Director Fee Agreement Template for the United Arab Emirates

A Director Fee Agreement is a comprehensive legal document that establishes the compensation terms and conditions for board directors serving UAE companies. Under the UAE Commercial Companies Law No. 32 of 2021, this agreement ensures proper governance of director remuneration while maintaining transparency and regulatory compliance across all company types.

When do you need this document?

You need a Director Fee Agreement when appointing new board members to your UAE company, renewing existing director terms, or restructuring compensation packages. Listed companies on the Dubai Financial Market or Abu Dhabi Securities Exchange must establish clear remuneration frameworks under SCA Decision No. (3/R.M) of 2020. The agreement becomes essential when implementing performance-based compensation, establishing committee-specific fees, or ensuring compliance with related party transaction requirements under the Corporate Tax Law. Financial institutions require additional documentation to meet UAE Central Bank Corporate Governance Regulations, while private companies use these agreements to formalize director compensation and protect against disputes.

Key legal considerations

Your Director Fee Agreement must address several critical legal elements to ensure enforceability and compliance. The compensation structure should align with UAE Corporate Tax Law requirements, particularly regarding related party transactions and tax implications for both company and director. Include detailed provisions for basic retainer fees, meeting attendance compensation, committee service fees, and any performance-based incentives. The agreement should specify expense reimbursement policies, payment schedules, and currency denominations. Consider including confidentiality clauses, conflict of interest provisions, and termination procedures that comply with UAE Commercial Companies Law. For listed companies, ensure alignment with SCA governance guidelines regarding disclosure requirements and shareholder approval thresholds.

Legal requirements in United Arab Emirates

UAE law imposes specific requirements on director compensation arrangements that must be reflected in your agreement. Under the Commercial Companies Law No. 32 of 2021, director remuneration must be approved by shareholders through general assembly resolutions, with specific voting thresholds depending on company type. Listed companies must comply with additional SCA regulations requiring transparent disclosure of director compensation in annual reports and proxy statements. The Corporate Tax Law No. 47 of 2022 affects how director fees are treated for tax purposes, requiring proper documentation and reporting procedures. Financial sector companies must meet enhanced UAE Central Bank requirements regarding director independence and compensation disclosure. Your agreement should include provisions for regulatory reporting, tax compliance, and adherence to any sector-specific governance requirements that apply to your company's operations in the UAE.