Directors’ Duties in The United Arab Emirates

>> Powers and Duties in The United Arab Emirates

You must act within the powers imposed by the shareholders (through the Memorandum and Articles of Association of the company and otherwise), and the Law.

Duties – skill and care

When exercising directors’ powers, you are required to exhibit good faith, act honestly and lawfully, with a view to the best interests of the company.

A director shall exercise care, diligence and skill when exercising his/her powers and the standard required is that expected from a person with your knowledge and experience. You have a duty to represent the company pursuant to the shareholders meeting instructions.

Duties – general

As a director, you must act in a way which you think is most likely to promote the success of the company. You need to consider a number of statutory factors relating to corporate requirements, including the long term consequences of your decisions, the company’s reputation and the interests of other stakeholders such as employees, customers and the community. day to day management of the company

  • maintaining a shareholders register
  • maintaining a register of directors and secretary
  • maintaining minutes of meetings relating to appointments of officers made by the directors, board meetings, committee board meetings and of shareholder meetings
  • maintaining accurate accounting records sufficient to show and explain transactions and so as to disclose with reasonable accuracy the financial position of the company
  • where the net assets fall below 75% of the company’s share capital the directors shall, within 15 days, notify the shareholders and DAFZA, so that the shareholders may take steps to remedy the situation
  • producing accounts for each financial year (within 3 months of the end of the financial year), to be:
    1. approved by the board
    2. audited by auditors

Duties – other

There are many other areas of law that impose duties on directors and senior managers. Matters likely to be of particular relevance, depending upon the nature of the entity and its activities,  are set out below:

  • You must comply with all competition law and regulations. While a competition law  has been recently implemented in the UAE its scope and application is still uncertain and further guidance must be sought where this  is a concern.
  • You must comply will all areas of tax law and regulations. Failure to do so could leave you liable for unpaid customs duties. Other than import duty (in relation to movement of goods from DAFZA onto the UAE mainland) DAFZA is a corporate and income tax free jurisdiction.

Labour law

Any serious accidental injury and investigations and environmental breaches if applicable must be reported in accordance with the company’s policy. For example, some aspects of Federal Law 8 of 1980 (“Labour Law”) are applicable to the health and safety of workers. In particular the Labour Law regulates the employees’ hours of work and leave, safety, preventive measures, health and social care for workers; and compensation in respect of employment accidents and occupational diseases.

The Labour Law places employers under  statutory duties to protect employees against the dangers of employment accidents and occupational diseases that may occur at work. Employers must establish health and safety measures and monitor their implementation.

Federal Ministerial Orders have also been issued  to amplify on various aspects of the Labour Law, for example:

  • Ministerial Order No. 6(1) of 1981 specifying operations for which it is unlawful to employ women, such as handling certain chemicals, etc
  • Ministerial Order No. 32 of 1982 specifying measures to be taken for the protection of workers from work-related risks.

Bribery

Like all employees, you must comply with  Anti-Bribery and Corruption legislation, including the UK Bribery Act and the US Foreign Corrupt Practices Act, and must understand, follow and promote your company’s internal policies  and procedures.

The UAE does not have a standalone bribery law. The UAE Penal Code is the main source of legislation and prohibits bribery pursuant to Articles 234-239. There are also numerous laws applicable to bribery at both federal and regional level which support the Penal Code.

The Penal Code prohibits bribery in the public and private sectors. The bribery of a public officer or one in charge of a public service makes the person who receives, offers and facilitates a bribe liable under the Penal Code.

The Penal Code further deals with bribery in  the private sector. However, only the person  who accepts the bribe is guilty of an offence –  the offeror or facilitator is not liable under the  law as drafted.

The sanctions under the Penal Code are focused on individuals (directors, managers, employees and public officials) rather than companies. Sanctions include fines and imprisonment of up  to 10 years. Depending on the Emirate there may also be additional sanctions under local law.

Data protection

There are no specific provisions under UAE  Federal Law relating to the type of measures to be taken or level of security to have in place against the unauthorised disclosure of personal data. There are, however, a number of provisions in a number of different laws that relate to data protection and privacy.

The Cyber Crime Law focuses on offences  related to accessing data without permission  and/or illegally Articles 2 and 3 of the Cyber Crime Law, including financial information (eg credit card information or bank account information) Articles 12 and 13.

The principle of a right to privacy of personal information is enshrined in the UAE Constitution and arises again in a number of different UAE laws.

Under the UAE Penal Code, the primary source of criminal law in the UAE, it is an offence to publish news, pictures or comments relating to the secrets of a person’s private or family life or to use another person’s ‘secret’ for your own, or someone else’s, advantage without the consent of the person to whom the ‘secret’ relates. A failure to obtain such consent would constitute a breach of the Penal Code Article 378 and could also be a breach of the Cyber Crime Law if the personal data is obtained or processed through the internet or electronic devices in general Articles 21 and 22; and Telecoms Law to the extent that data is obtained through any means of telecommunication, including through a telecommunications service provider, or any other electronic means (Clause 3 Privacy of Consumer Information Policy).

According to the Penal Code (Clause 379), personal data may be transferred to third parties inside and/ or outside of the UAE if the data subjects have consented in writing to such transfer.


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