21st October 2017
A Commercial Agent Agreement is a way for foreign companies to sell their products into the Abu Dhabi market without setting up their own commercial presence here. This can be cost-effective as the foreign party not only avoids business setup costs but also any costs in relation to further registrations. Any special registration will be arranged under the commercial agent’s trade license. A commercial agent can also be referred to as a distributor.
6 things you need to know
- The agreement with a Commercial Agent is usually exclusive for a defined territory, e.g. a specific Emirate or the whole of the UAE.
- The agreement must be registered with the Ministry of Economy.
- The Commercial Agent is entitled to a commission for all transactions within the territory, whether they have been involved directly or not.
- The Commercial Agent has powers to restrict the goods coming into Abu Dhabi, which can prevent trade in such instances as a dispute.
- The foreign company can not refuse to renew the agreement or choose to terminate the agreement without a valid reason. In such instances, compensation is likely to be due to the Commercial Agent.
- Disputes are heard via a committee before going to court.
In general, it is difficult to terminate a Commercial Agent agreement without mutual consent from both parties. Such agreements should be entered into wisely and professional legal advice should be sought.
The above information is purely intended as an overview and does not constitute legal advice.
Written by Jenny Hunt, Founding Partner & CEO, Gateway Group of Companies, Abu Dhabi UAE
Gateway is an award-winning business setup specialist, helping foreign companies to register their Abu Dhabi businesses correctly. By understanding clients’ activities and goals, we identify the most suitable route to market, including the risks and how to mitigate them, regulatory requirements, and ongoing commitments so that they can make an informed decision that is right for their business. Gateway's corporate sponsorship service for onshore companies provides security, control and 100% of the profits to its clients. Gateway's key services include corporate sponsorship, business setup, PRO services and visa processing. For assistance with your Abu Dhabi business set up, visa processing and ongoing Trade License renewals, Email Gateway Group: Info@GatewayToAbuDhabi.com