Directors’ Duties During Periods of Geopolitical Uncertainty: A UAE and Kuwait Perspective

In times of regional uncertainty, businesses often reassess their operational and financial exposure. For boards of directors, however, the legal position remains clear: geopolitical developments do not alter the duties owed by directors under UAE and Kuwait law.

Under UAE Federal Decree Law No. 32 of 2021 on Commercial Companies and Kuwait Law No. 1 of 2016 on Companies, directors are required to exercise the care and diligence of a prudent person in managing the affairs of the company. This obligation requires directors to remain adequately informed, exercise independent judgment, and ensure that material risks affecting the company are properly assessed and addressed.

Periods of geopolitical instability can expose companies to a wide range of risks, including operational disruptions, supply chain interruptions, financial volatility, sanctions exposure, and regulatory developments. In such circumstances, directors are expected to ensure that the company’s risk management frameworks and internal control systems remain robust and responsive to evolving conditions. palazzogatteschi.it

From a governance perspective, this often requires boards to actively review management reports addressing operational resilience, liquidity planning, contractual exposure, and regulatory compliance. Directors may also need to ensure that business continuity and contingency plans are periodically reviewed, updated, and tested, particularly where the company operates across multiple jurisdictions or depends on international logistics and supply chains.

At the same time, directors must continue to act in the best interests of the company, balancing prudence with commercial judgment. Decisions to delay investments, reconsider expansion strategies, or adjust operational priorities may be justified where they are supported by reasonable analysis and are aimed at protecting the company’s long-term stability. Conversely, decisions driven solely by speculation or market sentiment, rather than informed assessment and board deliberation, may expose boards to governance scrutiny. affiliate.sportsgrid.com. rmdoo.com. uslegallaw.com

Regulatory considerations may also become more prominent during periods of heightened geopolitical risk. In the UAE, financial institutions and designated non-financial businesses and professions are subject to obligations under Federal Decree Law No. 10 of 2025 on Anti-Money Laundering and Combating the Financing of Terrorism, together with related regulatory guidance. In Kuwait, similar obligations arise under Law No. 106 of 2013 concerning Anti-Money Laundering and Combating the Financing of Terrorism, supervised by the Central Bank of Kuwait and the Kuwait Financial Intelligence Unit.

These frameworks require institutions to adopt a risk-based approach, including enhanced monitoring of transactions, internal escalation procedures, and reporting obligations where heightened geopolitical developments may affect the institution’s risk profile. Directors therefore play an oversight role in ensuring that management remains attentive to evolving compliance risks and that appropriate internal reporting and regulatory notifications are made where necessary. amala-sa.com

For listed companies, additional obligations arise under the regulatory frameworks of the UAE Securities and Commodities Authority (SCA) and the Kuwait Capital Markets Authority (CMA). Where geopolitical developments materially affect a company’s operations or financial position, directors must ensure that the market is appropriately informed in accordance with applicable disclosure rules.

Importantly, directors should also recognize that board documentation and decision-making records play a critical role during periods of heightened risk. Board minutes, management reports, and properly documented deliberations can demonstrate that decisions were taken following reasonable inquiry and informed assessment. In both the UAE and Kuwait, such documentation may be essential in demonstrating that directors fulfilled their duties of care and diligence.

Ultimately, both UAE and Kuwait legal frameworks recognize that directors operate in an environment where uncertainty is often unavoidable. Courts and regulators generally assess board conduct by considering whether decisions were taken in good faith, on the basis of adequate information, and with the genuine belief that they served the company’s interests.

Periods of instability therefore do not suspend directors’ duties, they reinforce them. Effective governance during such times lies not in reacting to headlines, but in ensuring that board decisions remain measured, informed, and properly documented.

Meysan Partners continues to advise companies and boards across the region on navigating evolving legal, regulatory, and risk landscapes.

Authors: Patrick Obeid (Senior Associate) and Rosy Rizk (Associate)