What is a Memorandum of Association (MOA)?
A Memorandum of Association (MOA) is the primary document for establishing a company in the UAE. The official legal document which clearly outlines the structure, business purpose and information about a Limited Liability Company (LLC) is an MOA.
The MOA of an LLC is executed by all the shareholders (or their duly authorized signatories) in the presence of Court Notary Public (either online or in person) or electronically at the Department of Economy & Tourism (DET).
The shareholders of an LLC may opt for a standard template MOA, which is provided by the DET, or have one drafted by their lawyer with all the relevant mandatory provisions. Although some companies opt for the standard template, in our opinion, each company and their shareholder requirements and objectives are different. As such, it is always pertinent to draft an MOA in accordance with the requirements of the shareholders instead of using the standard template.
According to the Federal Decree-Law No. 32/2021 On Commercial Companies (the Commercial Companies Law) a company’s MOA and any amendment thereto shall be entered in the Commercial Register at the Competent Authority.
Mandatory Provisions in UAE MOA
Some of the mandatory provisions that should be included in the MOA of an LLC are:
- Name of the Parties or Shareholders: The complete name of the shareholder (individual or corporate entity) should be listed in the MOA with details of their identity documents and place and date of registration
- Name of the LLC: The shareholders of the LLC would have obtained a trade name reservation from the DET, and this name of the LLC should be exactly mentioned in the MOA
- Objectives or Business Activities: The shareholders of the LLC are also required to obtain an initial approval for the business activities they propose to carry out in the UAE through the LLC. These business activities have to be listed in the MOA as the objectives of the LLC
- Duration of the LLC: The duration of the proposed LLC has to be stated. If there are more than one shareholder, this has to be agreed between them beforehand.
- Share Capital, Number of Shares and Profit & Loss Allocation: Clear details of the total share capital of the LLC, number of shares issued to each shareholder and the profit and loss percentage has to be provided in the MOA
- Management of the LLC: This clause normally includes the appointment of a manager or a board of managers to manage the operations of the LLC. Specific powers to the manager can also be listed in this clause.
- Annual General Meeting (AGM): Matters with regard to convening the AGM, quorum for an AGM, natters to be decided at the AGM and voting decisions on matters presented at the AGM have to be stated in the MOA. This is a clause which must be very carefully discussed between the shareholders and drafted especially when there are considerations to be made about a minority shareholder or an actual investing shareholder.
Other important clauses shall include matters with regard to the Financial Year of the LLC, Dissolution & Liquidation of the LLC and Governing law and Dispute Resolution Mechanisms.
It is also important to consider any other agreements between the shareholders and accordingly try and align such provisions with the MOA of the company.
Language and Format of the MOA
The language of the MOA shall be in Arabic or in the dual language format of English & Arabic which is duly translated by a licensed legal translator. In the event of a discrepancy in the translation or difference between the Arabic text and the English text, the Arabic text shall prevail.
The MOA of an LLC shall always be updated and failure to do so can invite penalties. Any amendments to the MOA of an LLC shall be executed in the presence of the Notary Public (either online or in person) or through the DET’s electronic notarisation method by all the shareholders of the company.
James Berry & Associates: Legal Support for Drafting or Reviewing Your MOA
With more than 35 years of experience in the region, our legal team is qualified and experienced to draft and review all kinds of commercial agreements including your company’s memorandum of association in line with your requirements. Alternatively, we can review your existing MOA and ensure that the text is in alignment with your objectives and the Commercial Companies Law.
This is a general guide on the subject matter and should not be construed as specific legal advice.
Senior Legal Consultant, Corporate & Commercial