE) : The United Arab Emirates. Ministry : The Ministry of Economy. Minister : The Minister of Economy. Competent Authority : The local authority in charge of corporate affairs in the relevant emirate. Company : A limited liability company. General Meeting : Comprising the Company’s owner in case of a sole proprietorship or all partners in case that the Company is owned by several partners.

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Cabinet Resolution of 2022 Concerning Limited Liability Co…

Article (2) Applicability of the Resolution The provisions of the present Resolution shall apply to limited liability companies with regard to the following: 1. Procedures of the Company’s incorporation and management in case of a sole proprietorship.

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Cabinet Resolution of 2022 Concerning Limited Liability Companies 3 2. Regulating the cases in which the provisions prescribed for joint-stock companies are not applicable to the Company.

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

Article (4) Memorandum of Association of a Limited Liability Sole Proprietorship 1. The memorandum of association of a limited liability sole proprietorship shall particularly include the following details: a. The Owner’s full name, nationality, date of birth and place of residence. b. The Company’s name, address, trade name (if any) and objects. c. The Company’s headquarters and branches (if any). d. The Company’s capital estimated value and method of estimation. e. The Company’s commencement and expiry dates (if any).

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Cabinet Resolution of 2022 Concerning Limited Liability Companies 4 f. The Company’s management method, along with indicating the names of authorized signator…

Article (5) Procedures for Incorporating a Limited Liability Sole Proprietorship The following procedures shall apply to the incorporation of a limited liability sole proprietorship: 1. An incorporation application shall be submitted to the Competent Authority on the approved form, accompanied by the required documents, and the prescribed fees shall be paid. 2. The Competent Authority may request the adjustment or completion of any details or documents, pursuant to the provisions of the Decree-Law and the resolutions issued thereunder. 3. The Competent Authority shall issue its decision on the application for incorporating a limited liability sole proprietorship within (5) five Business Days…

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

Article (7) Management of a Limited Liability Sole Proprietorship 1. Subject to the provisions related to limited liability companies set forth in the Decree- Law, a limited liability sole proprietorship shall be managed by one or more Director(s), as decided by the Owner in the Memorandum of Association.

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Cabinet Resolution of 2022 Concerning Limited Liability Companies 6 2. The General Meeting shall appoint the aforesaid Company’s Director(s) unless the appointment is made in the memorandum of association or under a separate agreement. 3. In case of multiple Director(s), the Owner may appoint the board members and identify in their appointment decision their number and capac…

Article (8) Meetings of the Board 1. The Board shall hold its meetings as defined in the memorandum of association. 2. The Board’s decisions shall be passed by the majority of votes of attendees represented at the meeting. In the event of a tie, the meeting’s chairman shall have the casting vote, unless the memorandum of association provides for otherwise. 3. Before the Board calls for any General Meeting, the Board shall hold its meeting at least (30) thirty days before the date of the General Meeting, and shall notify the shareholders, after the Board meeting is over, of the Board’s decisions by virtue of a detailed notice. The Owner shall be notified of the date proposed for the General M…

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

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

Article (11) Accounts of the Company 1. The Company shall prepare regular accounts, as per the international accounting standards and principles, so as to reflect a true and fair image about the Company’s profits or losses for the fiscal year and the Company’s positions at the end of the fiscal year and shall adhere to any requirements set forth in the Decree-Law and the resolutions issued in implementation thereof.

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Cabinet Resolution of 2022 Concerning Limited Liability Companies 8 2. The Company shall apply the international accounting standards and principles when its interim and annual accounts are prepared and shall identify distributable profits.

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

Article (13) Powers of the Auditor The auditor may, at all times, access all the Company’s information, entries, books, records, documents and other papers. The auditor may ask for clarifications he deems necessary to perform his duties, and may also verify assets, rights, and obligations. If the auditor is unable to practice his powers and perform his duties, he shall record the same in a report to be presented to the Board or the Company’s Director, as the case may be. If the Board or the Company’s Director, as the case may be, fails to enable the auditor to perform his duties, the auditor shall send a copy of the report to the Owner. If the auditor then is unable to perform his duties, hi…

Article (14) Approval of the Balance Sheet 1. Subject to Article (94) of the Decree-Law, the Director, or the Board, as the case may be, shall, after the balance sheet and the profit and loss statement are drawn up, obtain the approval of the Owner of the balance sheet and the profit and loss statement audited by the auditor, within the four months subsequent to the end of the fiscal year. 2. If the Owner fails to approve the balance sheet and the profit and loss statement within the time limit specified in Clause (1) above, the Director or the Board, as the case may be, shall submit an application to the Competent Authority, within (7) seven days to be calculated from the expiry date of the…

Article (15) Annual Report of the Auditor 1. The auditor shall present to the General Meeting a report containing the details and information set forth in the Decree-Law. 2. The auditor shall attend the General Meeting and shall read out his report at the General Meeting, explaining any obstructions or interventions by the Board which he faced while performing his duties. The auditor’s report shall be independent and neutral. The auditor shall give an opinion at the meeting on all matters related to his duties, particularly the Company’s balance sheet, along with his observations on the Company’s accounts and financial position and any violations therein. The auditor shall be responsible for…

Article (16) Sale of Shares and Admission of Partners The following conditions shall apply to the sale of shares or the admission of partners into a limited liability sole proprietorship: 1. The Competent Authority’s prior approval of sale shall be obtained. 2. Where no particular provision is stipulated in the present Resolution, all the terms, conditions and criteria of a limited liability Company shall apply in so far as being consistent with the nature of a limited liability sole proprietorship. 3. If the ownership of shares is transferred by inheritance, the Company shall remain effective for a temporary period until the status is adjusted; meanwhile, heirs shall appoint a person who wi…

Article (17) Calling for a General Meeting 1. The General Meeting shall be held at the call of the Director or the Board of directors at least one time a year, within the four months subsequent to the end of the fiscal year. The General Meeting shall be held at the place and time identified in the notice of meeting, subject to the provisions of the sole proprietorship. 2. The Director or the Board, as the case may be, may call for a General Meeting, as they deem necessary.

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Cabinet Resolution of 2022 Concerning Limited Liability Companies 11 3. The Competent Authority, auditor or shareholder may submit an application to the Director or the Board, as the case may be, to call f…

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

Article (19) Introduction of Items to the General Meeting Agenda Subject to the provisions of sole proprietorships, the following procedures shall apply to the introduction of any new item to the General Meeting agenda: 1. The introduction shall be in writing via an application to be submitted and signed by the shareholder. 2. Any risky topics may be introduced by the auditor, the Director, the Board or otherwise to the General Meeting, accompanied by the supporting documents and information. The provisions prescribed for regulating items and results of the General Meeting shall apply to such introduction.

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Cabinet Resolution of 2022 Concerning Limited Liability Companies 12

Article (20) Deals with the Relevant Parties Subject to the provisions of sole proprietorships, the Company may conclude deals with the Relevant Parties only in any of the following cases: 1. Approval of the Director or the Board, as the case may be, if the deal amount is less than (5%) of the Company’s capital. 2. Approval of the General Meeting by virtue of a special decision where the deal value is more than (5%) of the capital. The Relevant Party may not vote on the General Meeting decision issued with regard to such deal. 3. The Director or the Board, as the case may be, shall duly maintain regular accounting books to reflect a true and fair image on the Company’s business position and…

Article (21) Application of the Provisions of Limited Liability or Joint-Stock Companies as Consistent with the Nature of Sole Proprietorships Where no particular provision is provided herein, the general provisions of limited liability companies and the provisions of joint-stock companies shall apply to limited liability sole proprietorships, in such a manner not contradicting with the nature of limited liability sole proprietorships.

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Cabinet Resolution of 2022 Concerning Limited Liability Companies 13

Article (22) Provisions Governing Cases Where No Particular Provision on the Company is Provided and Whose Nature is Inconsistent with Joint-Stock Companies The following cases shall be governed according to the standards and provisions prescribed therefor, as follows: 1. Board Membership: The following provisions shall apply to the board membership: a. Members of the board of directors shall be elected through the General Meeting by secret ballot unless the Company’s memorandum of association provides for otherwise. b. The board of directors’ membership shall be terminated in any of the following cases: 1. Death. 2. Removal from membership under a decision by the General Meeting. 3. Resigna…

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

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

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