Business Law of UAE: Importance

As of my last update in September 2021, the business law of the United Arab Emirates (UAE) is primarily governed by Federal Law No. 2 of 2015 concerning Commercial Companies (the UAE Commercial Companies Law) and other related legislation. The UAE is a civil law jurisdiction, and its legal system is influenced by both Islamic law (Sharia) and aspects of the French legal system.

Key aspects of the UAE business law include:

  1. Company Formation: The UAE Commercial Companies Law governs the establishment and operation of companies in the country. The law recognizes several types of companies, including limited liability companies (LLCs), public joint-stock companies (PJSCs), private joint-stock companies (PrJSCs), and partnerships.
  2. Foreign Ownership: The UAE has historically restricted foreign ownership in certain sectors. However, in recent years, the government has taken steps to relax foreign ownership restrictions to attract more foreign investment. Free Zones, which are designated areas with special regulations, often allow 100% foreign ownership.
  3. Commercial Agency Law: The UAE has specific regulations concerning commercial agency agreements, which require appointing a UAE national as an agent to distribute products and services in the country.
  4. Intellectual Property Rights (IPR): The UAE has strengthened its intellectual property laws to protect patents, trademarks, copyrights, and industrial designs. It is a member of several international agreements and treaties related to IPR protection.
  5. Labor Law: The UAE labor law governs the employment relationship between employers and employees. It covers aspects such as working hours, wages, leaves, termination, and other labor-related matters.
  6. Dispute Resolution: The UAE has a dual-track legal system, with both civil and Sharia courts. The courts follow civil law principles in commercial matters, and English may be used in some courts. Additionally, the country has established specialized courts, such as the Dubai International Financial Centre (DIFC) Courts, which operate under English common law principles.
  7. Foreign Direct Investment (FDI): The UAE government has been actively encouraging foreign direct investment through various initiatives, including the creation of free zones, streamlining licensing procedures, and enhancing investor protections.
  8. Taxation: The UAE is known for its favorable tax environment. Most businesses in the UAE are subject to either no corporate tax or a very low rate. However, there are specific taxes, such as VAT (Value Added Tax), which was introduced in 2018.

It’s important to note that UAE laws and regulations can change, so it’s essential to consult with legal experts or the relevant UAE government authorities for the most up-to-date information when considering business activities in the country. Additionally, since my information is based on data up to September 2021, there might have been developments or amendments to the business laws in the UAE after that date.

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