The UAE President HH Sheikh Khalifa bin Zayed Al Nahyan has issued a new federal law on commercial companies which is aimed at strengthening the country's competitiveness regionally and globally.

The Commercial Companies Law No. 02 for the year 2015 contains 378 articles, and the provisions of the law, its rules and regulations, and decisions issued in implementation of this law pertaining to commercial companies formed in the country, as well as special provisions which shall apply to foreign companies mentioned in this law, and the resolutions and regulations issued in implementation on foreign companies which make the country a centre for its activities, establish a branch or a representative office, said a Wam news agency report.

The law authorises an individual to establish and own a single-person limited liability company whose owner shall only be liable for its obligations as per the capital stated in the articles of association under the limited liability company provisions of the law, the Wam report said.

It also allows the juridical person to set up a joint private or limited liability company whose owner shall only be liable about its obligations in view of the capital stated in the articles of association under the limited liability company provisions of the law.

The law defines the holding company as a company that sets up companies within the UAE or abroad, owns shares or stakes of other companies that allow it to have an upper hand in management or influence its decisions, it said.

As for evaluation of equity stakes, the law stipulates that founders in the public joint stock company shall subscribe shares not less than 30 per cent before the initial public offering.

On debt-to-equity conversion, the law says the company may, according to a special resolution, increase its capital through converting cash debt into equity after the board of directors presents a study to the General Assembly on the urgency of taking this step.

Sultan bin Saeed Al Mansouri, Minister of Economy, said the new law is a quantum leap for the national economy and will have a significant role in promoting sustainable economic development in the country and strengthening its competitiveness regionally and globally.

It will also support economic diversification and accelerate the steps the country is taking towards a knowledge-based economy based on creativity and innovation, the UAE Vision 2021, and its national agenda.

Al Mansouri said the law was a result of the vision of the wise leadership of the country to raise the level of competitiveness of the national economy, and achieve one of the main objectives of the national agenda of reaching the 10th position on the Global Competitiveness Index.

Al Mansouri also said the law aims to contribute to the development of the business environment and the country's capabilities and economic status by organising companies based on global variables, especially those which relate to the rules of governance, the protection of the rights of shareholders and partners, the support of the flow of foreign investment and promotion of corporate social responsibility.

It will also contribute to strengthening the role of businesses that hold high position in the UAE's development strategy, as well as its vital and active role in the process of sustainable development witnessed by the country and in support of the economic diversification policy followed, he said.