Business Law FAQs

Questions

I am from the United States, and I want to set up a branch of my company in the UAE.

Answer:

Yes, it is possible for you to set up or establish your company branch in the UAE. Under new legislation, the UAE will allow 100% ownership of businesses for foreign nationals from 1 December 2020. Previously, all businesses were required to have a UAE citizen sponsor; Commercial Companies Law No. 2, passed in 2015, which stated that foreign shareholders could only own a up 49% of a locally registered company, with a local partner holding the 51% majority.

You will then need to get a license from the municipal and federal authorities.

you can also establish your company branch in the UAE free zone areas.

Our company is located in France and we found a company in the UAE that could help us with our business. However, we have Israeli clients who are using our services.

Answer:

Even though you’re services are not directly for Israeli use, your business still deals with them. And that is against the UAE law.

According to the Federal Law No. 15 of 1972, which is about the Arab League Boycott of Israel (tertiary boycott), dealing with any company that has a connection with Israel or provides the said country with spare parts or services is prohibited.

There are actually two more sections; the primary boycott, which prohibits the UAE companies to deal with Israel or any Israeli citizen, corporation, and company and the secondary boycott, which is about the UAE companies not allowing any deals with other companies that deals with Israel.

I was hired as a part-time employee by my primary employer for two years now. Then I decided to get another part-time job. My primary employer is now telling me that the company will not be giving me benefits anymore because of what I did.

Answer:

The Ministry of Human Resources and Emiratisation has issued a rule under the Ministerial Resolution 31 of 2018. It states that a part-time employee has the right to work on another part-time basis for a second employer or company.

With this being said, your employers, either they be primary or secondary are still responsible to pay your salary, knowing that you have an employment contract with them. Your primary employer is also responsible to provide you with benefits such as annual leave and end of service gratuity.

I’m an American citizen and I want to venture in Abu Dhabi because of its continuous growth when it comes to business.

Answer:

Just recently, the Abu Dhabi Global Market or more commonly known as ADGM has presented a commercial license that is dedicated just for technology start-up companies. This new license will allow entrepreneurs to have an operational license in Abu Dhabi. The license will also give such companies a professional services support program that will let entrepreneurs have access to a community of professional advisors, financial services, and a lot more.

The commercial license is also open to all nationalities who want to venture in the technology industry of Abu Dhabi.

I was informed that foreign companies who want to have their business in Dubai can only have it in a designated area or the Dubai Airport Free Zone. Do we have another option?

Answer:

Dubai actually has a dual license system, where foreign companies that are developed inside the Dubai Airport Free Zone are already allowed to open their business outside the said area. These businesses just need to get another license from the Dubai Department of Economic Development.

If they were able to process this, renting an office space or getting a national service agent would not be necessary anymore.

The application of the dual license can also be applied in Abu Dhabi through the Abu Dhabi Department of Economic Development.


Answer:

According to UAE Federal Law No. 2 of 2015 on Commercial Companies, a limited liability company or LLC does not have the ability to resort to public subscriptions or even issue transferable bonds and shares. The reason is because these are only done by public joint stock companies, which has a separate law.

The new Commercial Companies Law mainly talks about the restrictions and the rights of the LLC shares. It also aims to enhance the UAE economy.

The previous law is under the UAE Federal Law No. 8 of 1984 on Commercial Companies.

I’m not just a shareholder; I’ve also been appointed to be part of the supervisory board. I believe I have many responsibilities, considering that the company is asking us to hold at least 25% of its capital.

Answer:

Knowing that you are also a part of the supervisory board, means that you really have a lot of responsibilities that can affect the company’s growth.

First, as a supervisor, you can require the managers of the company to submit reports about their management. You can also make changes on the balance sheet of the LLC, distribute profits, and even scrutinize the company’s documents and books.

And as a shareholder, you have a say to almost everything. You and your fellow shareholders can request for a general assembly. Shareholders can also determine the LLC’s memorandum of association.

Now, when it comes to shareholders having at least 25% of the LLC’s capital, it should actually be lesser than that. In the Ministerial Decision No. 272 of 2016, it states that shareholders should not hold more than 20% of a company’s capital. It has already been reduced from 25% to 20%.

My employee has transferred to our competitor company. She was part of the research team and she knew all of the data that we have planned and prepared. Now, that she’s transferred to our competitor company, she is planning to use our data for her new company’s advantage.

Answer:

Yes, there is.

According to the Article 379 of the Penal Code, which is the Federal Law No. 3 of 1987, anyone who is entrusted with valuable business information is prohibited to disclose it, especially if it will harm a party, in this case, your company.

Also, the violator will be penalized if the information that was disclosed to him or her has been used for his or her own benefit.

Now, if this is done through hacking or any computer network-related incident, your ex-employee will also be penalized for it. Article 21 of the Federal Law No. 5 of 2012 on Combating Cybercrimes, states that invasion of privacy by means of electronic information system or information technology is against the law and will be dealt with accordingly.

The Dubai Healthcare City Authority and the Dubai International Financial Centre are making a move against the said action. Both organizations have passed such regulations and laws about data protection.

The products and service that my company offers are well-accepted by the UAE nationals. I want to step up my game and advertize the products and services through print and media.

Answer:

Please be aware that in creating advertisements for your products and services, you must always follow the rules and regulations made by the National Media Council. The federal government body in the United Arab Emirates regulates all kinds of advertisements.

They have regulated the Chairman’s Decision No. 35 of 2012, Concerning the Standards of Advertisement Content in Media. Here, the content of all advertisements that have been distributed, produced, or broadcasted in the UAE must comply with the said regulation.

I am a very busy entrepreneur and I want to know if all of my electronic business transactions are valid. I want to save time that’s why I tend to sign documents online.

Answer:

It’s important to have a commercial agent who will do all the marketing agreement for your business. It is even mandated under the UAE Commercial Law or the Federal Law No. 18 of 1981. The law regulates the appointment of sales representatives, commercial agents, or distributors to a specific company.

Now, in order for you to know if the commercial agency is legit, it must have the following requirements and characteristics:

  • Its commercial agents must either be UAE nationals or the agency itself is owned by a UAE national.
  • There are many unregistered commercial agencies, so make sure that the commercial agency that you’re working with is registered to the MoE. This will be a validation that the agency can engage to commercial activities.
  • The agreement should also be registered to prevent future dilemma.
Answer:

Yes, it is actually mandated. In the Article 5 of the Tax Procedures Law, UAE companies should retain records for at least five years. They need to submit those records on intervals to the tax authorities in the Arabic language. If your company has also enclosed Arabic translated copies, then the authority can accept the documents and invoices in the English language.

I am part of our company’s research and development team, and we want to make sure that our hard work will pay off. We spent months in creating a product and we want to protect it from being copied by other businesses.

Answer:

The United Arab Emirates respects intellectual property and to make sure that companies are protected from being copied, they have outlined a law about it.

In order to protect your company’s masterpiece, you must register the said product under the Federal Law No. 44 of 1992 about the Regulation and Protection of the Industrial Property of Patents, Designs, and Industrial Prototypes (as amended by Federal Law No. 17 of 2002). It will secure the initial function of your product. The Ministry of Finance and Industry also administer the Patent Law.

After doing that, the patent will last for up to 20 years. You can either use or license it within four years, starting from the date of your application.

No one will watch over my children since my wife’s untimely death. That’s when I decided to set up a business at the comfort of my home.

Answer:

Yes, there is no problem having your business at home.

After getting a license from the Department of Economic Development or DED, they have the right to authorize you to conduct your business activities at home. Just make sure to comply by their conditions and rules.

All of this is under the Article 18 of the Federal Law No. 13 of 2011.

My business partner decided to leave our company so that he can establish his own company. He then uses his knowledge about my company to increase his profit and over-all sales. He also exposes the materials used in my company’s products.

Answer:

Even though the United Arab Emirates lacks regulations when it comes to confidential business information, it still punishes violators who commit such action.

Anyone who damages or harms another party by using personal or private information without the victim’s consent is violating the UAE Federal Law No. 5 of 1985 Regarding Civil Transaction.

Answer:

The answer is, yes.

The UAE law states that every company records must be submitted monthly or quarterly. It also depends on your VAT registration certificate.

Also according to the UAE Federal Tax Authority, they have the right to decide whether or not a specific company needs to verify or submit its records on a monthly basis.

I am an investor who’s looking for a fast-growing company in the UAE. I came across an advertisement that’s promoting a technology company in the UAE. But instead of having an actual office, the company has a virtual office. Is it secure to invest in this kind of company?

Answer:

At first, the term “virtual office” may sound futuristic, advance, and innovative, but in the United Arab Emirates, having a virtual office instead of a physical or actual office is illegal. 

In a recent event, the Dubai Department of Economic Development or DED has trashed the idea that virtual offices are accepted in the UAE. The department has then issued a warning to all businesses that operate the so-called virtual offices.

I’m an American businessman and I have a lot of businesses across the world. One of my businesses is in the UAE. However, I can’t stay any longer or permanently in the UAE because I have other businesses. Should I appoint someone from the UAE to handle it for me?

Answer:

In your case, you have to process a power of attorney (POA), which is a document that lets you appoint one person to handle and manage all your business affairs in the UAE.

The process of appointing someone who will look over your business is also simple. The appointed person or agent is responsible in buying life insurance, business and financial transactions, operating business interests, settling claims and problems, and hiring professional help.

You should also keep in mind that in Section 1A of the Power of Attorney Act, there should only be one specified or appointed person. You can’t appoint another company to handle the business for you.

I am planning to establish a company in the UAE, and I was informed that it is necessary to identify the type or form of company that I’ll be having.

Answer:

In the UAE law, it is really mandatory to identify your company’s form. Article 9 of the Federal Law No. 02 of 2015 on Commercial Companies talks about the following forms:

  • Joint Liability Company
  • Simple Commandite Company
  • Limited Liability Company
  • Public Joint Stock Company
  • Private Joint Stock Company

It is stated that if a company does not adopt one of the forms mentioned above, its business will be null and void. You will also be liable for it if found guilty of the act.


Answer:

No. According to the Article 54 of the Federal Law No. 02 of 2015 under the Joining Partner, you, as a new partner, will become automatically liable for all the past obligations of the company. And besides, prior to starting with the company, you have been informed about its former obligations.

Aside from this, you will also work closely with other partners to resolve the company’s past and present obligations.

Answer:

Companies that are established in the Dubai International Financial Centre (DIFC) must always follow the rules under its authority. One of which is the maximum number of shareholders needed or required.

According to its regulation, an SPC in a DIFC location can only have three shareholders. Companies are also not allowed to be used as holding companies, and that it cannot do commercial activities.

Now, if you really want to add a shareholder, you might want to change the type of company that you have into WLL or With Limited Liability. A WLL company allows you to have a number of shareholders, ranging from 2 to 50.


Answer:

It doesn’t matter if you have a big or small business; just make sure to get a license for it from the Department of Economic Development.

Article 8(a) of the Law No. 13 of 2011 Regulating the Conduct of Economic Activities in the Emirates of Dubai, gives businesses a license validity of up to one year, which is also renewable for the same period.

According to the Article 5 of the same law, once you get your license, you will be able to run your business freely.

Answer:

Patent is used for a product’s over-all function and use, while trademark deals with a product or a service’s design like its logos, words, and symbols.

There are many businesses in the United Arab Emirates that have the same services and products, and sometimes, having an authentic trademark is what sets a company apart from the rest.

In order for your business trademark to be protected, it needs to be distinguishable and also you must register it before anyone else. You should register it under the Federal Law No. 37 of 1992 Regarding Trademarks (as amended by the Federal Law No. 8 of 2002). Applications are going to be sent to the Trade Control Section of the MoE.

According to the UAE Law, anyone who uses a registered trade mark will be dealt with.

I am having a hard time managing one of my businesses. I want to close one business in order to make room for my other businesses.

Answer:

Even though your business license is not yet expired, the Department of Economic Development can let you suspend it, depending on its rules and conditions.

Article 13(b) of the Law No. 13 of 2011 under the Cessation of the Economic Activities of Businesses also states that you will not be subject to any license cancellation fees or any fines for that matter if you decide to suspend your business license or if you decide not to renew it after the expiration date.

I think I have been the victim of identity crime. There have been numerous unauthorised transactions from my business account which states payment was taken in Thailand; but they were not me!! What can I do?

Answer:

I am very sorry to hear that you have been the victim of identity fraud. The first thing you must do is to report the crime on the Dubai police website on the link attached eCrime (dubaipolice.gov.ae). It may assist you to engage a lawyer and see if you can find the name/address of the preparator and issue criminal proceedings against them. This will probably be very difficult as if the person is in fact in Thailand then it breaches legal jurisdictions; if they are in UAE then fraudsters appear to be one step ahead so that the authorities can never catch them.

I am living in Pakistan and looking to come back to Dubai for my work; I left suddenly due to the pandemic and lockdown and am concerned now that I have a travel ban against my name. How can I find out if there are any cases against me from my home country?
Answer:

Since 2019, the way to check for a travel ban or criminal case against you has become so easy! Dubai police offer a service whereby you simply go to https://www.dubaipolice.gov.ae (or download the app) and enter your Emirates ID number; scroll down and click on the tab for “Criminal Status for Financial Cases”. Here you will find all the information you need, wherever you are in the world.

If you find out that you do have a travel ban or another financial case; you will need to instruct a lawyer and give them Power of Attorney to deal with this case for you.