Corporate Governance Advisory

The level of mandated formal governance scales with the entity type. Public joint stock companies are subject to detailed SCA-mandated governance rules under the Commercial Companies Law. DIFC/ADGM-regulated entities face DFSA/FSRA governance requirements specific to their licence category. A standard mainland LLC or free zone company has lighter statutory governance obligations under its constitutional documents and the Companies Law's general director-duty provisions, but this does not mean governance is optional in practice — a well-run private company still needs documented decision-making, related-party controls, and clear signing authority to function safely and to withstand a bank, auditor, or investor's scrutiny.

The Memorandum/Articles of Association (MOA/AOA) is the company's public constitutional document, filed with DED or the relevant free zone authority, governing the company generally and binding on all shareholders and, in many respects, third parties. A shareholders' agreement (SHA) is a private contract between specific shareholders that can add rights and obligations not reflected in the AoA — pre-emption rights, drag-along/tag-along provisions, deadlock resolution, and reserved matters requiring unanimous or supermajority consent. Where the two conflict on matters within the company's constitutional framework, the registered AoA generally takes precedence, which is why PNPC drafts or reviews the SHA and AoA together rather than in isolation.

Under Federal Decree-Law No. 47 of 2022, related-party transactions must generally be conducted and priced on an arm's-length basis, and certain related-party and connected-person transactions require specific disclosure. A related-party transaction that is governance-approved but not properly priced (or vice versa) creates exposure on both fronts. We draft related-party policies that combine the governance-approval step (who signs off, at what authority level) with a documented, arm's-length pricing rationale, so the two requirements are satisfied together rather than as disconnected exercises handled by different teams.

QFZP status can preserve the 0% Corporate Tax rate on qualifying income for an eligible free zone entity, but it depends partly on the entity maintaining adequate substance within the UAE — genuine decision-making, staffing, and operating expenditure connected to the qualifying activity, not merely a licence held on paper. A governance framework that demonstrates the board or equivalent management body actually meets, deliberates, and makes and minutes decisions within the UAE is part of the evidence base that supports a QFZP position; a framework that cannot show this is a live risk if the position is later reviewed.

A DIFC entity regulated by the DFSA, or an ADGM entity regulated by the FSRA, is subject to the relevant authority's rulebook on top of the underlying DIFC/ADGM companies regulations — this typically includes controller-approval requirements for significant shareholding changes, senior management function accountability, systems-and-controls documentation, and specific board composition or fitness-and-propriety expectations depending on the licence category. A standard (non-regulated) free zone company such as a DMCC or IFZA trading entity is not subject to these financial-services-specific requirements, though good governance practice remains valuable regardless.

A family constitution is a broader document than a shareholders' agreement — it typically addresses not just shareholding mechanics but the family's shared values, the criteria for family members entering employment or ownership, the process for resolving family disagreements, and the long-term vision for the business across generations, alongside the more legally binding governance and succession terms that are often mirrored into a formal shareholders' agreement or trust structure for enforceability. The constitution sets the family's shared expectations; the shareholders' agreement (and, where used, an underlying trust or holding structure) gives those expectations legal effect.

A delegation-of-authority (DOA) matrix sets out, by role and transaction type, the value threshold up to which a given individual or committee can approve a decision — a department head might approve expenditure up to a defined limit, a CEO up to a higher limit, and anything above that requiring board approval. It is cross-referenced against the company's bank mandates and signing-authority instructions so the two are consistent, and it is the practical document staff and banks actually use day to day, rather than the board charter itself.

Yes, and this is one of the more commonly under-appreciated governance gaps. Even where a small company's Companies Law obligations for formal meetings are light, contemporaneous minutes and resolutions are frequently the evidence a bank, auditor, or Corporate Tax reviewer relies on to confirm that a decision was properly authorised and that genuine decision-making occurred within the UAE. Reconstructing minutes after the fact — which auditors and reviewers can generally identify — is far weaker evidence than a contemporaneous record.

In the absence of specific provisions, a deceased shareholder's shares typically pass through the applicable succession process — which, for UAE-situs shares, depends on whether a UAE-recognised will exists — before the resulting heir(s) can exercise voting rights, and this process can take considerably longer than a business can comfortably operate without clarity on control. A well-drafted shareholders' agreement or family constitution addresses this directly, often through provisions for interim voting arrangements, mandatory buy-out options, or a pre-agreed succession sequence, coordinated with the shareholder's personal will.

Yes, where the shareholders' agreement includes properly drafted drag-along and tag-along provisions. A drag-along clause allows a majority shareholder reaching an agreement to sell the company to require minority shareholders to sell on the same terms, preventing a minority holdout from blocking an otherwise agreed exit. A tag-along clause protects a minority shareholder by allowing them to participate in a sale on the same terms the majority negotiates, rather than being left behind as a minority holder in a changed ownership structure. Both are negotiated terms, not defaults, and need to be expressly included.

We draft a conflict-of-interest policy that requires disclosure of the relevant interest, recusal from voting on the affected matter, and independent approval of the transaction by disinterested directors or shareholders, consistent with general director-duty principles under the Commercial Companies Law and, for regulated entities, the applicable DFSA/FSRA conflicts requirements. The policy is paired with the related-party transaction policy so a conflicted transaction is both properly governed and properly priced.

ESR notification and reporting obligations have been progressively wound down for financial years following the introduction of UAE Corporate Tax, but the underlying substance principle ESR established — that a UAE entity's core income-generating activities and management decisions should genuinely occur within the UAE — continues to inform both QFZP substance requirements and how Corporate Tax and regulatory reviewers assess whether governance is real or nominal. A governance framework built to demonstrate genuine UAE decision-making remains directly relevant even where standalone ESR filings are no longer required.

Yes. For groups spanning the UAE and India, we coordinate governance framework design between our Dubai and India offices so board composition, delegation of authority, and related-party policies are consistent across the group and support both jurisdictions' related-party and transfer-pricing documentation. An intercompany governance and pricing framework that only holds up in one jurisdiction typically creates a mismatch the group has to reconcile later, often at the worst time — during a tax review in either country.

PNPC generally recommends a review every year for actively growing or investor-backed companies, and at least every two to three years for stable, closely-held businesses, alongside an immediate review triggered by any material event — a new investor or director, a significant related-party transaction, a group restructuring, or a relevant regulatory change such as a Corporate Tax or DFSA/FSRA rulebook update. A framework left unreviewed for years frequently no longer reflects the company's actual ownership, regulatory status, or risk profile.

PNPC agrees a fixed, written fee before any advisory work begins, typically scoped to the number of entities in the group, whether a DIFC/ADGM regulatory overlay is required, and whether a full family constitution negotiation is involved alongside the core board and related-party framework. The exact fee depends on the complexity of the ownership structure and the number of stakeholder groups whose sign-off is needed.