[2024] T8_Public Joint Stock Company [Autosaved] (3)
Page 1: Introduction to PJSC
Definition of Public Joint Stock Company (PJSC)
Relevant Articles: 105 – 256 CCL (Companies Commercial Law)
Page 2: Types of Companies
Commercial Companies
Personal Companies:
General Partnership (GP)
Private Joint Stock Company (JSC)
Limited Partnership (LP)
Capital Companies:
Public Joint Stock Company (PJSC)
Limited Liability Company (LLC)
Page 3: Definition of PJSC (Art 105)
A PJSC has capital divided into negotiable shares of equal value.
Share Subscription:
Founders subscribe to part of shares.
Remaining shares are offered to the public via a Public Offering.
Shareholder Liability:
Limited to their capital contribution only.
Cabinet Resolution:
Cabinet may define minimum and maximum capital contributions for founders.
Page 4: Features of PJSC
Capital divided into transferable shares of equal value.
Shareholder liability is limited to the value of shares subscribed.
Shareholders cannot lose more than the amount invested in the company.
Page 5: Understanding Shares
Definition:
A share represents a shareholder's ownership interest in the company.
Share Capital:
Total value of shares held by all shareholders.
Nominal Value:
Fixed value at issuance; may differ from the market value.
Ownership Evidence:
Share certificate, signed by at least two directors.
Issued Share Capital:
Minimum limit for PJSC: 30,000,000 AED (Art 195).
Page 6: Naming of PJSC (Art 106)
Must include a trade name derived from activities plus designation “Public Joint Stock Company” or “PJSC”.
Examples:
Dubai Islamic Bank PJSC; Union Properties PJSC.
Page 7: Shareholders in PJSC
Shareholders can be numerous and not necessarily known to each other.
Company durability is unaffected by individual shareholder death or bankruptcy.
Term of the company specified in the Memorandum of Association (MOA) and Articles of Association (AOA).
Page 8: Formation of a PJSC (Art 109)
Founder Definition:
Any person who signs the MOA and holds shares at incorporation.
Founders bear liability for potential losses during incorporation.
Minimum of five persons required to establish a PJSC (Art 107).
Page 9: Founders Committee (Art 112)
Committee of at least three members chosen by founders.
Responsible for completing incorporation procedures and submitting documents.
Must appoint a Financial Advisor, Legal Advisor, and Auditor.
Certification of MOA required post-incorporation before subscription.
Page 10: PJSC’s MOA and AOA (Art 110)
Required to include provisions on Board of Directors and General Assembly powers.
Binding nature of AOA once registered.
Page 11: PJSC Memorandum of Association (MOA)
Describes basic constitution and objectives of the company:
Name, objectives, location, duration, capital amount.
Establishes company existence and purpose.
Page 12: PJSC Articles of Association (AOA)
Details internal governance: management procedures, voting rights, director appointments.
Serves as a rulebook for company operations.
Page 13: Particulars for MOA and AOA
Company name and head office.
Company objectives.
Founders’ information, capital amount, share distribution.
Undertaking by founders to finalize incorporation.
Page 14: SCA Incorporation Procedures (Art 114)
Review documents for incorporation (MOA, AOA, feasibility study).
Amendments are communicated to the Founders' Committee.
Completed applications are sent to authority for approval within 10 days.
Page 15: Prospectus Definition
A formal document for raising public funds through share offerings.
Must disclose company information, risks, and a business overview.
Reviewed by SCA for transparency.
Page 16: Subscription Definition
An agreement to purchase shares in a company.
Subscribers commit to specified capital in exchange for ownership.
The process often entails reviewing the prospectus for details and risks.
Page 17: Public Subscription Invitation (Art 121)
Founders and directors responsible for accuracy in the prospectus.
Must publish the prospectus in two local newspapers prior to subscription.
Page 18: Subscription by Founders (Art 117)
Founders must subscribe to a share portion before public offering.
In-kind contributions accepted as share fees.
Page 19: Process of Subscription
Public subscription period limited to 30 working days.
Undersubscription may permit founders to subscribe to remaining shares.
Page 20: Implications of Non-Incorporation (Art 128)
SCA announces failure to incorporate, founders must refund subscribers.
Responsibility for incorporation expenses and liabilities to third parties.
Page 21: Distribution of Shares (Oversubscription)
Proportional distribution if subscriptions exceed shares available.
Allocation must occur within 5 days post subscription closure.
Page 22: Allocation & Refund Formula
Detail on allocation of surplus contributions relative to shares subscribed.
Page 23: Example of Share Allocation
Scenario illustrating how shares are allocated based on total subscriptions and refunds due.
Page 24: Emirates Investment Authority Subscription (Art 127)
Can subscribe to PJSC shares up to a maximum of 5%.
Page 25: Constituent General Assembly
Established following successful public subscription.
Page 26: Constituent GA Meeting (Art 131)
Invitation to convene GA must be in the prospectus.
Quorum requirement: at least 50% of share capital.
Supermajority (75%) vote required for resolutions.
Page 27: Constituent GA Agenda (Art 132)
Review incorporation actions and expenses.
Approval of incorporation and board appointments.
Page 28: Finalizing Incorporation
BOD applies for Certificate of Incorporation post-GA.
Registration in commercial registry and obtaining Trade License.
Page 29: The Board of Directors
PJSC managed by a Board of Directors (BOD).
Page 30: BOD Management (Art 143)
AOA must detail BOD composition and terms.
Chairperson elected by secret ballot, represents the company.
Page 31: Appointment and Term of Directors (Art 144)
Directors elected by GA, term capped at three years.
Government representatives allowed for large shareholders.
Page 32: Restrictions on Board Membership
No nationality restrictions for new CCL.
Limited directorships in multiple PJSCs.
Page 33: BOD Powers (Art 154)
Full management powers except reserved matters.
BOD meetings required a minimum of 4 times annually.
Page 34: BOD Authority Restrictions (Art 154)
Specific transactions require prior GA approval to avoid mismanagement.
Page 35: More Restrictions on Directors
Duty to avoid conflicts of interest is mandatory.
Page 36: Duty to Notify of Conflict of Interest (Art 150)
Directors must declare interests in contracts and are barred from voting.
Page 37: Liability of Directors (Art 162)
Directors personally liable for fraud, abuse, and violations.
Claims may be initiated by the company or shareholders.
Page 38: Dismissal of Directors (Art 170)
GA can dismiss BOD members; automatic removal for legal infractions.
Page 39: Remuneration of Directors (Art 171)
AOA specifies director remuneration, capped at 10% of net profit.
Page 40: Marka PJSC Ruling [2021]
Landmark case holding directors liable for debts in bankruptcy context.
Page 41: AGM Definition
Annual General Meeting (AGM) is a periodic meeting of shareholders.
Page 42: General Assembly Meetings (Art 171)
AGM held annually, auditor may call a meeting if BOD fails.
Page 43: Agenda of the AGM (Art 179)
Review and approval of annual reports.
Elections, dividend proposals, and legal actions discussed.
Page 44: Shareholder Powers
Extend company duration, amend MOA/AOA, increase capital, merge, convert company type.
Page 45:
Page 46: Auditor Appointment (Art 245)
Auditors review the accounts and reports of a PJSC.
Page 47: Auditor Qualifications (Art 246)
Must be licensed, experienced, and not connected with BOD.
Page 48: Duties of the Auditor (Art 248)
Certify the accuracy of financial records and ongoing oversight is required.
Page 49: Auditor’s Powers
May demand documents and employ experts as necessary.
Page 50: Attending the GA (Art 252)
Auditors must attend and present their reports at GA meetings.
Page 51: Auditor’s Report (Art 252)
Evaluates compatibility of financial documents with actual company position.
Page 52: Duty of Confidentiality (Art 249)
Auditors must keep company information confidential.
Page 53: Dismissal of the Auditor (Art 253)
Dismissal possible due to incompetence or misconduct.
Page 54: Auditor Liabilities (Art 255)
Responsible for audit performance and accuracy of reports.
Page 55: Limitation to Sue Auditor (Art 256)
Claims are time-barred after one year from GA report presentation.
Page 56: Investing in Company Stocks and Bonds
Overview of investing options: shares and bonds.
Page 57: Understanding Shares
Defined as a shareholder's interest in a company.
Capital divided into equal share units, each with fixed nominal value.
Page 58: Nature of Shares
Necessary characteristics: nominal, negotiable, indivisible.
Page 59: Transfer of Shares (Art 214)
Transfer registration is necessary for effectiveness.
Conditions for refusal of registration are outlined.
Page 60: Definition of Debentures or Bonds
Issued as a loan certificate when capital is raised through loans.
Page 61: Company Finances
Overview of financial responsibilities and reporting requirements.
Page 62: Annual Financial Report Requirements (Art 237)
BOD must prepare balance sheets, profit/loss accounts, activity reports.
Page 63: Creation of Legal Reserve (Art 241)
10% of net profits should be allocated annually to create a legal reserve.
Page 64: Optional Reserve (Art 242)
AOA may establish additional reserve allocations for specified uses.
Page 65: Profit Distribution (Art 241)
GA specifies portions of profit to distribute post-reserves deduction.
Page 66:
Page 67: Definition of Private JSC (Art 257)
Requires at least two shareholders, capital privately held, minimum capital of 5,000,000 AED.