May 23, 2022Dated: | Byadmin admin | UAE’s strategic geographical location connects it to the significant global routes linking it to Europe, Africa, and Asia. The country’s favorable economic and social status and political stability make it an ideal destination for business. Hence you will find numerous Limited Liability Corporations (LLC), Free Zone (FZ), and Offshore Companies. The Commercial Companies Law (CCL) requires companies in UAE to hold an annual general meeting every year for all persons with a business interest in the company. The AGM is to discuss past performance, current progress, and future strategies to earn handsome returns on investments (ROI). LLC, FZ, and Offshore companies need to convene an annual general meeting (AGM) unless they have only one shareholder. Although offshore companies must mandatorily hold an AGM, Dubai’s venue need not always be. Continue reading to learn more about the annual general meeting requirement for LLC, FZ, and Offshore companies. What is an Annual General Meeting (AGM)? At a financial year-end and within four months of the following financial year, the shareholders and its Board of Directors (BoD) come together via AGM to meet, present, and discuss the annual business report and audited financial records, business matters, and corporate affairs. The AGM is generally the only opportunity for the BoD and shareholders to meet. Mandatary Requirement for LLC Annual General Meeting The mandatory requirements for companies to hold AGMs are as follows: As per Article 92 of the CCL in the UAE, a business must conduct an AGM once a year. The timeframe for the meeting is usually after the end of one financial year but within four months of the next financial year.The managerial personnel or the General Manager convenes the AGM and notifies all the partners of the AGM date at least 15 days before the AGM.The invitation may be a letter stating the date, venue, and time of the meeting or any other means of an AGM notification as to the company’s Memorandum of Association.The General Manager should mail the hardcopy of the invitation by registered post to the concerned person to avoid complaints of its non-receipt. All partners must compulsorily attend the meeting even if they hold shares in small numbers. If they cannot be present at the AGM, they must appoint a representative to attend the AGM on their behalf.The chosen representative may be another business partner other than the General Manager. Penalty for not Convening an Annual General Meeting The CCL will impose a penalty on the business if the General Manager of the LLC, FZ, or offshore company fails to hold the AGM at the end of a financial year and within the next four months of the next financial year. Depending on the financial status of the business, the penalty may be as follows: The penalty for failure to hold an AGM can cost the business house anything between AED 50,000 and AED 100,000 If the business incurs a loss because it fails to hold an AGM and the loss rises to half its capital, the acceptable fine amount will be anything between AED 50,000 and AED 1M. Conclusion Businesses in UAE often ignore the legal compliance and neglect to hold their AGM each year. There are companies in UAE that may have held an AGM only once in their entire lifetime. The partners of the LLC in UAE must realize that holding an AGM preserves and protects their interests and must have them at least annually. Flyingcolour can help you set up the dates for an AGM for LLC, FZ, and Offshore companies by sending you timely reminders and also help in sending AGM invitations to the concerned persons. Book your free consultation with us to know more about the comprehensive services.