UAE government has introduced regulations in the year 2015, which are essential for the smooth conduction of businesses. If you are a business owner in the UAE, you need to operate in compliance with the laws which were put in place to govern your business. These laws help ensure the protection of labor rights, consumer rights, and intellectual property rights.
The compliance requires for commercial companies to make changes to their Memorandum of Association. Till 2015, companies were following the Federal law of 1984 Concerning Commercial Companies, also called Old CCL. The new Federal law is referred to as New CCL. But first, understand why you need to follow business regulations. Here’s why:
Why are business regulations important?
Business enterprises and activities need to be exercised in strict adherence to local regulations. These regulations are important for businesses to run their operations smoothly. These regulations are important in the following ways:
1. Help with corporate control and governance
2. Protect labor rights
3. Ensure the safety and health of individuals
4. Govern the free zone where you set your commercial company
Changes to MoA under new CCL:
With the implementation of new UAE Companies law in July 2015, all Limited Liability Companies (LLC) were compulsorily required to amend their Memorandum of Association as per the new Companies Law before 30th June 2016.
Following are the Important Changes which were to be made to Memorandum of Association of commercial companies falling under CCL:
1. Details of Shareholders in the title of Memorandum were to be amended with all necessary information.
2. Articles referring to old Companies law needs to be amended with the new company law.
3. Companies need to adhere to International Accounting Standards which need to be mentioned in Memorandum.
4. Mandatory for shareholders to offer its shares for sale to the existing shareholders of the company before selling it to the third party.
5. The shareholders must provide all information regarding the proposed new partner to existing partners before selling his shares.
6. The notice period for any Board of Directors meeting shall be reduced from 21 days to 15 days.
7. The General Assembly must appoint an auditor every year along with his remuneration.
8. Follow the quorum of the General Assembly.
9. Pass a resolution by a simple majority.
Consequences of failure in compliance:
Under the new Companies Law, the companies failing to comply with the compulsory amendments on or before 30th June 2016 will be Deemed as Dissolved. In case of non-compliance, the commercial companies may further face Financial Penalties ranging from AED 10,000 TO AED 100,000.
Want to avoid penalties? Seek consultancy
With every regulation, there is an impending risk of penalties. When you seek professionals, they help you avoid those risks or minimize the probability of such an occurrence in a number of ways. These are as follows:
1. Develop an understanding of laws and the changes they require your company to make
2. Understand your business practices and operations and help make the necessary changes in Memorandum of Association
3. Choose the best audit and accounting firm to make use of legal and financial insights and help your business adhere to the local laws related to taxation, health, environment, and safety regulations.
As a business aiming for an excellent brand image, you need to ensure that you are complying with local laws and regulations.
Bens Auditors can make the process seamless and safe for your company. Contact Us to maximize your benefits with safety compliance!
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