AI Magazine Issue 1 2017

52 Acquisition International - January 2017 Due to the significant impact corporate governance has, not only on the interest of all stakeholders but also on the state’s economy, and with the view to develop its corporate governance regime and bring it into line with the best international practice, the UAE’s government had taken several steady steps and issued several laws and regulations to regulate managers’ and directors’ duties and liabilities. he liabilities imposed on managers and directors in the UAE can be either contractual (based on a management or employment contract or on a power of attorney - the ‘POA’) or statutory (as may arise under any legislation, laws or regulations issued in the state) and they are divided into civil liabilities in general, and criminal liabilities in certain cases where a breach is considered to be a crime, under the UAE’s Commercial Companies’ Law (the ‘Law’) or any other legislation or law. Civil liability is usually established when a manager or a director breaches any of the duties or obligations prescribed in any legislation, law or regulation, in the Articles of Association (the ‘AOA’) or Memorandum of Association (the ‘MOA’) of a company or in its general assembly’s resolutions, or if they act outside the authorities granted to them therein, in their employment or management contracts or their POA. Given its special nature and objectives, the Law is the main legislation regulating managers’ and directors’ duties and obligations which all managers and directors should be acquainted with in order to avoid violating them, which might render them legally accountable. Accordingly, the Law classifies these duties and obligations into general (applicable to all commercial companies) and specific (according to the nature or legal form of the company). The general duties and obligations imposed on all managers and directors of limited liability and joint stock companies under the Law include the following: • To comply with all legislation and laws issued in the state, the provisions of the MOA and AOA, their employment or management contracts and the resolutions issued by the general assembly; • To register the companies’ MOA and AOA and all their amendments in the commercial register; • To preserve the companies’ rights and to act for its benefit with the care of a prudent person, in accordance with its objectives and the powers granted to them and to avoid fraudulent acts; • Not to manage, participate or be involved in any business in competition with the company; • To prepare the annual budget, calculate profits and losses, prepare an annual report about the company’s activities and its financial position and have them audited by the company’s Name: Mojahed Al Sebae Partner Company: Galadari Advocates and Legal Consultants Email: mojahed@ galadarilaw.com Web: www.galadarilaw.com Address: Office 502-504, Level 5, Gate Precinct Building 5 Dubai International Financial Centre (DIFC) P.O. Box 506916, Dubai, UAE Phone: +971 4 371 1999 Are You Aware of Your Duties as a Manager or Director? T “Law is the main legislation regulating managers’ and directors’ duties and obligations which all managers and directors should be acquainted with”