Australian Business Council Dubai

conducting business in the UAE  

• Appoint an agent
• Limited Liability Company
• Branch of a foreign company
• Establish in a free zone
• Ways to establish yourself in other Gulf countries:
• The Gulf Co-operation Council (GCC) countries, besides the UAE, are: Kuwait, Oman, Qatar, Saudi Arabia and Bahrain.
• Similar regimes for establishment in other GCC countries, but subtle differences – Clyde & Co can assist you in this regard.

• Governed by the UAE Agencies Law and the UAE Commercial Code.
• The UAE Agencies Law provides that only UAE nationals (or companies wholly owned by UAE nationals) may act as an agent of a foreign principal in the UAE.
• To be enforceable under UAE law, an agency agreement must be registered with the UAE Ministry of Economy and Planning.
• If an agency agreement is registered with the UAE Ministry of Economy:
• the agent has certain statutory rights under the UAE Agencies Law.
• an agency agreement that is registered must confer an exclusive agency.
• Rights of an agent under the UAE Agencies Law include an entitlement to commissions on all sales made within the territory and an entitlement to compensation if the agency agreement is terminated by the foreign principal.
• Even if the agency agreement is unregistered, the agent may still be able to claim compensation in the event of termination by the foreign principal.
• Key takeaway points:
• Choose your agent wisely – it is tough to divorce an agent that is registered in the UAE without copping a monetary blow.
• Clearly define the products and/or services in the territory for which the agent is to be appointed.
• Consider whether appointing an agent is the best way for your company to do business in the UAE.

• An entity which is 51% owned by a UAE national (or a company wholly owned by UAE nationals) and 49% owned by a foreign entity or individual.
• Although majority owned by a UAE national (or a company wholly owned by UAE nationals), Clyde & Co can institute legal safeguards into the procedures for managing and operating the limited liability company, which should restrict the ability of the UAE national (or company wholly owned by UAE nationals) to “takeover” the operation of the limited liability company.
• KEY POINT: the choice of UAE national or, colloquially, the “sponsor”, is the single most important decision. The question “Who is your sponsor?” is commonly asked when doing business with companies in the UAE and the Gulf generally.

• Historically, a branch of a foreign company in the UAE has been confined to carrying out “non-trading” activities, such as acting as a representative or regional headquarters office. Recently, there have been ad hoc statements from the government authorities suggesting that a branch of a foreign company may be able to carry out trading activities, but it is unclear how these statements will be interpreted and implemented consistently going forward.
• No equity in a branch, but allows you to transact business “onshore” in the UAE.
• Must, in most circumstances, appoint a UAE national (or a company wholly owned by UAE nationals) as the local service agent of the branch (once again, colloquially referred to as the “sponsor”).
• A branch is licensed only to carry out certain activities in line with a standard classification of activities issued by the relevant government ministries in each of the 7 emirates.

• Special areas designated, generally, by industry allowing businesses in that particular industry to conduct business in that special area.

• Each free zone, generally, has its own governing authority and, generally, its own rules and regulations.

• 100% foreign ownership of an entity incorporated in a free zone.
• Tax holiday (sometimes up to 50 years).
• Import and export tax exemption.
• Unrestricted repatriation of capital and profits.
• Sponsorship of employees by the free zone authority.

• An entity incorporated in a free zone cannot conduct business outside of that free zone – may need to appoint an agent under the UAE Agencies Law if you wish to conduct business outside of the free zone – the degree to which authorities enforce this rule is unclear.

• Dubai Technology and Media Free Zone (which comprises Dubai Internet City, Dubai Media City, Knowledge Village,
  
• Dubai Studio City and the International Media Production Zone).
• Dubai Airport Free Zone.
• Jebel Ali Free Zone.
• Dubai Metals and Commodities Centre.
• Dubai International Financial Centre.
• Dubai Logistics City.
• Dubai Industrial City.
• Dubai Maritime City.
• Dubai Silicon Oasis.
• Dubai Healthcare City.
• Dubai Humanitarian City.