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DUTIES, POWERS AND LIABILITY OF THE BOARD OF DIRECTORS IN THE UAE

Last updated on April 30th, 2020 at 04:12 pm

Duties of the Board of Directors:

  • Implementing a policy that ensures stakeholder welfare;
  • Ensuring the company has sound administrative, financial and accounting systems;
  • Establishing procedures to manage conflicts between board members, senior management, shareholders and so on;
  • Ensuring the application of governance rules in the company.

Powers of the Board of Directors:

The Board of Directors shall have all the required powers to do such acts as required for the object of the company, other than as reserved by the UAE Federal Law No. 2 of 2015 on Commercial Companies or the Articles of Association of the company to the General Assembly. However, the Board of Directors may not enter into loans for periods in excess of three years, sell or pledge the property of the company or the store, mortgage the company’s movable and immovable properties, discharge the debtors of the company from their obligations, make compromise or agree on arbitration, unless such acts are authorized under the Articles of Association of the company or are within the object of the company by nature. In other than these two events, such acts require to issue a special decision by the General Assembly.

Liability of the Board of Directors:

  1. The members of the Board shall be liable towards the company, the shareholders and the third parties for all acts of fraud, misuse of power, and violation of the provisions of UAE Federal Law No. 2 of 2015 on Commercial Companies or the Articles of Association of the company or an error in management. Every provision to the contrary shall be invalid.
  2. Liability as provided for in above shall apply to all the members of the Board if the error arises from a Decision passed unanimously by them. However, in the event of the decision passed by the majority, the members who object to such decision shall not be held liable provided they state their objection in writing in the minutes of the meeting. Absence from a meeting at which the decision has been passed shall not be deemed a reason to be relieved from liability unless it is proven that the absent member was not aware of the Decision or could not object to it upon becoming aware thereof.
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