The draft must now be signed into law by President His Highness Shaikh Khalifa Bin Zayed Al Nahyan. It will come into force three months after publication in the UAE's official gazette, which is expected before the end of this year according to local press reports.
Dubai-based company law expert Alan Wood of Pinsent Masons, the law firm behind Out-Law.com, said that the announcement meant that a "further hurdle" to the implementation of the law, which was first drafted in 2006, had been cleared.
"The decision to drop the discussion about foreign ownership restrictions from the draft bill will disappoint many and the spotlight in that regard will now turn to the Investment Law, which is due to be discussed after the summer," he said.
"However, other aspects of the draft law have survived the FNC's review process and the hope is that the new law will clarify and extend a number of key areas to reflect the quantum change in the UAE's position as an international trading hub since the existing law was introduced in 1984," he said.
The new Companies Law was first drafted in 2006 and is intended to update the existing regime, which dates back to 1984. During a length debate in February the FNC removed the most eagerly anticipated clause from the new legislation, which would have changed current rules limiting foreign ownership of companies based outside the 'free zones'. Foreign ownership rules will now be considered as part of the Investors Law, which is not due to be discussed until after the FNC's summer break.
The change in the name of the law was intended to ensure there was "no ambiguity in the meaning or definition of a company", and to make sure that all types of commercial enterprise were subject to the new law, according to an automated translation of the FNC's official account of the debate.
The FNC also made changes to the draft law in relation to its corporate social responsibility provisions. The new law will allow companies to voluntarily contribute up to 2% of their average profits during the two fiscal years before the contribution is made "for the purpose of serving the community", and to deduct this donation from their annual accounts.
According to a report in Gulf News, the new law will criminalise manipulating the markets to create or maintain an artificial price for tradeable securities. The offence will carry a prison term of up to six months and a fine of up to 10 million dirhams (approx. £1.8 million). Misrepresenting a company's true financial position will carry a penalty of up to three years in prison, a 500,000 dirham (approx. £90,000) fine, or both.
