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Capital Companies
Public Joint Stock Company(PJSC)
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Definition
³Any Company whose Capital is
divided into Transferable Shares of
Equal Value. The Liability of eachShareholder is limited to the Value
of the shares to which he has
subscribed´ ( A
rt. 64 CCL)
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When a Company is PJSC
Any Company
Capital must be divided into EQU AL V ALUE
Shares are TR ANSFER ABLE
The Liability of each Shareholder is LIMITED
Liability of Shareholder is limited to the value
of shares to which he has SUBSCRIBED
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What is share
A share is the interest of a Share-
Holder in a Company
The Capital of a Company is
divided into certain indivisible Units
of a Fixed Amount, these UNITSare called SH ARES
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SH ARES means Share in the
Share Capital of a Company.
A share is evidence by a SH ARE
CERTIFIC ATE
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Share Capital
Share Capital is a C APIT AL
R AISED by a Company by
ISSUE of Shares
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Characteristics
The Name of the PJSC should be
derived from its activities or Objects.
The term ³Public Joint Stock´ mustbe added to the company name ( Art.
65 CCL).
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How to Incorporate PJSC
A PJSC can be incorporated only by an
EMIRI DECREE, therefore, founders
are not free to draw up the Company¶s
Statutes.
The specimen may NOT be changed
without the approval of the Minister ( Art.
68)
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Statute & A.A. must be similar to
Ministerial Decision
The Statutes and Articles of
Association must be identical to the
specimen issued and published asMinisterial Decision (By Law No. 64
of 1989)
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Shareholders
The members/shareholders of the
company can be many and not
necessarily known to each other.
Death or Bankruptcy of one or more
members has no effect on the duration
of the Company
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Capital of PJSC
The Capital of the PJSC is divided into
Transferable Shares and the Liability of
Members/Share Holders is, contrary to
partnerships, PROPORTIONATE to the
value of the Shares owned by them ( Art.
64 CCL)
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Formation of the Public Joint Stock
Company (PJSC)
THE FOUNDERS
The Founders are those persons who
sign the initial Statutes andA
rticles of Association with the intent to assume
the Liability arising there from. Unless
there are at least TEN FOUNDERS, the
incorporation of the can not be licensed.
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The Statutes
The founders should prepare
between them (a) the Statutes and
(b) Articles of Incorporation inaccordance with the specimen,
published as ³BY L AW´ (64 of 1989)
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The Articles of Incorporation should
include following particulars:
1. The name of the Company and its
Head office
2. The duration of the Company3. The Object of the Company
4. The names of the Founders, their
Places of residence, professions &Nationalities
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Minimum Capital for PJSC
5. The amount of the Capital, number of
Shares into which the capital is
divided, the nominal value of each
share and its kind.
The Minimum capital of a PJSC is
AED 10,000,000.
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Details of Shares
6. A Statement of each share in kind,
name of the subscriber, the special
conditions thereto and the liens and
preferential rights imposed on the
shares
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Ex penditure & Founders¶ Undertaking
7. A statement of the approximate
expenses, wages and costs undertaken
to be paid by the company for its
incorporation.
8. An undertaking by the founders to
finalize incorporation formalities.
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Procedure for Incorporation
After agreeing and signing the statutes
and Articles of Incorporation, the
founders have to follow up the
registration formalities with the
Competent Authority in the Emirate
where the company is being
incorporated ( Art. 71)
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Issue of Licence
If the Competent Authority
approves the application, it will
issue the decision to licence theincorporation of the company.
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The Subscription
The subscription formalities for the
company shares shall start within
15 days from the date of thedecision of the Competent Authority
to incorporate the Company ( Art.
76).
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Invitation for Public Subscription
Invitation shall be printed in Two
Local daily newspapers published
in the Arabic Language at leastFive Days before the
commencement of the Subscription
( Art. 77).
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In addition to a summary of the statutes &
Articles of Incorporation, the prospectus
should include t
he following particulars:
1. Statement that the founders have paid the
required percentage of the value of the
shares subscribed by them.
2. The Maximum number of shares that may
be subscribed by each person.
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3. The number of shares required to be
held to qualify for membership of the
Board of Directors.
4. Date, place and conditions of
subscription.
5. Percentage of shares owned by Nationals
and the conditions of the disposal thereof.
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Prospectus must be signed by
Founders
6. Any other matters affecting the rights or
obligations of the shareholders.
The founders should sign the
prospectus and will be jointly liable for
the accuracy of the particulars
mentioned therein.
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Subscription by Founders
Before publishing a prospectus
inviting subscription for shares,
founders must themselves subscribeto a Minimum of 20% and a
Maximum of 45% of the SH ARE
C A
PIT A
L of the company ( A
rt.7
8)
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1. The subscription should be open to the
Public for a period of not less than 10
days and not more than 90 days
during which all shares, after
deducting founders¶ shares, have to be
offered for subscription.
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2. The Company will not be incorporated
unless all its shares are fully subscribed
to.
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Extension of Subscription Date
3. If the subscription is not completed within
the prescribed limit of time, the founders
may, by decree of the Competent Authority, extend the subscription for a
period not exceeding 30 days, provided
that the Ministry is notified of theCompetent Authority¶s decree in this
regard ( Art. 82)
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R evocation of Incorporation when the
proper response is not found
4. Even after extension to time the shares
being not subscribed by the public, the
founders may revoke the incorporation
of the company, or, subject to the
approval of the Minster, either reduce
the capital or subscribe to the remaining
unsubscribed shares themselves ( Art.83).
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R eturn of Paid-up value in case of
R evocation
5. If the incorporation of the company
is revoked, the founders will be
jointly liable for the return of thepaid-up value of the shares to the
subscribers ( Art. 84).
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Proportionate allocation of Shares
If the subscription exceeds the number
of shares offered, the shares shall be
allocated to the subscribers in
proportion to the number of shares for
which they have subscribed.
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As for as possible allot share to every
Subscriber
Allocation shall be made up to the
nearest complete share, provided that
none of the shareholders, as a result of
the allocation, should be deprived of
participating in the company irrespective
of the number of shares subscribed to
( Art. 85).
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PJSC
First General Body Meeting
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The Constitutive General Meeting
Once the capital has been fully
subscribed to, the founders must, within
30 days from the closing date of the
subscription, convene the subscribers to
attend a Constitutive General Meeting
( Art. 88).
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The Main functions of the meeting are
the following:
1. Consideration of the report of the
founders dealing with the process of
incorporation and the expenses
involved;
2. Election of the First Board of Directors
and Appointment of the company¶s
Auditors;
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3. Approval of the evaluation of shares
contributed in kind;
4. Declaration that the company hasbeen finally incorporated.
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During R egistration Period- It is
Corporate Personality
During the registration period and while
the incorporation formalities are being
implemented the company is
considered to have a corporate
personality necessary for the purposes
of implementing this procedure ( Art. 72).
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Company bound by the actions of
Founders
The company will be bound by the
actions of the founders and shall bear
the consequences and costs thereof
during this period, provided that the
incorporation of the company is legally
completed.
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Who will Manage PJSC
A Public Joint Stock Company is
Managed by a Board of Directors.
The Articles of Association shall specify
the method of its Composition, the
Number of its members and their Term
of membership.
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Minimum & Maximum BOD
The number of its Members may
not be less than Three (3) and not
more than Fifteen (15) Directors( Art. 95).
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How the Directors be appointed
Directors are appointed at the ordinary
General meeting by secret ballot.
However, as an exception, the
founders may appoint from amongst
them the First Board of Directors.
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Term of Board of Directors
The Board should be appointed for a
period not more Three years. Unless
the statutes provide otherwise, a
Director may be appointed for more
than one term ( Art. 96) .
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Majority of BOD must be UAE
Nationals
The CCL stipulates that the
Majority of the members of the
Board shall be U
AEN
ationals ( A
rt.100).
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Other Conditions applicable to a BOD
A member of the board, further, mustnot be convicted of a crime of Honor or Breach of Trust unless he has been
pardoned by the Competent Authorities. A person may not be a Director,
whether in his personal capacity or as arepresentative of a corporate entity, inmore than Five PJSCs whose mainoffices are in the U AE ( Art.98).
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General Powers of the Board of
Directors
The Board (BOD) will have the full
powers for the management of the
company and for the carrying out of
activities necessary for the fulfilment of
its objects.
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Excluded Powers
Except such matters which are
expressly reserved by the Commercial
Companies Law or the Articles of
Incorporation of the company to the
general meeting (e.g., approval of the
annual accounts, amendment of the
statutes).
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Matters which are excluded from the
authority of the Board (Art. 103)
1. Concluding loans for periods exceeding
three years.
2. Selling or mortgaging the company'sreal estate or store.
3. Absolving company debtors of their
commitments toward the company.
4. Conducting a conciliation or agreeing
to Arbitration.
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Company is bound by the actions of
BOD
The company is bound by transactions
entered into by its Board of Directors
performed within its competence ( A
rt.110).
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Further Restrictions on Directors
(Art. 108)
(i) A Director cannot be involved in any
activities on his own, or on behalf of a
third party, similar to the activities
carried out by the company.
(ii) A company cannot offer a loan
to, or guarantee the loan of, a
Director.
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Contract in which Director has interest
(iii) A Director with a conflicting interest in a
proposed contract with the company must
declare his interest to the Board and is
forbidden to vote in connection therewith;if he is entering into a contract himself with
the company it must be ratified by the
shareholders ( Art. 109).
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Responsibilities of Directors (Art. 111)
The directors shall be liable towards the
company, the shareholders and third
parties for: (a) all acts of fraud, (b)
abuse of authority and (c) any violation
of the Law or the company's Articles of
Incorporation as well as
mismanagement.
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BOD have to Indemnify the Company
from their actions
The company shall have the
right to initiate proceedings
against the Board of Directorsclaiming damages suffered by
the shareholders caused by
faults of the Board.
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Share holder also can proceed against
BOD
Any shareholder may independently
initiate proceedings when the company
fails to do so if the fault had caused a
particular damage to him as a
shareholder, provided that he notifies
the company of his intention to initiate
proceedings.
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Dismissal of Directors
At the General Meeting, the
shareholders may, even if stipulated
otherwise in the company's Articles of
Incorporation, dismiss all or some of the
members of the Board of Directors ( Art.
116).
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No R e-nomination for 3 Years
If a member of the board of directors
has been dismissed, he may not be re-
nominated for membership of the board
before the expiry of three years from the
date of adoption the dismissal resolution
( Art. 117).
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Remuneration of Directors
The Directors may be paid
collectively as remuneration fixed
annual sum resolved upon at thegeneral meeting.
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Maximum Ceiling on R emuneration
The remuneration must not exceed 10%
of the net profit after deducting the
depreciation, the reserve and the
distribution of a dividend of not less than
5% of the capital to the shareholders
( Art. 118).