REALWorld Law

Corporate vehicles

Corporate governance

What corporate governance requirements apply to each type of corporate vehicle used to invest in real estate?

United Arab Emirates - Abu Dhabi

United Arab Emirates - Abu Dhabi

(a) Within Abu Dhabi and outside the Abu Dhabi Global Market free zone

Limited liability company (LLC)

An LLC must:

  • appoint a UAE-certified financial auditor before the end of its first year of business, and the company accounts must be certified by such auditor each fiscal year;
  • hold a general assembly (shareholders' meeting) each year for all shareholders; and
  • appoint a general manager to manage the company. The general manager can be of any nationality.

The shareholders of the LLC can choose whether to have a board of managers or not.

Public joint-stock company (PJSC)

There are greater corporate governance requirements, as one would expect, with a PJSC compared to an LLC. Since a PJSC is required to be listed it has to comply with the governance requirements of the relevant stock exchange. These include various disclosure requirements to be met and the publication of accounts and other statements. Emirates Securities and Commodities Authority (ESCA) has also issued a corporate governance code, adherence to which is mandatory for PJSCs.

Additionally, if new shares are offered, the existing shareholders have a pre-emption right before they are offered to the public (except when shares are being issued to "strategic investors" outside of the pre-emption regime).

Private joint-stock company (private JSC)

A private JSC must have a board of directors consisting of between three and 12 directors and each director's term is no more than three years (subject to re-election). From the directors, there must be a chairman and such chairman must usually be a UAE national.

The corporate governance requirements for a private JSC are less strict than a PJSC. Since private JSCs are not listed entities they are not bound by the same disclosure requirements as PJSCs, unless the private JSC voluntarily chooses to adhere to the corporate governance code which is mandatory for PJSCs.

(b) Within the Abu Dhabi Global Market free zone

There is no concept of a general manager, but a private company must have at least one director. The directors will be responsible for management and can bind the company individually as against third parties

Directors of companies in Abu Dhabi Global Market free zone are subject to increased and more detailed fiduciary duties (particularly around conflicts of interest and acceptance of benefits from third parties) compared to on-shore companies. Companies are also subject to increased administration, company secretarial compliance requirements and filings must be made with the Abu Dhabi Global Market Registrar.

A comparatively high level of information will be publicly available through Abu Dhabi Global Market (including annual accounts and names of directors).