Legal Support for UAE Businesses

Legal support for UAE businesses plays an important role and helps you with company formation, licensing, regulatory compliance, drafting business contracts, dealing with employment law, family law, real estate law, and dispute resolution, under UAE federal law and free zone regulations. The UAE commerce sector is set to adopt modern and latest business laws. The Foreign Direct Investment law regulates 100% foreign ownership in approved sectors. Cabinet of Ministers Resolution No. 31 of 2019 introduced Economic Substance Regulations for UAE entities conducting specified relevant activities. Separate AML/CFT obligations were established under Federal Decree-Law No. 20 of 2018 and Cabinet Decision No. 10 of 2019.

To facilitate the operation of a business, the UAE has one of the fastest-evolving legal environments in the region. Since 2018, the UAE has introduced impactful reforms to foreign ownership, economic substance, arbitration, and employment law. Businesses in the UAE may be subject to federal laws, emirate-level rules, and free-zone regulations, depending on their license, location, and activity. The classification and exact interpretations of laws can be better understood with professional lawyers and legal consultants.

The UAE operates a dual system. Federal law applies equally across the seven emirates, but two financial free zones, e.g. Dubai International Financial Centre (DIFC), and Abu Dhabi Global Market (ADGM) follow their own common-law structures or jurisdictions. Emirate based laws are also applicable in the respective Emirate. Let’s throw the light more:

Federal Decree-Law No. 19 of 2018 introduced the legal structure allowing foreign investors to own up to 100% of qualifying mainland companies in approved sectors. In July 2019, the UAE Cabinet approved a 122-economic-activity list across 13 sectors, including agriculture, manufacturing, renewable energy, e-commerce, transport, and hospitality, eligible for full foreign ownership, subject to emirate-level approval and conditions such as minimum capital requirements. That list is known as a “positive list.”

In 2019, many mainland LLCs generally required a UAE national shareholder holding at least 51% of the shares. However, businesses carrying out activities included on the approved positive list could qualify for increased or full foreign ownership, subject to the applicable conditions and approval of the relevant emirate authority. Legal advisors could help determine whether a proposed activity qualified and assist with restructuring the company accordingly.

Cabinet of Ministers Resolution No. 31 of 2019, which was effective April 30, 2019, introduced Economic Substance Regulations in response to EU and OECD requirements. UAE entities, including free zone and offshore companies carrying out “relevant activities” such as banking, insurance, investment fund management, lease finance, headquarters, shipping, holding companies, intellectual property, and distribution and service center businesses, must:

Federal Decree-Law No. 20 of 2018 and its Cabinet Decision No. 10 of 2019 implement regulations with considerably more effective AML/CFT obligations. Designated Non-Financial Businesses and Professions, including real estate brokers, dealers in precious metals, auditors, and corporate service providers, must now register, conduct customer due diligence, and report suspicious transactions via the goAML platform.

Federal Law No. 6 of 2018 is the UAE’s first independent arbitration law, which modernized arbitration onshore. The law established a modern framework for arbitration agreements, tribunal appointments, interim measures, arbitral awards, annulment applications, and court enforcement.

DIFC Law No. 2 of 2019, effective August 28, 2019, replaced the previous DIFC employment regime. Important changes include revised end-of-service gratuity rules with a qualifying scheme, DEWS, announced to launch next year, 2020, new discrimination protections, and a penalty fee for late payment of dues.

Recently, the UAE’s government also introduced a long-term visa scheme that gives 5- and 10-year renewable residence visas to investors, entrepreneurs, and talented persons. This update is a significant advantage for business owners who are planning for long-term operations.

When you’re hiring the legal advisor for your business, always verify the firm is licensed by the relevant authority (e.g., Dubai Legal Affairs Department); only UAE national advocates have mainland court audience rights, and foreign lawyers can work as legal consultants.