In Dubai, one of the most popular forms of local company is Limited Liability Company LLC whose setup requires presence of a local partner who will own majority interest of the company. Amongst the specific requirements fulfilled by foreign investor when going for company setup in Dubai, drafting and notarizing Articles of Association (AOA) is a significant matter.
Our business setup consultants Dubai can offer complete information on the steps required in setting up business in Dubai and can assist international entrepreneurs understand the legal aspects involved in company formation Dubai.
What does Articles of Association stand for?
AOA stands for Articles of Association. When a UAE company is formed, the shareholders get together and draft memorandum and articles of association. AOA specifies the purpose of the company, what business will the company do, regulations for company’s operations, how tasks will be accomplished within the framework, appointment of director’s process and procedure for management of financial records. Moreover AOA of a UAE company also identifies the way how many shares it will issue, who are the initial subscribers, what is the power of directors, how will company pay dividends, audit financial records and power of voting right. In short, AOA is actually a set of rules which can be deemed as a user’s manual for the company as they highlight the methodology for accomplishing the tasks that must be carried out on a daily basis. If you are interested in drafting articles of association and any other requirements for setting up a business in UAE, feel free to contact our Dubai business setup consultants.
Board of Managers Mentioned by AOA
Articles of Association specify a few requirements when deciding for board of managers for the company. These requirements are related to qualities and the experience of a candidate or future company director. Amongst them, following are most important,
- The candidate should provide information about practical experience as former director
- Should provide details of which companies the candidate holds shares
- Declaration of agreement with UAE Commercial companies Laws provisions and decision to take due diligence is required
- BOD can appoint managing director of company and specify his related duties
Board of managers of UAE company can hold general meetings at main office of company or any other place approved by all managers. Managers of a UAE company are required to meet minimum 4 times per year.
Power of Auditors as per AOA
- A UAE company has one or more auditors who are appointed by general assembly. Appointed auditors must be authorized and UAE certified public accountant.
- Auditors will have to perform their duties according to international standards on auditing, UAE commercial companies law and other local applicable regulations. They also must perform their activities in complete accuracy.
- According to AOA, an auditor cannot be business partner, director or have executive position in the UAE company.
- Auditors can conduct internal audits, review and analyze the financial situation of the company and can evaluate the balance sheet. They have complete access to the firm’s records, financial reports and any other related documents required for their actions.
Company Liquidation According to AOA
Articles of Association specify the ways by which a company can be liquidated. A UAE company is terminated only when owners of the company unanimously decide. Mostly, a company is liquidated when profits are quite less than losses. BOD decides the process of liquidation and can put managers of the company as liquidator until a qualified liquidator is selected.
Read More: Company Liquidation in Dubai
Difference between MOA and AOA
According to UAE legislation, companies in UAE must draft their Article of Association and Memorandum of Association (MOA). The key difference between them is,
MOA prevails over AOA. MOA is root document of UAE company that contains basis details, objects and powers of the firm. AOA on the other hand is also a major document but provides rules and regulations of company’s operations.
MOA is subsidiary to company act whereas AOA is subsidiary to both MOA and company act. Also MOA must have 6 clauses and be registered with registrar of companies whereas AOA is formulated as per company’s discretion and it is not required to be filed with registrar, however organization may do so voluntarily.
We invite you to talk to our team of Dubai business setup consultants and find out more about the legal requirements to setup a UAE company. Visit our website Business Setup Dubai or contact us by sending your query on firstname.lastname@example.org.