In order to ensure that business operations run smoothly across the country, the UAE government implemented restrictions in 2015. In the UAE, business owners must abide by the compliance laws that were put in place to regulate their industry. These laws aid in ensuring the protection of labour, consumer, and intellectual property rights.
Commercial enterprises must amend their Memorandum of Association in order to comply. Up until 2015, businesses had to abide by the Old Commercial Companies Law (CCL), or the Federal Law of 1984 concerning Commercial Companies. The New CCL is the term of the new Federal statute. But first, you must understand why adhering to business regulations is necessary.
Keep reading to find out!
Importance of Business Regulations
Business ventures and activities must be conducted strictly in accordance with local regulations. For firms to operate efficiently, these requirements are crucial. The regulations are crucial in the following ways:
1. Assistance with corporate governance and control
2. Upholds the workers’ rights
3. Ensures the well-being and safety of individuals
4. Governs the free zone where the business is set up.
Purpose of a Memorandum of Association attestation in UAE
The Memorandum of Association is essentially the constitution of a business organisation. It will include information about the shareholders, the board of directors, firm operating rules, policies, safety and security concerns, and more. For the establishment of a business, the MoA UAE must be submitted with the other relevant paperwork.
In accordance with the nation’s federal laws, attestation of a document is a necessary requirement. An MoA that has not been attested will be deemed invalid and the application for a business licence will be denied. The Ministry of Foreign Affairs (MOFA) in the UAE and the relevant departments and ministries in your home country must certify the MOA that you are attaching.
In the UAE, business formation procedures generally call for the attestation of the Memorandum of Association. Before commencing the official procedures for business setup in the UAE, expat entrepreneurs must have the MOA attested.
Changes to Memorandum of Association UAE under New CCL
All Limited Liability Companies (LLCs) were mandated to change their Memorandum of Association in accordance with the new Companies Law before June 30, 2016, following the implementation of the new UAE Companies Law in July 2015.
The important changes that were made to the Memorandum of Association of Commercial Companies falling under CCL are as follows:
- The Memorandum’s title must be updated with the necessary information regarding Shareholder Details.
- The new company law must be included in articles that refer to the previous version of the Companies Act.
- International Accounting Standards, which must be mentioned in the Memorandum, must be followed by companies.
- Shareholders must offer their shares to the company’s current shareholders before selling them to a third party.
- Before selling the shares, the shareholders must let existing partners know everything they need to know about the new proposed partner.
- There will be a 15-day notice period instead of the usual 21-day notice period for the Board of Directors meetings.
- The auditor’s annual appointment and compensation must be approved by the General Assembly.
- Comply with the General Assembly’s quorum.
- Obtain a simple majority to approve a resolution.
Consequences of Non-Compliance
In accordance with the new Companies Law, businesses that did not comply with the mandatory amendments by the deadline of June 30, 2016, were deemed as Dissolved.
If you are trying to set up a business in the UAE, the Memorandum of Association needs to be drafted in accordance with the revised guidelines. It has to be attested by competent authorities in the country of origin, as well as, the UAE before you proceed with further formalities.
Your company will be subject to financial penalties ranging from AED 10,000 to AED 100,000 in the event of non-compliance.
Avoid Penalties. Seek consultancy.
There is a potential for penalties with every regulation. When you consult an accounting professional, they assist you in a number of ways to minimise these risks or completely eliminate the possibility of their occurrence in the future. Seeking a consultancy can help your business because:
a) They are familiar with the changing laws and suggest the changes that your business must do as a result, and
b) Understand your company’s policies, guidelines, and operations, and assist in amending the Memorandum of Association as required.
Choosing the best audit and accounting firm can provide a wide range of legal and financial insights that can help your company abide by local laws and regulations related to taxation, health, environmental and safety requirements. That’s where we come in. At Nair & Nelliyatt Chartered Accountants, we can make the procedure of drafting MoA UAE, simple, straightforward and secure. To know more about the attestation of the Memorandum of Association UAE and thereby optimise the growth and compliance of your business, contact our experts at firstname.lastname@example.org today for a free consultation.