Part 2- IHC FZLLC Special Regulations
Chapter 3- Management of FZLLC
Section 1- Director, Manager and Officers
Section 1. Director, Manager and Officers
In addition to the obligation of having a Manager required for every licensed Entity at the Free Zone, the FZLLC must have a Director.
Article 103. Director
a. Requirement of a Director:
- The business and affairs of the FZLLC shall be managed by one or more Director(s), except for matters required to be decided at a General Meeting, as provided in the MOA and AOA
- The MOA and AOA shall specify the powers and duties of the Director(s).
- The number of Director(s) may be fixed in the MOA and AOA. It shall not be less than one and more than seven Directors.
b. Qualities of the Director
- The Director shall be a natural person, not convicted of a criminal offence, involving dishonesty or moral turpitude in the past ten (10) years. An undischarged cannot be a director.
- The MOA and AOA shall specify the criteria based on which a person qualify as a Director.
c. Election, Term and Removal of a Director
- The first Director shall be appointed by the Shareholder(s) incorporating the FZLLC at the time of incorporation through an Ordinary Resolution or by a Resolution passed by a greater majority of Shareholders with voting rights as provided by the MOA and AOA or through the MOA and AOA.
- Appointment and removal of Director(s) shall be made by an Ordinary Resolution or by a resolution passed by a greater majority of Shareholders with voting rights as provided by the MOA and AOA.
d. Duty of care of the Director(s)
A Director of the FZLLC, in exercising his/her powers and discharging duties shall:
- Act honestly in good faith and lawfully, in the best interests of the FZLLC;
- Exercise the care, diligence and skill that a reasonably prudent person would exercise in similar circumstances;
- Exercise his powers only for the purpose for which they were given;
- Disclose to the FZLLC presence and nature and extent of a direct or indirect material interest that he has in a transaction entered into or proposed to be entered into by the FZLLC or by a subsidiary of the FZLLC.
This disclosure must be made by the Director in writing to the FZLLC as soon as practicable after the Director becomes aware of the circumstances which gave rise to his/her duty to make the disclosure.
e. Prohibition of Loans or any other Assistance to a Director
The FZLLC may not provide financial assistance to a Director, a Director’s spouse or child or to a company of which the Director directly or indirectly owns 20% or more of the total shareholding.
Financial assistance includes provision of loan, debenture, credit facility, a guarantee or security or indemnity in connection with a loan debenture, credit facility or whether by the FZLLC or another person.
However, FZLLC may provide the abovementioned financial assistance if:
- Approved by a resolution passed by Shareholders holding shares representing not less than 90% of the total voting rights of the FZLLC
- All of the Directors, in case of existence of multiple Directors, resolve that giving the financial assistance to the Director does not materially prejudice the interests of the FZLLC and its Shareholders and the ability of the FZLLC to discharge its liabilities as they fall due.
f. Alternate Director
Unless provided otherwise in the MOA and AOA, a Director may appoint another person to represent him/her and to vote on his/her behalf at any meeting of the directors of the FZLLC, as an Alternate Director. The name of the Alternate Director must be given in writing to the secretary of the FZLLC prior to or at the time of commencement of the Directors meeting.
This appointment may be revoked at any time by the Director though notice in writing given to the secretary of the FZLLC.
g. Validity of Acts of a Director
The acts of the Director are valid notwithstanding a defect in the appointment or qualification of a Director.
Article 104. Manager
A Shareholder, Director or Secretary may also be appointed as a Manager.
In addition to the authorities of a Manager under these Regulations, a Manager’s authority may be provided in the MOA and AOA of the FZLLC.
Article 105. Officers
a. The FZLLC may, by a resolution of Director(s), appoint officers who may consist of one or more assistant manager, a secretary and a treasurer and any officers as may from time to time be deemed desirable .
b. The officers shall perform the duties conferred to them by the resolution of Directors, but in the absence of any specific allocation of duties it shall be the responsibility of the assistant manager to act in order or seniority in the absence of the Manager but otherwise to perform duties as may be delegated to them by the Manager or the secretary to maintain the registers, minute books and records (other than financial records) of the FZLLC, and to ensure compliance with all procedural requirements imposed on the FZLLC by applicable laws, and the treasurer to be responsible for the financial affairs of the FZLLC.
Section 2- Shareholders meeting of FZLLC
Article 106. Calling a Meeting
a. Unless the MOA and AOA provide otherwise, the FZLLC must hold a General Meeting as its Annual General Meeting within twelve (12) months from the date of its incorporation and once every twelve (12) months thereafter.
A meeting of the Shareholders, other than the Annual General Meeting will be referred to as an Extraordinary General Meeting.
b. The Director(s) may call a General Meeting to consider any matter that the Director(s) determine requires consideration of the Shareholders.
c. The Director must issue a notice for a General Meeting as soon as practicable as and in any event not later than fourteen (14) days from the request of one or more Shareholders holding Shares representing 10% or more of the Share capital of the FZLLC, or 10% or more of a class of Shares, issue a notice for a meeting of that class.
A Shareholder request should state the purpose of the meeting and should be signed and deposited at the Registered Office of the FZLLC.
d. If the Director(s) does not within twenty one (21) days from the date of the deposit of the request issue a notice for the General Meeting, the Shareholder(s) who made the request may issue such a notice.
Article 107. Power of the Authority to Order a Meeting
The Authority may, on application of a Director, Manager or a Shareholder, due to default of calling for a meeting, call or direct to call a General Meeting.
The FZLLC must comply with the direction of the Authority under this article.
Article 108. Notice of Meeting
a. A meeting must be called by a notice in writing at least twenty.one (21) days and no more than two (2) months, unless the MOA and AOA provide otherwise. If a meeting is called by a shorter notice than twenty one (21) days, the meeting will be considered to have been duly called if is so agreed by one or more Shareholders holding Shares representing 94% or more of the total voting rights in the FZLLC, or Shares representing 94% or more of the class of which a meeting is called.
b. A notice of meeting should:
- Specify the place and date of the meeting;
- Provide the agenda of the meeting;
- State the general nature of the business of the meeting;
- Permit a Shareholder to appoint a proxy who may attend and vote on behalf of the appointing Shareholder; and
- Include a copy of accounts and auditor’s report if relevant.
c. Notice of the meeting must be given to each Shareholder entitled to receive it by delivering or posting to his registering address.
Article 109. Form of the Meeting
Unless the Articles of Association otherwise provide, a meeting of Directors or of a committee of Directors or Shareholders may be held by means of such telephone, electronic or other communication facilities as permit all persons participating in the meeting to communicate with each other simultaneously and instantaneously.
Article 110. Quorum for Convening a Meeting
a. Quorum at the General Assembly meeting shall not be valid unless one or more Shareholders holding at least 75% of the capital of the FZLLC are present.
b. If such Quorum as set for the in clause (a) of this article is not present at the meeting, the Shareholders shall be invited to another meeting, to be held within twenty one (21) days from the date of the first meeting, provided that at least 50% of the capital is present at the meeting.
c. If the Quorum as set forth in paragraphs (a) and (b) of this article is not present, the Shareholders shall be invited to a third meeting to be held upon the expiry of thirty (30) days from the date of the second meeting. Quorum at the third meeting shall be valid irrespective of the Shareholders present at the meeting.
Article 111. Voting at a Meeting
a. The voting at a meeting should be on a poll, where a Shareholder has one vote for each Share owned. On a poll, a Shareholder entitled to more than one vote is not required to cast the same decision for all the votes.
b. A Shareholder who is a corporate entity may by a resolution or any other appropriate instrument authorize a person to represent the corporate entity at the meeting and in doing so the person will be authorized to exercise all the rights of the Shareholder.
c. Ordinary Resolutions shall not be valid unless passed by a number of Shareholders holding over 50% of the Shares represented at the meeting of the General Assembly.
d. Special Resolutions shall not be valid unless passed by a number of Shareholders holding three quarters or more of the Shares represented at the meeting of the General Assembly.
Article 112. Resolutions in Writing
a. Shareholders may pass a Resolution in Writing signed by all Shareholders entitled to vote unless it is prohibited in the Memorandum of Association and Articles of Association.
b. A Resolution of Shareholders in Writing may be signed in counterparts, and will be considered to be passed when the last Shareholder signs the Resolution or its counterpart.
c. A Resolution of Shareholders in Writing passed in accordance with the provisions of paragraphs a and b is considered as valid as if had been passed at a convened General Meeting or a meeting of a class of Shareholders.
Article 113. Proxy
a. A Shareholder entitled to vote at a General Meeting or at a meeting of a class of Shareholder is entitled to appoint, by an instrument of Proxy and by notice to the FZLLC in writing, another person, whether a Shareholder or not, as a Proxy vote on behalf of the appointing Shareholder.
b. The instrument of Proxy must be in the following form:
I …………………being a Shareholder holder of……………………… shares in…………………FZLLC, hereby appoint……………….as my proxy to vote on my behalf at the annual general meeting/ extraordinary general meeting / meeting of a class of Shareholders, to be held on……………………
Signed this day of…………..
c. A proxy appointed for a Shareholder has the same rights as the Shareholder including the right to attend and vote at the meeting.
Article 114. Minutes of Meetings
a. The FZLLC must keep minutes of meetings of Shareholders, Directors and committees of the FZLLC in books maintained for that purpose. The minutes must be signed by all the attendees or the person presiding over the meeting.
b. Minutes prepared according to this article shall be kept by the secretary or other officer of the FZLLC and shall be evidence of the meeting unless contrary is provided.
c. Defaulting to comply with this article 114, the FZLLC may be subject to sanctions.
Article 115. Special Provisions Related to FZLLC of One Person
a. Decision in Writing:
A General Meeting of the FZLLC of one person will be considered to be convened, and a resolution will be considered to be passed at such general meeting, by the Shareholder issuing a decision in writing. If a decision is not taken in writing, the Shareholder may provide the FZLLC with a record in writing of the decision.
b. Corporate Entity:
If the Shareholder of the FZLLC of one person is a corporate entity, the Shareholder may by a resolution or any other appropriate instrument authorize a person to represent the corporate entity and sign a resolution in relation to the FZLLC.
Such person may be authorized to exercise all the rights of the Shareholder.
Article 116. Notification of Change of Person
Each FZLLC shall file with the Authority details of any change in the persons or the particulars of the persons who are Directors and Officers of the FZLLC within fourteen (14) days of such change taking place.