Recently, the government of UAE has issued new corporate governance laws in the country. There has been the inclusion of new rules for public joint stock companies. The new rules are applied to public joint stock companies. These companies are listed in either the Dubai stock exchange or Abu Dhabi Securities exchange. Today we will list down the key elements of the New Governance laws.
· Firstly, we need to understand what corporate governance is. It is a set of practices, rules, policies, processes, and mechanisms that direct the entities for their operations, activities, and authority. They are introduced to attain a balance between the entity and all its stakeholders which include the community, shareholders, senior management, and others. Explore the UAE Law and Lawyers in Details here.
· The governance laws promote the rule of law. They encourage transparency, responsiveness, efficiency, accountability, equality, and participation. The best governance laws are formulated by the UAE government to help build the investors’ confidence and build trust. In addition to it, it is also a way to mitigate risk factors along with mismanagement.
· The UAE government believes that governance laws should be embedded into the cultural mindset rather than just a tick-box practice for compliance purposes. It has a great impact on the investors, decision-makers, and the rest of the stakeholders.
· There is not much difference between new and repealed governance laws in the UAE. Both of the rules established stipulate that articles of association should decide upon the methods of formation, number of members, period of membership, and Board of directors.
· However, one major change introduced is that if the state owns 5% or more of the company’s shares, then the state can appoint a representative in the company. There may be a pro-rata basis to the shareholding in a company. Furthermore, the state has the right to vote that expires concerning the number of shares utilized to appoint the board representatives.
· The governance law which remains unaltered is that the majority of the board members and the chairman should be UAE nationals. In addition, the women representative on the board of directors remains unchanged.
· Nevertheless, the only change is that new governance laws set a minimum percentage of 20% of the board of representatives to be women. It is compulsory to disclose the percentage of women represented on the board of directors.
· New governance laws further established regulations for board membership. This may include having the procedure of candidature remain open for 10 days at least. It was the previous 14 days. Publishing the details of the board candidates within a company should be done in 2 days. It was previously 5 days.
· Furthermore, the new governance Personal Injury restrict board members they should not be board members in more than 5 companies. If they are the chairman, managing Director, or vice chairman then the limit is 2 companies.
· It is worth mentioning that the new governance laws of UAE also list down the documents needed which should be submitted by the candidates for membership of the board.
· For further details and explanations, we want you to add value by hiring professional advocates and legal consultants. They will advise you and guide you if you need practical advice to anticipate towards anything.
· Let us tell you that Lawyers in Dubai have great importance and value. They can help you to understand any kind of governance and the implementation of different Laws.