Summary of private joint stock companies

 According to the federal Companies Law No. 32 of 2021

 

* Definition :

– A private Joint Stock Company is a company in which the number of shareholders is not less than two and not more than two hundred shareholders and its capital is divided into shares of equal value, and its value is paid in full without offering any of them in a public subscription, but the subscription should be with the full capital, and the shareholder is not asked only to the extent of what he owns shares, and a legal person (companies) may establish and own a private Joint Stock Company and own all of its shares, and the owner of the company’s capital is not asked only to the extent of the capital of a private Joint Stock Company recorded in the memorandum of association, and its shares are owned closely by a few individuals it is not possible to sell shares without the consent of all shareholders and the security of the stock register designated by the Securities Commission Finance and commodities

– On the contrary, for public shareholding companies, where the number of founders is required to be at least 5 people, public companies can also raise funds in the capital markets, thereby submitting an IPO prospectus for inspection purposes to the public( IPO ) .

 

* Company Capital :

– The capital of the company may not be less than 5 million dirhams, and it must be paid in full, and the maximum capital of the company may be amended by a decision of the Council of ministers at the suggestion of the minister of economy .

– As for the capital of the public shareholding company not less than AED 30 million, the responsibility of each partner is as much as his contribution to the capital. the founders must subscribe with shares not less than (30%) and not more than (70%) of the company’s capital. the number of board members must not be less than three and not more than eleven members.

 

 

* Establishment procedures :

1-founders Committee: the founders of the Company shall select a committee of at least 2 of them, and it shall handle the procedures of establishing the company and registering it with the competent authorities (Ministry of Economy – Department of Economic Development – Securities and Commodities Authority), and it shall be fully responsible to the authorities for the accuracy, correctness and completion of the data and documents submitted to the above bodies, and the founders committee may delegate one of its members or others in completing the establishment procedures .

2-the way to submit the incorporation application to the competent authority : 

– An application for incorporation shall be submitted, accompanied by the memorandum of association, the articles of association, the economic feasibility of the project and the schedule for its implementation .

– The application is considered within 10 working days from the date of its submission and is decided by approval or rejection, and in case the competent authority does not respond within the above-mentioned period, it is considered as a rejection of the incorporation application .

– The decision to reject the incorporation application may be appealed to the competent court within 30 days of the rejection decision or from the lapse of the period referred to in the previous clause.

3-in case of approval of the application for incorporation from the Competent Authority, the application for incorporation shall be submitted to the Ministry of economy:

– The application for incorporation shall be submitted to the ministry accompanied by the preliminary approval from the Competent Authority referred to in the previous clause, the memorandum of association and all the documents submitted by the founders before the competent authority.

– The application for incorporation is considered within 10 working days, and in case there are shortcomings or the need to complete documents, the founders must complete them during this period, otherwise it is considered a waiver of the application for incorporation .

– In case the ministry approves the establishment application, the documents will be sent to the competent authority within 5 working days, and then the Competent Authority will issue a decision to grant the license after the approval of the ministry .

* Business Formation attorney in Dubai, Abu Dhabi UAE advises that the company must have a register in which the names of shareholders, the number of shares and any actions that occur, and submit to the competent authority to regulate the Register of shares of private shareholding companies (the secretariat of the Register of shares), for example (one-person Dubai Depository Company, First Abu Dhabi Bank, Abu Dhabi Commercial Bank, Finance House, Abu Dhabi Securities Exchange )

* Issuance of the company’s certificate of incorporation : its fees are AED 5000 to be paid via the electronic dirham on the Ministry of Economy website 

– The representative of the company submits an application to the ministry to issue a certificate of incorporation attached to it :

1-a bank certificate confirming the company’s capital deposit

2-memorandum of association

3-a copy of the initial approval decision from the Competent Authority of the establishment

4-a statement of the names of the members of the company’s Board of directors, and a written acknowledgement that their membership does not contradict the provisions of the law .

5-A certificate stating that the Register of shareholders has been handed over to the Securities and Commodities Authority (SCA)

6-any other documents requested by the ministry

– If all the documents are completed, the ministry will issue the license certificate within two working days

* Issuance of commercial license :

– After issuing the certificate of incorporation, the board of directors must take measures to register the company with the competent authority within 5 days from the date of issuing the certificate of incorporation

– The competent authority issues the commercial license within 3 working days after completing the required documents

– The ownership of shares may not be transferred before the publication of the budget for at least a fiscal year , but during this period it is permissible to mortgage or transfer ownership from one shareholder to another or from the heirs of one shareholder to others under a judicial ruling

– Any assignment of shares may not be recorded except through the secretariat of the Register of shares , and it may reject the request for assignment , in the case of :

1 – if the shares are mortgaged or reserved

2-if the company has a debt on the shares, it is not permissible to assign until after the debt is satisfied

3-if one of the contractors is incompetent or months bankrupt or insolvent .