Article 71 – Sole ownership –Article 8 provides that a limited liability company may be established by one natural or corporate person. This approach follows free zone regulations which allow the incorporation of a free zone establishment (FZE), which originally is a common law concept. Under the Existing Law, limited liability companies may only be established by a minimum of two founders and a maximum of fifty. The maximum limit of fifty partners still applies under the New Law.
Article 79 – Pledge of Quotas1 (shares) - The New Law provides that limited liability quotas (or shareholdings) may be pledged. The Existing Law is silent in respect of pledge of quotas, and so it is questionable whether quotas can be pledged legally. This new development will assist raising of debt finance by owners of limited liability companies and will enhance the security package that can be offered to the financiers. Pledge of quotas will add another level of comfort to beneficial owners of quotas (foreign investors) in respect of their shareholding relationship local registered owners (nominee).
Article 80 – Preemption Rights – preemption rights are still mandatory by operation to law under the New Law, as is the case under the Existing Law.
Article 83 – Company’s Managers – Under the New Law, companies may appoint one or more managers without setting out a maximum number of managers. Under the Existing Law, the maximum number of mangers is five.
Article 86 – Competition – Under the New Law, manager(s) of a company may not be allowed to operate any business in competition with the business of the company in question. Defaulting manager(s) will be discharged and compensate the company accordingly. This matter is not addressed under the Existing Law.
Article 93 – Invitations to General Assemblies– Invitations to general assemblies need to be sent out 15 days before the date of the meeting or less than 15 days if all partners agree. Under the Existing Law, the notice period required is 21 days which may not be abridged.
Article 96 – Quorum for General Assemblies – Under the New Law, general assemblies will not be valid unless attended by partners owning 75% of the capital of the company. If the quorum is not satisfied in the first meeting, the second meeting shall be called for within 14 days from the first meeting, which shall not be valid unless attended by partners owning 50% of the capital of the company. If the quorum is not satisfied in the second meeting, a third meeting shall be called for after the lapse of 30 days from the date of the second meeting, which shall be valid regardless the quorum attended such meeting. This means that the existing difficulties in achieving quorum general assemblies for public joint stock companies at the first attempt have been magnified by the New Law. Resolutions of general assemblies shall only be valid if approved by partners owning at least 50% of the capital of the company. Under the Existing Law, general assemblies may only be valid unless attended by partners owning 50% of the capital of the company. If the quorum is not satisfied in the first meeting, a second meeting shall be called for within 21 days from the first meeting, which shall be valid regardless of the quorum attended such meeting. Any amendment to the articles of the company requires the approval of partners owning at least 75% of the capital of the company.
Article 103 – reference to joint stock companies rules – Article 103 of the New Law refers to the rules governing joint stock companies with respect to any matter which is not addressed under the rules of limited liability companies. Such reference is not provided for under the Existing Law.
Article 79 – Pledge of Quotas1 (shares) - The New Law provides that limited liability quotas (or shareholdings) may be pledged. The Existing Law is silent in respect of pledge of quotas, and so it is questionable whether quotas can be pledged legally. This new development will assist raising of debt finance by owners of limited liability companies and will enhance the security package that can be offered to the financiers. Pledge of quotas will add another level of comfort to beneficial owners of quotas (foreign investors) in respect of their shareholding relationship local registered owners (nominee).
Article 80 – Preemption Rights – preemption rights are still mandatory by operation to law under the New Law, as is the case under the Existing Law.
Article 83 – Company’s Managers – Under the New Law, companies may appoint one or more managers without setting out a maximum number of managers. Under the Existing Law, the maximum number of mangers is five.
Article 86 – Competition – Under the New Law, manager(s) of a company may not be allowed to operate any business in competition with the business of the company in question. Defaulting manager(s) will be discharged and compensate the company accordingly. This matter is not addressed under the Existing Law.
Article 93 – Invitations to General Assemblies– Invitations to general assemblies need to be sent out 15 days before the date of the meeting or less than 15 days if all partners agree. Under the Existing Law, the notice period required is 21 days which may not be abridged.
Article 96 – Quorum for General Assemblies – Under the New Law, general assemblies will not be valid unless attended by partners owning 75% of the capital of the company. If the quorum is not satisfied in the first meeting, the second meeting shall be called for within 14 days from the first meeting, which shall not be valid unless attended by partners owning 50% of the capital of the company. If the quorum is not satisfied in the second meeting, a third meeting shall be called for after the lapse of 30 days from the date of the second meeting, which shall be valid regardless the quorum attended such meeting. This means that the existing difficulties in achieving quorum general assemblies for public joint stock companies at the first attempt have been magnified by the New Law. Resolutions of general assemblies shall only be valid if approved by partners owning at least 50% of the capital of the company. Under the Existing Law, general assemblies may only be valid unless attended by partners owning 50% of the capital of the company. If the quorum is not satisfied in the first meeting, a second meeting shall be called for within 21 days from the first meeting, which shall be valid regardless of the quorum attended such meeting. Any amendment to the articles of the company requires the approval of partners owning at least 75% of the capital of the company.
Article 103 – reference to joint stock companies rules – Article 103 of the New Law refers to the rules governing joint stock companies with respect to any matter which is not addressed under the rules of limited liability companies. Such reference is not provided for under the Existing Law.
