8th August 2019
Doing business in Abu Dhabi it's essential to know the business laws and regulations to ensure your organisation is compliant at all times. It's worth noting that since the UAE is still a relatively young country (the union was formed in 1971) and due to its rapid expansion, laws and regulations can change and get updated frequently. Particularly, in the last few years, business laws and regulations have been implemented and updated to provide a legal framework on par with international standards to support the country's vision of a diversified economy.
Recent changes in the Commercial Companies Law (2015); introduction of the Bankruptcy Law (2016) and introduction and current implementation of the Foreign Direct Investment Law are all intended to promote the UAE as a safe, structured, competitive and attractive location for Foreign Direct Investment and thus develop a thriving economy.
The business laws and regulations relate to both the setup and operation of businesses, labour rights, consumer rights and intellectual property rights.
Business laws and regulations in Abu Dhabi
The Ministry of Economy is responsible for developing federal laws and legislations related to economy, commerce and investment. It is also responsible for trade agreements with other nations.
The Commercial Companies Law (Federal Law No. 2 of 2015) made it mandatory for all licensed onshore companies to adopt a structure of corporate governance and maintain corporate accounts to international standards.
The Bankruptcy Law (Law No. 9 of 2016) was established to assist companies in financial distress to help them avoid collapse.
The Foreign Direct Investment Law (Decree Law No. 19 of 2018) was introduced to attract foreign investment into the UAE by enabling foreign investors to own up to 100% of mainland companies in the UAE in certain sectors. 122 activities, across 13 sectors have been identified to be opened up for increased levels of foreign ownership. It is now for the governments in each of the Emirates to decide the specific foreign ownership levels for their respective Emirate.
The Competition Law (Federal Law No. 4 of 2012) was implemented to provide and maintain a competitive environment by prohibiting anti-competitive practices. It prohibits restrictive agreements, dominant players from taking advantage of their position e.g. via price-fixing, and economic concentrations to create monopolies.
The Combating Cyber Crimes Law (Federal Law No. 5 of 2012, updated by Federal Law No. 12 of 2016) protects privacy and reputation on social media. This includes posting photographs/videos of people without their consent, threatening people and spreading of non-verified information.
The Penal Code (Federal Law No. 3 1987) widened as recently as December 2018 to fight corruption, determines acts recognised as crimes and their respective penalties.
The Arbitration Law (Federal Law No. 6 2018) in line with international arbitration standards, was introduced to resolve commercial disputes instead of the Civil Procedure Code.
The Labour Law (Federal Law No. 8 of 1980) and its subsequent amendments in 1981 and 1986, as well as numerous decrees, governs the labour rights of private-sector employees in the UAE. There are also specific laws relating to Emiratisation (the employment of Emirati nationals).
The Midday Break Rule (Ministerial Decree No. 401 of 2015) implemented to protect persons working outside under direct sunlight during the middle of the day.
The Trademark Law (Federal Law No. 37 of 1992, updated by Federal Law No. 19 of 2000 and further by Federal No. 8 of 2002) was implemented to protect brands.
The Electronic Transactions And Commerce Law (Law No. 2 of 2002) was implemented to permit the execution of contracts between two parties electronically.
The Anti-Money Laundering and Combating the Financing of Terrorism And Financing of Illegal Organisations (Law No. 20 of 2018) was implemented to combat money-laundering and related crimes, as well as to counter the financing of terrorist operations and suspicious organisations.
The Value Add Tax Decree (VAT Decree (Federal Decree-Law No. 8 of 2017) was implemented to provide the UAE with a new source of income for providing public services, as well as reducing its dependence on hydrocarbons.
The Excise Tax Decree (Federal Decree-Law No. 7 of 2017) was implemented to reduce consumption of harmful substances: carbonated drinks, energy drinks and tobacco products.
Other specific laws and regulations could apply to your business depending upon the activities of your organisations, such as environmental or health and safety regulations.
Business laws and regulations for Abu Dhabi free zone companies
In the instance your organisation is established in a free zone it will be governed by the independent regulations of the respective free zone. Other general business laws will apply to free zone entities (except the Commercial Companies Law). Further, the free zone company will be governed by specific laws relating to its activity e.g. property rights and QHSE compliance.
If you are planning to expand your business to Abu Dhabi speak to Gateway about how we can help navigate the business setup formalities and structure your business so you have full operational and financial control of your business by engaging Gateway's corporate nominee sponsor service.
Written by Jenny Hunt, Founding Partner & CEO, Gateway Group of Companies, Abu Dhabi UAE
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