2.0 LIMITED LIABILITY COMPANY
2.1 Although various forms of companies are available, “Limited Liability Company” (“LLC”), is the preferred vehicle for foreign investors to do business within non Free Zone areas in UAE.Important features of LLC are given below

2.2 The requirement for 51% of the shares in a non-free zone company incorporatedin an Emirate to be owned by UAE nationals has been removed.
Foreign ownership restrictions have not, however, been abolished entirely. Instead, the government has moved to a new default position that all companies may be wholly owned by non-UAE nationals, unless a specific restriction is created.In particular, companies carrying on activities with a “strategic impact” will continue to be subject to restrictions on foreign ownership.
No amendments may be made to the memorandum of association, or equivalent document, (MOA) of an existing company which prejudice UAE national ownership if the company carries on such “strategic impact” activities, without the consent of the competent licensing authority. A Cabinet Decision will be issued outlining the scope of these “strategic impact” activities and particular controls for the licensing of them.
Subject to any mandates of the Cabinet in relation to “strategic impact” activities, the power to issue decisions on the contribution of UAE nationals to the capital in companies has been devolved to the governments of individual Emirates.
The Emirate of Dubai has issued approved activities permitting 100% foreign ownership and they cover building & contracting, trading & distribution, various industrial activities, transport, logistics, investment, hotel, shopping malls& commercial complex, etc.
The Emirate of Abu Dhabi has issued approved activities permitting 100% foreign ownership and they cover agriculture, manufacturing, repair installation& maintenance, sewage & sanitation, building and contracting, ecommerce, business incubator, marketing & advertisement,research & development, rental services & cleaning, hospital, etc.
In view of the above different ownership restriction may be applied in different Emirates.

2.3 LLC can have a single or sole shareholder.

2.4 Minimum capital is not specified in the New CCL which now provides for adequate capital for LLC but the Cabinet by means of a resolution may stipulate minimum capital of LLC. All shares shall be of equal value.

2.5 Each Partner’s liability is limited to nominal value of capital;

2.6 Share shall be paid in full at the time of incorporation. In practice, licence may be issued without the proof of bank deposit.

2.7 Profit share of partner will be pro-rata to his stake in the capital, unless the Memorandum of Association stipulates otherwise. Any provision in the Memorandum of Association for excluding a partner from profit or exempting a partner from loss or stipulating fixed profit share of a partner, shall be void;

2.8 LLC shall not offer its shares for public subscription;

2.9 Transfer of shares shall be restricted and existing partners shall have the first right of refusal. In the event of disagreement of price, an expert approved by the Competent Authority has to be appointed for valuation of the share;

2.10 A partner’s share can be pledged provided this is done under notarised document and entered in the Commercial Register with the Competent Authority.

2.11 Management may be entrusted to one or more Managers (equivalent to Directors), selected from amongst partners or outside party. Memorandum of association may provide the powers of management to the Manger/Board of Managers.

2.12 If the number of partners exceeds fifteen, a Supervisory Board is to be formed. The Supervisory Board is appointed from at least three shareholders to supervise the company’s annual reports, budgets distribution of profits and to also supervise the LLCs managers and submit a report in this regard to the General Assembly.

2.13 Directors shall be responsible for preparing annual accounts and get them audited within three months from the end of the financial year and hold the Annual General Meeting within four months from the end of the financial year;

2.14 Notice of General Meeting of Partners to be sent by registered post or other approved method (21 days before General Meeting of Partners);

2.15 Quorum for General Assembly meeting is the number of partners representing 50% of the capital; in case of lack of quorum in the first meeting, another meeting will be held within 5-15 days from the date of the first meeting wherein the shareholders present will be the quorum irrespective of the number of shareholders attending.

2.16 Partners may attend the General Meeting personally or through a proxy permitted by the Memorandum (Manager may not be a proxy);

2.17 The holders of 10% of the share capital in a company may now convene a General Assembly.

2.18 5% of the net profit shall be transferred to a legal reserve (until such reserve is equal to 50% of the paid up capital) which is not available for distribution.

2.19 The Manager is required to maintain the Register of Partners and the Minutes of Directors and Partners.

2.20 LLC has to maintain books of accounts and appoint an auditor to audit the accounts. The provisions of auditors as applicable to joint stock companies shall be applied to LLC auditor

2.21 Unless otherwise provided by New CCL, the provisions of joint stock company shall be applicable to LLC.

2.22 A company’s memorandum of association must provide for the means of settling disputes between the company and its directors or as between the shareholders in the company.

2.23 A General Assembly and voting may be held electronically in accordance with controls set out by the Minister of Economy.

2.24 Shareholders are now empowered to apply to the courts in an insolvency situation to increase the share capital of a company where the requisite 75% of the shareholders do not voluntarily agree to do so.