Law 2 Paper

Introduction

The issue of directors' responsibilities and obligations under UAE law has gained increasing importance for companies incorporated in the United Arab Emirates.

This update focuses on the duties of directors under the relevant UAE laws and regulations, and primarily on directors of limited liability companies established in the United Arab Emirates. The duties of directors of public companies are not covered in this update.

Fraudulent Misrepresentation

Misrepresentation is a concept in contract law referring to a false statement of fact made by one party to another party, which has the effect of inducing that party into the contract. For example, under certain circumstances, false statements or promises made by a seller of goods regarding the quality or nature of the product that the seller has may constitute misrepresentation. A finding of misrepresentation allows for a remedy of rescission and sometimes damages depending on the type of misrepresentation.

Criteria of misrepresentation

Misrepresentation is one of several vitiating factors that can affect the validity of a contract. A misrepresentation occurs when one party makes a false statement, inducing another party to contract. For an action to be successful, some criteria must be met in order to prove a misrepresentation. These include:

* A false statement of fact has been made,

* The statement was directed at the suing party and

* The statement had acted to induce the suing party to contract.

Source of directors' duties

The duties owed by directors of limited liability companies established in the United Arab Emirates are mainly contained in:

* the Commercial Companies Law (8/1984);

* the Civil Transactions Law (5/1985) (the Civil Code); and

* the Commercial Transactions Law (18/1993) (the Commercial Code).

General directors' duties

The general duties which directors owe to a company and its shareholders are contained in the laws listed above. These duties...