The Securities and Commodities Authority (SCA) sent out a Circular to the listed public joint stock companies on the application of the Federal Law No (2) of 2015 concerning Commercial Companies. The SCA has informed the listed companies under this Circular of clarifications to certain important articles contained in the Law, which should be taken into consideration by these companies. Furthermore, the SCA required these companies to comply with the Articles of Association template for the companies listed on the financial market as posted on the SCA website.
The clarifications contained in the Circular addressed the articles relating to public joint stock companies exempted from the provisions of the Commercial Companies Law (CCL), the terms and conditions to be observed, compliance with the Memorandum of Association and Articles of Association templates as published on the SCA website. However, a company may add whatever it deems fit to the templates of the Memorandum and Articles of Association if not contrary to the provisions of the CCL and the implementing resolutions and regulations thereof and subject to obtaining the approval of the SCA and the competent authority and ratification of the company’s General Assembly under a special resolution issued with majority vote of the shareholders who hold no less than 3/4 of the shares represented in the General Assembly of the company.
The Circular highlighted the need for commercial companies subject to the oversight and control of the Central Bank of the United Arab Emirates and the Insurance Authority to obtain the approval of these authorities prior to making any amendment to their Articles of Association.
The Circular sent by the SCA to the public joint stock companies contained clarifications to another group of articles contained in the CCL including, inter alia, the IPOs, amendment of the company's articles of association or memorandum of association, acquisition of assets during the company's first financial year, formation of the board of directors, cases of appointment of the board members in the General Assembly, vacancy of a board member position, nomination to the board of directors, government or corporate person membership in the board of directors, membership in the boards of directors of the joint stock companies, notification of conflict of interests to the member, acts banned to related parties, conditions for transactions made with related parties, the board's member taking part in a competitor business, prohibition to provide loans to board members, representation of companies, meetings of the board of directors, use of modern technology in the board meetings and remuneration of the board members.
The clarifications also addressed issues relating to the convening of the General Assembly for the ending financial year, announcement of the invitation for the General Assembly meeting, functions of the annual General Assembly, right to attend the General Assembly, authorities of the General Assembly, General Assembly quorum and its decisions, how to pass a special resolution, withdrawal from the General Assembly, voting by the board members on the General Assembly decisions, minutes of the General Assembly meetings and implementation of such decisions.
Furthermore, the clarifications addressed the articles pertaining to the contribution of the strategic partner and conversion of cash debts into shares in the company capital, conditions to encourage the company employees to own its shares, how to distribute dividends, voluntary contributions, appointment of the auditor, obligations of the auditor, duties of the auditor, the auditor's annual report, the holding company and issues relating to the holding company, procedures for subsidiaries to maintain accounting records and issues relating to the subsidiary.
The Circular also included clarifications to the items pertaining to losses of the joint stock companies, facilitation of periodic inspections by the SCA inspectors, offenses that can be reconciled, delayed regularization, offenses that cannot be reconciled, and regularization and the period prescribed thereto.
The SCA enclosed with its letter sent to the listed companies - in addition to the clarifications – a copy of the Articles of Association template for a public joint stock company listed on the financial market.