Establishing and Doing Business :

Regulation of the establishment and conduct of business in the UAE is
shared at the federal and emirate levels. There are four major laws
affecting foreign investment in the UAE; namely,
- Federal Companies Law,
- Commercial Agencies Law,
- Federal Industry Law, and
- Government Tenders Law.
These laws, especially the Federal Companies Law, are being revised
to overcome obstacles to foreign direct investment in the UAE.
The Federal Companies Law applies to all commercial companies
established in the UAE and to branch offices of foreign companies
operating in the UAE. Companies established in the UAE are required
to have a minimum of 51 percent UAE national ownership. However,
profits may be apportioned differently. Branch offices of foreign
companies are required to have a national agent unless the foreign
company has established its office pursuant to an agreement with the
federal or an emirate government. All general partnership interest must
be owned by UAE nationals. Foreign shareholders may hold up to a 49
percent interest in limited liability companies.
The Commercial Agencies Law On June 18, 2006, the UAE
announced substantial changes to the Commercial Agencies Law.
These amendments include: 1) requiring mutual consent to renew
an agency agreement; 2) limiting an agency contract to a fixed time
period; 3) allowing either party to file for damages; 4) eliminating
the Ministry of Economy’s Commercial Agencies Commission(which
handles agency disputes); and 5) allowing the import of «liberalized
goods» without the agent’s approval.
The Agencies Law requires that foreign principals distribute their
products in the UAE only through exclusive commercial agents that are
either UAE nationals or companies wholly owned by UAE nationals.
The foreign principal can appoint one agent for the entire UAE or for a
particular emirate or group of emirates.
The Federal Industry Law stipulates that industrial projects must
have 51 percent UAE national ownership. The law also requires that
projects either be managed by a UAE national or have a board of
directors with a majority of UAE nationals. Exemptions from the law
are provided for projects related to extraction and refining of oil, natural
gas, and other raw materials. Additionally, projects with a small capital
investment or special projects governed by special laws or agreements
are exempt from the industry law.
In Abu Dhabi, ZonesCorp is in charge for the development of the
industrial sector. The three industrial cities of Abu Dhabi – ICAD I,
ICAD II and ICAD III – are expected to attract investment exceeding
Dhs30bn by 2009. Total investments in both ICAD I, ICAD II have
exceeded Dhs20bn. ZonesCorp was established with Dhs1 bn with
a 10-year closed end fund to build infrastructure projects to attract
industrial investment.
The Tenders Law stipulates that with respect to federal projects, a
supplier or a contractor must either be a UAE national or a company
in which UAE nationals own at least 51 percent of the share capital
or foreign entities represented by a UAE distributor or agent. Foreign
companies wishing to bid for a federal project must, therefore, enter
into a joint venture or agency arrangement with a UAE national or
company.

Federal tenders must be accompanied by a bid bond in the form of an
unconditional bank guarantee for five percent of the value of the bid.


UAE Federal Government entities often tender internationally if goods and
services are not available locally.