Company establishment & investment
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Government initiatives that have helped modernise
the UAE legal framework
Setting up a business in the UAE? The commercial landscape of the country offers a myriad of opportunities, especially when it comes to Joint Liability Companies. With Sapph-x's expertise in business setup and corporate structure, we break down the essentials of Joint Liability Companies as governed by the UAE Commercial Companies Law.
As per Article 39, a Joint Liability Company in the UAE involves two or more physical partners. These individuals are both individually and collectively accountable with their personal assets for any obligations the company might incur.
A crucial aspect of setting up a Joint Liability Company is the naming convention. As per Article 41, the name should have one or more partner's name, followed by an expression like "& Co." or similar, concluding with "Joint Liability Company". A vital point to note is the legal implications of including a non-partner's name. Such an inclusion can render them responsible for the company's commitments.
Article 42 highlights the importance of the Memorandum of Association. It mandates the inclusion of specific details ranging from partner data, company name, address, capital, management method, profit and loss percentage, and more. It's essential to ensure all details are meticulously covered to avoid legal complications.
The UAE has a clear set of procedures for incorporating Joint Liability Companies, as outlined in Article 43. This involves submitting an application with the required documents to the Competent Authority, awaiting their decision, and registering the company with the commercial register. Given the tight timelines mentioned, it's essential to be prompt in responses and submissions.
All partners are typically involved in the management of a Joint Liability Company. However, the Memorandum of Association can delegate the management role to specific individuals or even third parties, as per Article 45.
Article 46 strictly advises partners against engaging in competitive activities without the unanimous consent of all partners. Engaging in such activities can have legal implications, including returning all profits made through such endeavors to the company.
The manager's role in a Joint Liability Company is pivotal. Articles 47 to 49 detail the process of appointing, dismissing, and the roles and responsibilities of a manager. Whether a partner or not, the manager's actions and decisions can have a significant bearing on the company's operations.
Setting up a Joint Liability Company in the UAE is a lucrative venture, but it demands a thorough understanding of the UAE Commercial Companies Law. With Sapph-x by your side, you can navigate the complexities of the business landscape, ensuring a seamless setup and structuring process.
Government initiatives that have helped modernise
the UAE legal framework
The United Arab Emirates (UAE) is home to various business structures, each governed by its distinct set of regulations. The Joint Liability Company (JLC) is one such structure with a unique regulatory framework. Before setting up a JLC in the UAE, it's crucial to understand the essential articles from the UAE commercial companies law that define managerial rights, accountabilities, and partnership dynamics. Here's a comprehensive overview:
- As outlined in *Article 50*, a manager is prohibited from entering into
a contract with the JLC for personal or relative's benefits (up to the
second degree) without obtaining written consent from all partners.
- Moreover, managers cannot engage in business activities similar to the
JLC without an annual written approval from all partners.
- *Article 51* focuses on the manager's liability. If a manager violates
the company's Memorandum of Association, is negligent, or fails in
performing their duties, they can be held accountable.
- For
companies with multiple managers, *Article 52* details how
responsibilities are divided. Decisions must be unanimous or by the
majority, as outlined in the Memorandum of Association. In emergency
situations, individual managers can act on their own if the delay could
result in significant losses.
- According to *Article 53*, the JLC is liable for damages caused to third parties due to actions taken by any partner with the consent of other partners.
- When a new partner joins the JLC, *Article 54* dictates that they will
be responsible for all prior obligations of the company, given these are
disclosed.
- For a partner looking to withdraw, *Article 55* provides the
conditions and liabilities associated with such a decision.
- As for ownership interests, they cannot be transferred without consent
from all partners, as specified in *Article 56*.
- *Article 58* defines the operations of a JLC post its term expiry or
after achieving its objectives. Partners remain liable if the company
continues operations beyond these events.
- Mutual financial responsibilities between the JLC and partners are
detailed in *Article 59*.
- *Article 60* and *Article 61* further delve into financial aspects,
focusing on executing a partner's assets for the company's obligations
and determining profits, losses, and partner shares at the end of the
fiscal year.
In conclusion, the JLC structure in the UAE comes with its set of unique regulations and guidelines. For business owners and entrepreneurs looking to navigate these, having a thorough understanding is essential. Sapph-x, as a premier business setup and corporate structure firm, can guide you seamlessly through the intricate regulatory landscape, ensuring a hassle-free establishment of your JLC in the UAE. For expert advice and support tailored to your needs, reach out to us today.
Government initiatives that have helped modernise
the UAE legal framework
Setting up a business in the UAE? It's crucial to understand the various types of corporate structures available. One such structure is the Limited Partnership Company (LPC). Based on the UAE commercial companies law, here's what you need to know about LPCs.
According to *Article 62*, an LPC comprises joint partners, who are responsible for the company's obligations, and silent partners, who are only liable to the extent of their capital contribution. Interestingly, silent partners don't have the capacity of a trader.
As per *Article 63*, both individuals and juristic entities can become silent partners in an LPC.
*Article 64* suggests that an LPC's name should include the name of one or more joint partners and an indication of its legal form. It's essential to note that silent partners' names shouldn't appear in the company's name. If it does, they could be considered joint partners.
*Article 65* states that the memorandum should list the names of both joint and silent partners. If not, the company might be deemed as a Joint Liability Company.
Only joint partners can manage an LPC as per *Article 66*. However, decisions require unanimous consent unless the memorandum states otherwise.
Silent partners in an LPC have rights similar to partners in a Joint Liability Company. Any loan or commitment made by a joint partner becomes an obligation of the company (*Article 67*).
*Article 68* provides silent partners with several rights, including inspecting the company's books and obtaining information about its operations. However, they shouldn't participate in management.
Silent partners shouldn't interfere in management affairs related to third parties. If they violate this, they could be held liable for any obligations arising from their actions (*Article 69*).
*Article 70* restricts silent partners from assigning their interest without consent from all partners or as stated in the Memorandum of Association.
The UAE offers a conducive environment for businesses with its diverse corporate structures. LPCs present an opportunity for investors to collaborate without being actively involved in management. However, understanding the roles, responsibilities, and rights of both joint and silent partners is crucial.
If you're considering setting up an LPC or any other business structure in the UAE, consult with experts like Sapph-x to navigate the legal intricacies and ensure a smooth setup process.
Government initiatives that have helped modernise
the UAE legal framework
The UAE offers a diverse array of business structures for investors and entrepreneurs. Among these, the Limited Partnership Company (LPC) holds a unique position. Particularly intriguing is the role of the silent partner in such setups. Using the UAE commercial companies law as our guide, let's shed some light on the nuances of being a silent partner in an LPC.
According to *Article 62*, while an LPC comprises joint partners responsible for company obligations, it's the silent partners who hold limited liability, only to the extent of their capital contribution. Intriguingly, they cannot operate as traders.
Any individual or legal entity is eligible, as indicated in *Article 63*. This offers flexibility and inclusivity for potential investors.
*Article 68* is generous regarding the rights of silent partners. From lending to the company to inspecting its books, they have a say in many areas, albeit without being viewed as participating in management.
*Article 69* is clear – silent partners should refrain from engaging in management matters concerning third parties. They can, however, review financial documents. A breach of this might render them liable.
It's vital for silent partners to stay within their designated role. Should they infringe on prohibited management activities, *Article 69* warns they may be held fully liable for company obligations.
*Article 70* suggests a silent partner cannot transfer their interest in the company without the unanimous consent of all partners, ensuring stability and trust within the partnership.
While both are integral to an LPC, their roles differ considerably. Silent partners primarily invest without being actively involved in daily operations, whereas joint partners manage the company. The distinction, especially regarding liability, is crucial for potential silent partners to understand.
For investors seeking a passive yet impactful role, being a silent partner in an LPC in the UAE is an enticing option. However, with rights come responsibilities. As always, clarity on legal provisions is paramount. If considering such a venture, seeking guidance from experts, like those at Sapph-x, can pave the way for a seamless business experience.