Directors' Duties and the Increasing Requirement for D&O Insurance in the UAE
Type
E-journal
Date
23 Oct 2012
Jurisdiction
United Arab Emirates
Taxonomy
Directors, Companies & Corporate Bodies
Copyright
LexisNexis
Relevant company
Clyde & Co
Legal reference
Federal Law No. 8/1984
Analysis
In the aftermath of the global economic recession awareness of, and the requirement for, good corporate governance is high on the legislative agenda of many countries; the UAE is no exception. In light of this, the UAE is in the process of enacting a new company law, which will represent an overhaul of the existing legislation, first enacted 28 years ago pursuant to Federal Law No 8/1984 ("Commercial Companies Law").
As directors of local companies begin to realise the potential liabilities for breaching their duties are now just as real as in many more established jurisdictions, Insurers will wish to know what effects the proposed legislation will have on the developing D&O market in the UAE.
The duties
Crucially, the draft commercial companies law (the "Draft Law") contains an express statement of directors' duties. This is in stark contrast to the current regime where directors' duties are scattered around various sources and, in some cases, exist by little more than implication.