Directors’ Duties in The United Arab Emirates

>> Liabilities and Penalties in The United Arab Emirates

Exercise your responsibilities carefully as the penalties for failure to do so can be severe.

Either the breach of duty itself, or the imposition  of one of the sanctions described above, may lead to disciplinary action being taken against you and/ or limitations upon you being able to continue in your role.

Under the Federal Commercial Companies  Law (No 2 of 2015) a director may be liable to  pay compensation:

  1. for any damage or loss due to an intentional or reckless breach
  2. to anyone who has suffered loss or damage due to his non-compliance and/ or breach of the Companies Law

When a company brings an action against a director, the court may issue any order that the court sees fit.

Limitation of liability

A company may grant directors the right to be indemnified out of the assets of the company against any loss or expenditure incurred by the director in defending themselves in any court proceedings. This can be in any criminal or civil cases, which relate to anything done or omitted to be done by the director, and in which a judgement acquits, or is in favour of, the director. This right can be granted through the company’s articles. Delegation of authorities

Any director may appoint another director as his/her alternate who shall be entitled to vote in accordance with the appointing director’s instruction (if any) separately from his own vote.

A director can delegate powers under his power of attorney if his power of attorney includes subdelegation powers. These delegated powers should be set out in a sub-power of attorney.

Directors and officers (“D&O”) insurance

A company may obtain and maintain directors and officers insurance. The company may purchase and maintain insurance for any directors or officers against any liability or expense.

UAE law requires insurers operating in the UAE to be IA (Insurance Authority) approved.


Latest version updated 10th April 2018

Country Breakdown

9.27

Million

Population

DH

United Arab Emirates Dirham

Currency

$ 348.7

Billion

GDP

83,600

km2