Insight: Is your
business health costing you

Regular compliance health checks are the best medicine to mitigate risks

April 2017

We can assist you with carrying out a review of your existing corporate and licencing structure and practices, to ensure compliance and mitigate risk.

A Health Check for your Business

It is important to conduct a periodic review of your business to ensure you are

  • compliant with applicable legal requirements
  • structured in an optimal way
  • aware of potential issues on the horizon of your business
It is advisable to regularly revisit these issues from time to time, as the nature of your business or the applicable legal requirements may have changed. A thorough health check will help identify areas of weakness and any potential liabilities, giving you the chance to mitigate any risks.

Areas of focus:

There are numerous licences required to conduct business activities in the UAE. It is important to regularly review your business activities and ensure you have all required licences and permits in place.

Failure to do so could result in sanctions from government authorities, including fines or temporary suspension of your ability to conduct your business.

Limited Liability Companies (LLCs) are obliged to update and/or amend their memorandum of association before 30 June 2017, in order to be compliant with the new UAE Companies Law.

LLCs that have not implemented these changes by the deadline are at risk of being dissolved automatically and/or incurring fines (a fine is specified in the new Companies Law as AED 2,000 per day).

Mandatory changes include (amongst others):

  • inclusion of LLC address
  • reference to how share pledges may be made
  • changes to quorum requirements
  • changes to voting requirement for passing ordinary and special resolutions of a general assembly of an LLC

Corporate structure is given a lot of thought when a business is first started or a company moves into a new jurisdiction, but not thereafter. This can be costly.

It is important to ensure your company's corporate structure supports the current operations of your business and future expansion, limits liability and protects your investments.

Review whether new corporate vehicles should be introduced to protect a business and its assets, from potential risks and liabilities, from other parts of the business.

Further consider the benefit of potentially relocating your company to one of the numerous free zones.

It is advisable to revisit these whenever there are significant changes in your business. This is to ensure your interests are properly protected and there are appropriate agreements and mechanisms in place to govern any potential disputes.

Being protected by up-to-date registrations is critical to the value of your business.

As your business expands, you should consider registration in additional jurisdictions.

If you rely on intellectual property owned by others, ensure the terms of your licence agreements are robust. Further, confirm the licensor does in fact own the intellectual property and has taken reasonable steps to protect it.

People are essential to the success of all businesses, and a few key employees often build-up knowledge that is impossible to replace. It is advisable to consider if your employment contracts help prevent your competitors from poaching your staff, and ensure your employees cannot take sensitive information.

You also need to be aware of the rules for hiring and firing staff, to ensure your business is not exposed to unnecessary liability.

Companies need to be mindful of the requirement to make gratuity payments when staff leave, and ensure they have correctly calculated and budgeted for these payments.

All companies should have processes in place to ensure they receive suitable advice before entering into commercial contracts.

If you enter into a large number of contracts, we recommend you develop standard agreements to use as a starting point. Or develop checklists to make sure you are assessing and managing the key risks.

You should review these from time to time to check they still meet your needs, and to update them to reflect changes to your business, lessons learnt, and relevant legal developments.

Directors have a range of legal duties and the consequences of breaching these can be significant. It is important directors are aware of these duties, and all decisions are made in accordance with relevant corporate documents and laws, and properly documented.

If your company finds these requirements burdensome, consider if you can amend your corporate documents to streamline the process while still maintaining suitable checks and balances.



Key Contacts

Our team have a wealth of experience from leading international law firms and a number of in-house environments. More than just experts in their practice areas, our people are dedicated, engaged professionals who take the time to understand our clients' businesses.

Nathan Banks
Founder & Managing Partner
+971 50 189 3276


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