To accommodate the rapid expansion of the several Free Zones established in the UAE and, for practical purposes, provide exemption to companies or joint ventures established in specific areas, the provisions of Article (2) of Federal Law Company Law No. (8) of 1984 which provides for the scope of application of the law were replaced by the new provisions in Federal Law No. (15) of 1998.

The new amended Article (2) of this law retains the concept provided in the previous Article (2) providing that the provisions of the Company Law shall apply to commercial companies incorporated in the State or that establish their main centre of activity therein, and to all companies which establish their domicile therein.

However, the amended Article (2) excludes companies incorporated in Free Zones in the UAE from it’s provisions. Regulations provided by the concerned free zones shall apply to these companies except when they are considered as UAE companies.

Except when companies are considered to be UAE companies, the new Article (2) provides a further exemption stating that the provisions of the Company Law shall not apply to oil companies operating in the different fields of oil and gas industry, as well as companies operating in various aspects of electricity, gas, water purification. The Council of Ministers is also authorised in accordance with the new provisions to issue decisions to provide companies with such exemption from the provisions of the Company Law or to provide for this exemption in special provisions in companies Memoranda and Articles of Association.