Commercial CompaniesThere are several options for incorporationg of legal entities and business registration in the UAE:
- General partnership.
- Joint venture.
- Public Joint Stock Company.
- Closed Joint Stock Company.
- Limited Liability Company.
- Equity Partnership.
The law allows investors and entrepreneurs to create and wholly own land based companies in all sectors, with the exception of a small number of reserved "strategic activities". The recent amendment to the law aims to boost the country's competitive advantage as part of the UAE government's broader program to diversify the economy towards an innovative, knowledge-based economy. It is worth discussing the key regulatory codes and regulatory updates that directly affect the business environment in the UAE.
Law by decree No. 19 of 2018 on Foreign Direct Investment (“FDI Law”), which removed ownership restrictions for a certain set of economic activities. The law will also allow companies to apply for exemptions from ownership restrictions. This law helps to remove much of the regulation and administrative barriers to attracting foreign and Arab direct investment. It creates a unified regulatory framework for foreign investment in terms of regulating investment procedures, licensing and registering companies in the UAE. The law regulates the benefits, tax incentives and guarantees for foreign investors and their rights, as well as regulates their obligations.
- National Economic Register
Free economic zones (offshore) UAEIn the offshores of the UAE, there is a general rule that is characteristic of such zones around the world: if foreign representatives act as subjects of legal relations, they themselves have the right to choose the rules by which they will be guided. However, if a citizen of the Emirates is involved in the relationship, then this case falls under the jurisdiction of the judicial authorities of the country. At the same time, local authorities continue to monitor the activities of the subjects, as well as the police. But, in a controversial situation, you do not have the right to be judged according to the laws of the UAE (this does not apply to especially serious crimes).
Licensing businessesBefore actually starting its activities, a commercial enterprise must obtain a license allowing it to carry out its chosen economic activity. There are six types of licenses: commercial, agricultural, craftmanship, professional (licenses to engage in professional activities), industrial and tourism. Such licenses are issued by the DED of each emirate. It is possible to apply for a business license through the Department of Economic Development website or in person at the DED Customer Service Center. Depending on the specialization of the business and the nature of the economic activity, applicants may require the following permits from certain government agencies:
- insurance industry - Insurance management.
- health sector - Ministry of Health.
- hospitality sector - Abu Dhabi Tourism Authority.
- banking and financial institutions - Central Bank of the UAE.
- manufacturing companies - the Ministry of Finance and Industry.
Moreover, commercial licenses are issued to owners of enterprises that carry out activities such as:
- general trade;
- conclusion of a contract (contractual activity);
Crypto LicenseCryptocurrency licenses are classified as business licenses. Commercial processes, including the trading process, require a commercial license. This license allows you to engage in all other cryptocurrency operations in Dubai. The UAE cryptocurrency license is currently subject to strict regulations from the UAE government as well as the Central Bank. In the long term, it is expected to become one of the main business categories.
Currently, three free trade zones issue cryptocurrency licenses in the UAE:
- Dubai Multi Commodities Center (DMCC” )
- Dubai Airport Free Zone Authority (“DAFZA”)
Financial Services Regulatory Authority (hereinafter referred to as “FSRA”). This is the regulatory body that governs all crypto assets in the UAE.
It is difficult to give an accurate estimate of the cost of a cryptocurrency license in the emirates. The total amount of capital required will depend on the exact nature of the business; place of establishment of the company; and the size of the operation. The total cost of the entire process can be around 34,690 USD (EUR 31,370) and it includes:
- company formation costs;
- payment for filing an application for a license for cryptographic work;
- opening a corporate account with EMI (outside the UAE).
As of today, there is no specific crypto law in the UAE. The Financial Services Regulatory Authority's (FSRA) "Crypto Asset Regulation at ADGM" is the most comprehensive guidance on cryptocurrencies in the UAE. In accordance with it, a company carrying out operations with crypto assets must comply with the following requirements:
Only certain crypto assets are allowed. The decision regarding specific crypto assets is made based on market capitalization, traceability, security, price volatility and other factors;
- Keep capital funds equivalent to 6 months of operating expenses" (12 months equivalent for crypto data exchange);
- Prevention of fraudulent activity and the requirement "know your customer" (hereinafter - "KYC") require compliance;
- Mandatory risk management and disclosure;
With a diversified economy, a stable political system, strong capital flow, a favorable tax environment and liberal trade regimes, the UAE is now an attractive investment hub with the vision of becoming an economic, tourism and commercial capital for more than two billion people. With a constant stream of new business opportunities, investor-friendly legislation, a sound financial system, and a well-developed infrastructure, the UAE is becoming one of the most attractive jurisdictions for doing business and is expected to continue its position in the coming decades.
The content of this article is intended to provide a general guide to the subject matter, not to be considered as a legal consultation.