CASE STUDY 3
Running head: CASE STUDY 1
Case Study
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Case Study
Any individual group of people or a company that wants to establish a company in the United Arab Emirates. Should be aware that, according to the article 12 of the companies law, a company once it’s registered with the commercial registry in Dubai, then it automatically considered as a separate entity, which has a corporate personality that differs from the shareholders. Terterov, 2015
Therefore once a company is registered, it is expected to have a separate and different financial capacity, should be in a position of operating within the statutory limits and within the umbrella of its memorandum of association. Finally, a registered company should be in a position to sue or be sued in the court of law with its name. In addition to article 12, article 218 provides that all the shareholders of the company will be only liable to the extent of their shares in the company. Section 218 further provides that, the LLC should not have less than two or more than 50 shareholders; this is also contained in article 4 as well. Because of these provisions that are in the law, it is therefore not easy for a single shareholder to incorporate and own a company alone, like it happens in other jurisdictions. Therefore in case, a foreign individual wants to establish a business in Dubai the first thing that he or she should do is to register an establishment and to appoint a UAE agent.
Another critical issue that whoever, who feels to have a company in Dubai should ensure that he or she meets, is having a local partner who is termed by the law as a sponsor. UAE: Emalab: new company to build a LAB plant in Dubai, 2016
The sponsor will hold more than 51% of the shares as provided by the company laws of the United Arab Emirates. With the sponsor in place, you can now decide the terms. You should be in a position of specifying what will be the position of doing for you, the annual sponsorship fee, and the powers that will be bestowed on him so that at the end of the day, the sponsor can sign off and let you run your business alone as provided by the law.
However, in terms of the minimum share capital, the law provides in article 227 of the constitution provides that, a minimum share capital should be DH 150k and not less than DH 1000. The owner of the company should be aware in advance that, the company law does not have a provision for issuing different classes of shares; the company law in article 218 as well as article 221 provides that, the shares of LLC are not bearer shares. (Suleiman, 2017)
Another vital thing that, individuals who are willing to establish a company in UAE, should be aware of is that all the shares should be paid for and at the same time be distributed among the shareholders as provided in article 222 of the company laws. Therefore in the United Arab Emirates unlike other jurisdictions the law does not recognize the concept of authorized shares; however, it understands the idea of unissued shares. People who have the mind of establishing a business in Dubai they should also know that the law, has provisions in article 17 on how the profits and the losses of the company should be shared among the stakeholders. Unless the memorandum has the specifications on how the benefits and the damages should be shared, then what is provided in article 19 and 227 will be followed in sharing the loss and profit of the company
References
Suleiman, A. (2017). The petroleum experience of Abu Dhabi. Abi Dhabi, UAE: The ECSSR.
Terterov, M. (2015). Doing business with the United Arab Emirates. London: GMB Publishing.
UAE: Emalab: new company to build LAB plant in Dubai. (2016). Focus on Surfactants, 2002(10), p.2.