REVIEW OF CORPORATE LAWS IN

UNITED ARAB EMIRATES

(UAE)
LEGAL FRAMEWORK PERTAINING TO
CORPORATE LEGISLATION
● Dubai Company Act was first enabled in 1984. Since 1984, it
has gone through several changes in order to provide local and
foreign businesses with a suitable environment
● In 2015, The UAE government announced a new Company
Law. Federal Law No. 2 of 2015 on Commercial companies
established new regulations for those doing business in the
Emirates.
● The shocks and instability that characterized the gulf markets
in 2006, 2008 and 2014 urged UAE to pay greater attention to
sound governance policies and practices
● The UAE corporate governance was made on the lines of that
of United Kingdom, one of the developed countries in which
corporate governance has been well established for years
LEGAL FRAMEWORK PERTAINING TO
CORPORATE LEGISLATION
● UAE Commercial Companies Law, 2015 is the master legislation governing
incorporations
● UAE corporate governance rules 2016 transitive by Securities and Commodity
Authority (SCA) under power conceived by Master Legislation, applicable to listed
UAE companies, not applicable to banks as they fall under Central bank rules
● SEZ (Special Economic Zones), monitored by DIFC (Dubai International Financial
Centre)
● Abu Dhabi Global Market- Companies Regulation and Commercial Licensing
Regulation
● Key Corporate Governance Authorities: SCA, Central Bank, Dept of Economics
● Responsible for composition, formation, operation on board, members, committees,
powers and its remuneration, CSR and audits
● Also provides provision for the violation penalty of corporate governance rules
MAIN PROVISIONS OF CORPORATE LAW
IN UAE
● United Arab Emirates corporate law regulates the governance,
finance and power of corporations in the United Arab Emirates
● In UAE, a company can be formed in any of the following three
jurisdictions:

1. Mainland
2. Free Zone
3. Offshore
MAINLAND
● A mainland company is an onshore company and license to establish the entity is issued by
the Department of Economic Development (DED) of the respective emirate
● A mainland business is allowed to do business in the local UAE market as well as outside
UAE without any restriction
● Different types of license under mainland are: Professional, commercial, industrial, tourism

● Following are the facts about Mainland Companies in UAE.

1. These companies are regulated under Federal Law No. 2 of 2015 which came in to
effect on 1 July 2015.
2. No expatriate can own more than 49% shares in any commercial limited liability
company (LLC).
3. Gulf Cooperation Council (GCC) national can own 100% shares in any company and
GCC companies or individual GCC national can make partnership with UAE national.
4. For certain business activities, as per law only UAE national can own 100% shares.
5. Business activities covered under professional category can be 100% owned by expat /
foreigners but it is mandatory to have UAE national as a service agent.
FREE ZONE
● UAE Free Zone companies can only operate within the free zone boundaries and are
generally limited to performing solely those activities listed in their license(s).
● UAE has over 35 FTZs of which more than 20 are located in Dubai and establishing a
business entity in one of the FTZs is an attractive option for foreign investors
● The main attraction for setting up a company in a free zone is that there is no UAE
national shareholding required. All free zones in UAE offer the following incentives:
● 100% foreign ownership of the enterprises
● 100% cent import and export tax exemptions
● 100% repatriation of capital and profits
● No currency restrictions
● Corporate tax exemption for 15 years, renewable for an additional 15 years
● No personal income taxes
OFFSHORE
● UAE Offshore company registration is a very popular method of doing business in the
Middle East region
● In UAE there are three offshore jurisdictions – Dubai (Jebel Ali Offshore Company)
Ras Al Khaimah and Ajman
● The Jebel Ali Offshore Company is an International Business Crown/holds the only
offshore vehicle that is permitted to own / hold real estate in the Emirate of Dubai
● JAFZA Offshore operated under JAFZA Free zone
● The RAK Offshore provide a flexible and credible option for foreign investors to register
an offshore company in UAE without the need to establish a physical presence in the
UAE
● UAE Offshore companies benefits: No Corporate tax, 100% foreign ownership, 100%
Capital and Profit Repatriation, UAE Bank Account, International Invoicing, Limited
Liability Company, No TIEAs, Absolute Privacy and Confidentiality, Ability to maintain
multi-currency Bank accounts in the UAE, Virtual office facilities available in the UAE
MAIN PROVISIONS OF CORPORATE LAW IN UAE
LEGAL FORMS OF BUSINESS:

The common legal forms of business in Mainland, Free zone

and Offshore formation in the UAE are:

● Sole proprietorship
● Civil Company
● Limited Liability Company (LLC)
● Partnership
● Private Shareholding Company
● Public Shareholding Company
● Branch of Foreign Companies/Representative Office
● Branch of GCC companies
● Branch of Free zone company
● Branch of Dubai based companies
● Branch of UAE based companies
LEGAL FORMS OF BUSINESS:

● UAE government has implemented wide range of

economic and administrative policies which has made
UAE an attractive business destination for foreign entities
● Under Law of UAE, there are five types of business
establishments applicable to foreign entities interested in
establishing their presence in the UAE:
● A company can create a permanent establishment
● A company can create an entity in any of the UAE free
zone
● A company can enter into a commercial agency
agreement
● A company can establish a branch office
● A company can create a civil company (currently possible
to establish a company in Dubai, Sharjah and Ajman)
IMPLICATION FOR
MANAGERS
● Language barrier with the local workers
● Any expatriate manager, speaking their local language
will be able to better instil trust in the local workers
● Alignment of business requirements with the culture and
customs are needed to sustain in UAE
● Paternalistic style of leadership is followed in UAE
● The relationship and trust building process in the UAE
local workers depend on the the managers’ cultural
understanding, awareness and respect.
● Expatriate managers who are compassionate about the
worker’s personal issues and feelings will receive higher
cooperation from the local workers
POINTS TO CONSIDER WHILE
PLANNING BUSINESS OPERATIONS
● The UAE has one of the most liberal trade regimes in the Gulf
region and attracts strong capital flows from across the region
● UAE has a well-established infrastructure, strong banking
system and a stable political system
● Although there are restrictions on company ownership by non-
GCC nationals, the UAE also provides for a window of free
trade zones
● There are a high number of expatriate workers at all levels of
the economy such that expatriates accounts for over 80% of
the workforce
● UAE provides a tax favourable environment for most
industries
SWOT ANALYSIS
STRENGTH WEAKNESS
● Most liberal trade regimes in the ● UAE’s currency is pegged to the
Gulf dollar
● Well connected to the rest of the ● Country’s location is in a volatile
world region with political instability in
● High number of expatriate the region
workers

OPPORTUNITY
● Economic diversification into
gas, high tech industries and
financial sector
● Despite the impact of 2009
downturn, tourism still gives high
level growth
THREATS
● Property market crash and
project delays could threaten
future development
● Outdated tax system and heavy
subsidies on utilities and
agriculture
THANK YOU!
Group 5:
Lakshmi Satya Rayasam 133082
Pankaj Chandna 133085
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Tanmaye Kapur 133110
Vaibhav Bhatia 133112
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Manisha Sachdeva 281180
Shubham Chauhan 281194