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Commercial Code in Dubai

Commercial Code in Dubai

Updated on Friday 31st January 2020

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Double tax treaty UAE-Czech Republic.jpgThe legal system in Dubai is based on the principles of Civil Law. Different laws are brought together in a number of important codes that provide the general principles of law in that particular domain. The Dubai Commercial Code regulates business activities, defines the existing legal entities and regulates the way in which entrepreneurs and merchants can carry on commercial activities in Dubai. Our lawyers in Dubai can offer legal support and assistance in any commercial matter.
 

Regulating business activities in Dubai

 

The Commercial Code in Dubai contains issues regarding private law and public law. The Code laws set forth the principles for engaging in commercial activities in Dubai, such as the law for foreign investments, the competition law, the law on commercial companies, the law on commercial arbitration and other basic business laws in Dubai. The Code also defines the free trade zones in Dubai and describes the ownership principles available for foreign investors in and outside of these special investment areas.
 

Commercial companies in Dubai

 

According to the Commercial Code, there are five types of business entities that can be established by foreign business owners interested in starting a business in Dubai. Also, according to the law, a company established in Dubai (except for companies established in the free trade zones) must have one or more UAE national partners who will hold at least 51% of the company’s capital. Hiring employees for companies in Dubai and/or concluding various contracts and agreements are defined in the Code.
 
The Code also regulates the principles for dealing with commercial disputes and the courts in Dubai responsible for solving such legal matters. The basic requirements for doing business in Dubai are also regulated by the Code, including commercial licenses and professional licenses in Dubai.

 

 The new 2015 Commercial Code in Dubai

 

After several years in which the UAE Government has tried to provide a pro-business environment, in 2015 it enabled Law No.2 of 2015 related to Commercial Companies. The following provisions need to be considered by foreign investors in the UAE:
 
  • the new law now recognizes the statute of holding companies
  • the new Commercial Law refers to the procedure of pledging shares and the evaluation of shares in kind; 
  • the law provides for new audit requirements in the case of public joint stock companies; 
  • companies are also required to set new and improved corporate governance regulations.

 

What types of companies can I open in Dubai?

 
According to the Companies Act in Dubai, foreigners can set up public limited liability companies, private limited liability companies, free zones companies, partnerships or can act as sole traders. 
 

The Competition Law in Dubai

 
The Competition Law in Dubai observes and controls the activities of companies on the market which need to act in a reasonable manner, regardless of the operations involved. This set of laws oversees small, medium and large companies with establishments in Dubai. It is good to know that in Dubai, the anti-competitive behaviors are strictly forbidden. For a better understanding of the provisions of the Competition Law in Dubai and the proper ways in which business is done, please feel free to address to our Dubai attorneys. They can also help you obtain the EORI number.
 

How can I open a company in Dubai’s free trade zones?

 
Foreign entrepreneurs who want to have 100% ownership of their company can establish the business in the free trade zones in Dubai, with less effort and complete support offered by the Trade Register. As soon as the Articles of Association, the company’s main documents, have been drafted and submitted, your business in Dubai’s free zones will be soon incorporated. The certificate of registration will be issued by the registration authorities, alongside with the identification number of the firm. We remind that opening a company in the free zones in Dubai means no taxes, complete ownership, and different investment incentives.
 

New business rules - 100% ownership for companies in Dubai

 
If at the moment foreign investors in mainland Dubai need to enter into a partnership with a local entrepreneur to have a business, with 49% ownership, this rule is about to be abolished at the end of 2018. The new legislative framework also regards the residency of foreigners in Dubai which will be granted for 10 years. The purpose of the new legislation is to attract more foreign investments in mainland Dubai and to compete, at a certain level, with the free zones that offer a wide range of benefits, including complete ownership, a very much appreciated advantage among business holders.
 
 
If you want to know more about the new Commercial Law in Dubai and other legal matters, please contact our attorneys in Dubai. We are able to offer you legal assistance in Dubai and legal representation for litigation procedures in Dubai.