Long-awaited companies law remains in limbo, with no reason given for a new delay in its passage through the FNC.
New delay hits UAE companies law
ABU DHABI // The long-awaited companies law remains in limbo, with no reason given for a new delay in its passage through the FNC.
After spending several years in the planning stage the law, first drafted in 2006, was debated by the FNC over four marathon sessions in February - the longest the council has ever spent on a single piece of legislation.
Even then, it did not quite conclude its debate, leaving a few clauses to be finalised after further consulation with the Ministry of Economy.
After council members pushed for the removal of the most anticipate clause, which would have removed the requirement for all companies outside the free zones to be majority Emirati owned, the law was sent back to the councils finance committee to finalise four articles.
They covered the legal definition of corporate social responsibility, voting rights, definitions of kinship and types of firms covered by the law.
The council was then supposed to discuss the law on March 6, but on March 5 Dr Anwar Gargash, the Minister of State for FNC Affairs, wrote to the council to say the meeting would be postponed to allow for further discussion.
That surprised several members, as council's finance committee had earlier that week concluded its discussion with ministry officials about the remaining articles.
Further meetings with officials were subsequently held, and a letter from the ministry said it was ready for the concluding debate to be held last Tuesday (May 7).
However the Speaker, Mohammed Al Murr (Dubai) asked for that meeting to be postponed to this Tuesday, which members agreed to.
As a result, no session was held last week, despite the FNC having previously said it would meet every week until its summer recess in mid-June, to deal with a backlog caused by a five-week hiatus last month.
But to members' surprise, the agenda for this Tuesday's session makes no mention of the companies law.
"The committee has already prepared the report and is ready, it is up to [the council] now," said Ali Al Nuaimi (Ajman), a member of the finance committee.
He said the delay was not from the ministry and therefore the "ball was in the council's court".
"We do not know the reason for the lateness," he said.
He said it was for the Speaker, not the committee, to decide when the debate would be held.
Lubna Qassim, the director of the economic legislations department at the Ministry of Economy who helped draft the law, said in February the law should be passed soon or it risks becoming outdated.
She said the law was required to help improve the business and investment climate. The existing companies law dates back to 1984.
Ross Barfoot, a corporate partner at the Abu Dhabi office of the law firm Clyde & Co, said further delay could have a dampening effect on the UAE's business environment.
"Investors know that new legislation is coming but don't know when and this uncertainty affects their confidence in committing to business ventures," he said.
"Although the much anticipated foreign ownership restriction provisions have been stripped out, we are still keen to see the promulgation of the law as it seeks to modernise and update the current law, which will benefit both local and international investors."