"The text of article 227 of the Federal Law No. 8 of 1984
shall be replaced with the following text:
The limited liability company shall have a capital
sufficient for realizing the objective for which the company was established.
The capital shall be determined by the partners of the company and it should
consist of equal shares.
The share should be indivisible; accordingly, if several
persons own one share, they should elect one of them to be the sole owner of
such share in the Company. The Company shall have the right to fix a period in
order to make such election, but if the joint holders failed to elect one of
them, the company shall have the right, after the expiry of such period, to
sell the share on behalf of the holders thereof, and in such case, the partners
shall have the right of redemption for purchasing such share. The profits and
losses will be distributed among the shares equally, unless the memorandum of
association stipulates otherwise.
Article Two
This decree shall be published in the official gazette and
will be effective from 1/6/2009."
Some
are concerned that the language of the first paragraph may leave the
question of what is sufficient capital to regulators. The second
sentence may say that the partners of an LLC will determine the
capital, but the first sentence leaves the question of who determines
what is sufficient up in the air. Might not each emirate's own
department of economic development begin arbitrarily determining what
it believes is the sufficient amount of capital to launch ventures in a
given industry?
Time
will tell, but word is that with capital now to be determined by LLC
partners, license renewals will be subject to submission of an audited
annual financial statement. Submitting annual statements has always
been a requirment of LLCs, but one apparently observed in the breach.
Now authorities will be looking to make sure that a start-ups books go
on the record.
