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Doing Business in Abu Dhabi
 
 
 

General

In the past, each emirate followed its own procedures governing the operations of foreign business interests. In practice, however, Abu Dhabi and the other emirates followed the same general system, whereby foreign companies operated in one of three ways: with a local sponsor, through a partnership with a UAE national or company, or through a private limited company or public shareholding company incorporated by Ruler's decree.

Since 1984, steps have been taken to introduce a codified companies law applicable throughout the UAE. Federal Law No. 8 of 1984, as amended by Federal Law No. 13 of 1988 - the "Commercial Companies Law" - and its by-laws have been issued. In broad terms the provisions of the Law are as follows:

The Federal Law stipulates a total local equity of not less than 51% in any commercial company and defines seven categories of business organisation which can be established in the UAE. It sets out the requirements in terms of shareholders, directors, minimum capital levels and incorporation procedures. It further lays down provisions governing conversion, merger and dissolution of companies.

The seven forms of business organisation defined by the law are:

• General Partnership Company;
• Partnership-en-commendam;
• Joint Venture Company;
• Public Shareholding Company;
• Private Shareholding Company;
• Limited Liability Company;
• Share Partnership company;
• Partnerships.

Note: Partnership companies are limited to UAE nationals only. The Abu Dhabi government does not presently encourage the establishment of partnership-en-commendam and share partnership companies.

Forms of Business Organisation

Joint Venture Company

A joint venture is a contractual agreement between a foreign party and a local party licensed to engage in the desired activity. The local equity participation in the joint venture must be at least 51%, but the profit and loss distribution can be prescribed. There is no need to license the joint venture or publish the agreement. The foreign partner deals with third parties under the name of the local partner who – unless the agreement is publicised – bears all liability.

In practice, joint ventures are seen as offering a suitable structure for companies working together on specific projects.

Public & Private Shareholding Company

The Law stipulates that companies engaging in banking, insurance, or financial activities should be run as public shareholding companies. Foreign banks, insurance and financial companies, however, can establish a presence in Abu Dhabi by opening a branch or representative office.

Shareholding companies are suitable primarily for large projects or operations, since the minimum capital required is Dh. 10 million for a public company, and Dh. 2 million for a private shareholding company. The chairman and a majority of directors must be UAE nationals and there is less flexibility of profit distribution than is permissible in the case of limited liability companies.


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