In light of Federal Decree-Law No. (32) of 2021 on Commercial Companies

Commercial companies are considered private legal entities, as stipulated in Article (92) of the Federal Civil Transactions Law, which enumerates legal entities. Article (93) of the same law clarifies a juridical person shall enjoy all rights, save those pertaining (exclusively) to the capacity of being a natural person, within the limits laid down by law. Such persons shall have: ‑ separate financial liability, legal capacity within the limits laid down by the document establishing it, or as laid down by law, the right to bring proceedings and a separate place of residence,the place of residence of a juridical person shall be deemed to be the place in which it has its administrative centre,. Article (94) of the same law stipulates that legal entities are subject to the provisions of their respective laws. Consequently, commercial companies are subject to the provisions of the Commercial Companies Law, which in the United Arab Emirates is Federal Decree-Law No. (32) of 2021 on Commercial Companies.

Article 8 of the aforementioned Decree-Law defines a company as: “The Company is a contract whereby two or more persons undertake to participate in an economic project that aims to achieve profit by contributing a share of money or work, and to divide among themselves the profits or losses arising from such project”

Article 21 of the same Decree-Law clarifies that a The Company shall, as of the date of registration in the commercial register with the Competent Authority, acquire the legal personality in accordance with the provisions of this Decree Law and the resolutions issued in implementation hereof.

The aforementioned article also states that during the incorporation period, the company shall have legal personality to the extent necessary for its incorporation. The company shall be bound by the acts of the founders in connection with the incorporation procedures and requirements within such period, provided that such incorporation is completed in accordance with the provisions of this Decree Law.

The legislator did not overlook the status of a company upon its dissolution ,the company shall undergo liquidation. During the liquidation period, the company shall maintain its legal personality to the extent required for the liquidation process. The phrase “Under Liquidation” should be added to the name of the company in a clearly written manner.

Finaly, we state that the subsidiaries of a holding company shall have legal personality and financial liabilities independent of the holding company.

Based on the foregoing, we observe that the company possesses legal personality, which qualifies it to acquire rights, bear obligations, issue decisions, undertake legal actions and its legal representative acts on its behalf. We also note that the provisions governing the legal personality of commercial companies clarify that it does not differ significantly from a natural person, allowing us to say that it is a person in the truest sense. This is of paramount importance and necessity for the growth and development of economic and legal life.

Dr. Ghassan Arnous

Consultant , Zayed Al Shamsi Advocates and Legal Consultants