The event that the requisite majority is not obtained in favor of any capital expenditure project, the government may nevertheless go ahead with such project and shall put up the whole of the related expenditures and enjoy the whole of the related benefits.
Operations are conducted on behalf of the parties by an operating company incorporated in Abu Dhabi under Abu Dhabi law of its capital, 60 percent is held by ADNOc and 40 percent by ADMA. This new agreement improved upon those before it by immediately giving the host country the majority of the equity in the venture, which granted the national company a preponderant role in the management and running of operations although the 75 percent majority required for passing important decisions by the JMC provides an effective veto to the foreign partners.
A sound assessment of this agreement should not, however, be based solely on the provisions it contains, but on the manner in which participation is effectively implemented and more specifically on: (1) the manner in which the national company exercises its right to market its equity share; and(2) the contents of the implementing agreement and the status and functioning of the operating company created. Abu Dhabi provides an interesting model of a successful implementing agreement concluded within the framework of a participation agreement. The preparation and negotiation of the required implementing agreements with ADPC and ADMA took much longer than expected. The agreement concluded with ADCo took four years to be finalized and was not signed until September 1978; the agreement with ADMA was concluded in April 1977. The main provisions of the implementing agreement with ADMA, which are still in effect, are as follows: operations are conducted on behalf of the parties by a profit operating company(called ADMA-OPCo) Inco in Abu Dhabi and governed by the laws of the emirate. Th principal office of the company is in Abu Dhabi there ADMA, as interim operator, undertook to transfer to Abu D all documents, accounting records and papers pertain in operations in Abu Dhabi(previously kept in London from w operations were directed). Sixty percent of the capital of is held by ADNOC and 40 percent by th ADMA shareholders. ADMA-OPCO has a Board of Directors to manage its affairs composed of five members nominated by ADNOC and one nominated by each of the three shareholders in ADMA. The Chairman of the Board and the General Manager of the Company are chosen from among ADNOC’s candidates. According to Article VI(a) of the Articles of Association of ADMA-OPCO, the resolutions of the Board relating to routine management issues are taken by a simple majority of three, which must include the two members from ADNOC. By contrast, matters of policy come within the jurisdiction of the JMC as described above and thus require a 75 percent majority In selecting contractors, preference is given to national contractors and contracting companies, provided they are technically qualified and their prices do not exceed their competitors’ prices by more than 10 percent; a similar priority is given to national retailers when purchasing goods and materials. The company undertakes to follow an active policy of hiring personnel in order to ensure the development of its own staff(instead of almost complete reliance on the seconders of one of the partners, as was once the case). When recruiting, the company must abide by the government’s policy.