Managing Director Service Agreement Template for the United Arab Emirates
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What is a Managing Director Service Agreement?
The Managing Director Service Agreement is a crucial document used when appointing senior executives in UAE-based companies. It serves as the primary contract governing the relationship between the company and its Managing Director, incorporating specific requirements under UAE Federal Labor Law No. 8 of 1980 and Commercial Companies Law No. 2 of 2015. This agreement is essential for establishing clear parameters around executive authority, corporate governance, remuneration, and performance expectations. It typically includes comprehensive provisions for confidentiality, non-competition, and intellectual property rights, while addressing specific UAE requirements such as visa sponsorship for expatriate directors and local employment regulations. The document is particularly important for ensuring compliance with UAE corporate governance standards and protecting both the company's and the executive's interests.
About the Managing Director Service Agreement
A Managing Director Service Agreement is a comprehensive executive employment contract that governs the appointment and working relationship between a company and its most senior executive officer in the United Arab Emirates. This document establishes the legal framework for corporate leadership while ensuring compliance with UAE federal employment and commercial laws.
When do you need this document?
You need this agreement when appointing a new managing director to lead your UAE company, whether they are a local national or expatriate executive requiring visa sponsorship. It's essential when restructuring senior management, promoting an existing employee to managing director position, or when your company is establishing operations in the UAE and needs to formalize executive leadership. The document is also required when your parent company is appointing a managing director for its UAE subsidiary, or when updating existing executive contracts to reflect new UAE labor law requirements under Federal Decree Law No. 33 of 2021.
Key legal considerations
Your agreement must clearly define the managing director's scope of authority, reporting relationships to the board of directors, and limitations on decision-making powers to ensure proper corporate governance. Include comprehensive remuneration packages covering base salary, performance bonuses, benefits, and any equity participation while addressing UAE tax implications. Establish robust confidentiality and non-disclosure provisions to protect sensitive company information, trade secrets, and client relationships. Consider including non-competition clauses that comply with UAE enforceability standards, typically limited to specific geographical areas and reasonable time periods. Address intellectual property ownership for any innovations or developments created during employment, and include clear termination procedures covering notice periods, severance payments, and post-employment obligations.
Legal requirements in United Arab Emirates
Your agreement must comply with UAE Federal Labor Law No. 8 of 1980 and recent amendments under Federal Decree Law No. 33 of 2021, which govern employment contract terms, working hours, and termination procedures. Ensure compliance with Commercial Companies Law No. 2 of 2015 regarding directors' duties, corporate governance requirements, and board reporting obligations. If your managing director will have commercial agency powers, address requirements under Federal Law No. 18 of 1981. For expatriate executives, include visa sponsorship obligations and compliance with Immigration Law No. 6 of 1973, covering residency requirements and employment permit conditions. The agreement must specify UAE law as governing jurisdiction and include dispute resolution mechanisms, preferably through UAE courts or recognized arbitration centers. Ensure proper witnessing and notarization requirements are met for contract validity, and maintain Arabic translations if required by local authorities or company bylaws.
GOVERNING LAW
Applicable law
This Managing Director Service Agreement is drafted to comply with United Arab Emirates law. Key legislation includes:
UAE Federal Law No. 2 of 2015 (Commercial Companies Law): Governs corporate structures, management positions, directors' duties, responsibilities, and corporate governance requirements
UAE Federal Law No. 18 of 1981 (Commercial Agency Law): Relevant for understanding restrictions and requirements if the managing director will have agency powers
UAE Federal Decree Law No. 33 of 2021 (Labor Law amendments): Recent updates to employment regulations including new working models and employee protections
UAE Federal Law No. 6 of 1973 (Immigration Law): Governs entry and residency requirements if the managing director is an expatriate
UAE Federal Law No. 7 of 1999 (Pension and Social Security Law): Relevant for UAE national managing directors regarding pension and social security obligations
DIFC/ADGM Employment Laws: If the company is in free zones like DIFC or ADGM, their specific employment regulations must be considered
UAE Corporate Governance Rules: Specific regulations for listed companies regarding director appointments and governance requirements
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