The
Commercial Companies Law promulgated by Sultani Decree 18/2019 (“CCL”) was published in February 2019 and
came into force 60 days after publication.
Please refer to our previous articles on this topic:
The
CCL provides that the Minister of Commerce and the Chairman of the CMA will
issue executive regulations within a year of the CCL’s implementation in
addition to any decisions required to enforce the provisions of the CCL. Currently, the draft executive regulations
appear to be at an advanced stage and due for timely publication.
Companies
must comply with the requirements of the CCL within one year of its
implementation – which means the deadline of 18 April 2020 is approaching fast.
For
the first time, annual general meetings of joint stock companies, which must
take place before 31 March each year, will be held under the new regime. Many joint stock companies will take the
opportunity to organise an extraordinary general meeting (“EGM“) on the
same day and at the same venue to reduce the administrative burden of convening
two separate general meetings.
The
EGM will approve the amendments to the articles of association (“AoA”) required to be made to comply
with the CCL. This may also be an
opportunity for companies registered many years ago to undertake a full review
of their constitutional documents and make further amendments to align them
with best practice and corporate governance.
Please
note that the CMA has issued model articles that listed joint stock companies
are expected to adopt, subject to the inclusion of additional clauses.
Please
find below a summary of the most relevant changes introduced by the CCL in
respect of the organisation of general meetings:
- The new deadlines
mandated by the CCL apply. The
invitation to attend a general meeting must be published 15 days prior to
the date of the meeting and must include both the date of the first and
the second meeting (to be held within seven days from the date of the
first meeting). If the quorum is
not met at the first meeting, the second meeting shall be held as provided
in the invitation.
- General meetings
must be attended by the directors (but their absence will not affect the
validity of the meeting).
- Members of the
board may not attend general meetings on behalf of the shareholders.
- The company must
constitute an auditing committee from among the members of the board
and appoint a
legal advisor and
an internal auditor.
- Minutes of the general
meetings must be signed by the secretary, the chairman, the auditor and
the legal advisor and lodged with the competent authority within seven
days calculated from the date following the date of the meeting. The deadline under the previous law was
15 days.
Of
course, the sections of the AoA regulating general meetings will have to be
revised to reflect the provisions above. Further changes may or will relate to:
- The number of
directors of the company: as the CCL provides for an odd number of
directors, companies which currently have an even number of directors will
have to decide whether they wish to add or remove one seat on the board of
directors (subject to compliance with the minimum and maximum number of
directors allowed for each type of company).
- The inclusion of
more stringent provisions in respect of related party transactions and
conflicts of interest.
Where
changes are required, failing to comply with the provisions of the CCL within
the deadline may result in the company, its authorised managers and/or
directors being exposed to sanctions.
