As published on internationalinvestment.net, Wednesday 8 December, 2021.
The United Arab Emirates will allow the creation of companies for acquisition or merger purposes, the Economy Ministry said on twitter and in the official news agency.
The move is part of a series of amendments to commercial companies law aimed at facilitating business and attracting investment into the Gulf state.
Other changes include allowing branches of licensed foreign companies to transform into UAE commercial firms, as well as eliminating nationality requirements for members of companies' boards of directors, the ministry said.
Previously, the chairman and the majority of the members of a company's board of directors were required to be UAE nationals.
Emirates News Agency reported yesterday that the Ministry of Economy, in cooperation with the Securities and Commodities Authority (SCA), held an extensive media briefing to introduce three of the new economic laws that underwent largest legislative amendments of their kind in the history of the UAE and approved by His Highness Sheikh Khalifa bin Zayed Al Nahyan, President of the UAE, on 27th November 2021.
In total, amendments were made to more than 40 laws with an aim to further enhance the UAE's economic environment, investment and commercial infrastructures and to support the security and stability of the society, keeping pace with the country's future growth aspirations.
During the media briefing, the Ministry shed more light on the details, provisions, and amendments related to three new economic legislation that form part of this package, and their expected impact on the national economy, business environment, investment, innovation system and intellectual property during the next phase.
These are: 1. Federal Decree-Law No. 32 of 2021 on Commercial Companies 2. Federal Decree-Law No. 37 of 2021 on Commercial Registry 3. Federal Decree-Law No. 26 of 2021 on Trademarks The media briefing was led by Abdullah bin Ahmed Al Saleh, Undersecretary of the Ministry of Economy, with the participation of Maryam Al Suwaidi, CEO of the SCA; Ahmed Al Hosani, Director of the Commercial Registration and Certificates of Origin Department at the Ministry of Economy; and Fatima Al Hosani, Director of the Trademarks and Intellectual Works Department at the Ministry of Economy.
Al Saleh said, "The new laws that were launched in conjunction with the UAE's golden jubilee represent an important milestone in the development of the legislative system to drive national economic growth in accordance with the vision of the wise leadership and in line with the Principles of the 50. They also support the achievement of the outputs of the Fifty-Year Charter announced by the government of the UAE.
These laws have been developed and updated in cooperation between the Ministry of Economy and its partners from government entities and in consultation and coordination with the private sector, in a manner that accelerates the transformation towards a new model of the national economy based on flexibility and sustainability. It puts in place proactive legislative frameworks that drive long-term economic growth in the country over the next fifty years of the UAE."
He pointed out that the new legislation represents key drivers for enhancing the flexibility of the economic climate, stimulating innovation, developing the intellectual property system, and increasing the country's attractiveness to companies, investors, entrepreneurs, talents and innovators from around the world in vital and strategic sectors.
Meanwhile, Maryam Al Suwaidi noted that the new set of legislative amendments issued by His Highness Sheikh Khalifa bin Zayed Al Nahyan, President of the State, on the occasion of the country's golden jubilee keeps pace with the UAE's developmental aspirations and is an unprecedented step forward in building the most competitive economy in the world. It would enhance the UAE's economic environment and the investment structure in terms of the country's attractiveness to foreign investments and their competitiveness among the most dynamic investment destinations in the world.
Furthermore, she noted that it contributes to the development of the legislative structure and the provision of a legislative environment that is most conducive to investment, which is one of the most important factors that differentiate countries in terms of their attractiveness to investments. This is especially so since the foreign investor always focuses on the quality and development of local legislation and the availability of a transparent and fair environment under the scope of the law, she noted.
She added, "Legislative modernization and the constant development of the legislative structure are necessary to keep pace with global best practices. It is also a reflection of the achievements made by the UAE over the past fifty years in line with the vision of its wise leadership and the aspirations of its people, and further encourages the country's comprehensive, sustainable development. It provides necessary support for various economic sectors and enhances the UAE's overall competitiveness and position on the map of the future and various global indicators of competitiveness, especially in the field of economy and investment."
The law enhances the openness of the UAE's business climate in a way that supports the competitiveness of the national economy and the dynamism of the business environment. It ensures a dynamic and advanced investment environment that enables investors to implement vital projects for the economy, increase the attraction of foreign companies and attract foreign investments to the country's vital economic sectors The law serves many categories both inside and outside of the country, including: commercial companies established in the country, branches of companies and representative offices of companies established outside the UAE; global companies; investors and businessmen from within the country; foreign investors from different countries of the world; entrepreneurs and owners of small and medium enterprises (SMEs); family companies; and all members of the community.
It contributes to invigorating market activity, developing opportunities, increasing the number and size of national and foreign companies and projects operating in the country, raising their competitiveness and increasing their ability to access regional and global markets.
It contributes to increasing the number of companies listed in the country's financial markets, attracting international companies to these markets, and encouraging companies to public offering and listing in the capital markets, thus raising the growth indicators of these markets to advanced and globally competitive ranks.
The new amendments include a comprehensive review, during which, 51 articles were replaced, 3 new articles were added, and one article was deleted, with a total of 55 updates. The updates include a number of new provisions that support the shift towards the new economic model in the country in accordance with the principles of economic openness, flexibility and proactiveness, and in line with the goals of the fifty.
The law amendments include development of financing solutions for companies and restructuring operations and finding solutions to the challenges facing business activities in the country.
Most prominent provisions and amendments to the law: - Allow the establishment of companies for the purposes of acquisition or merger, and SPVs, and establish a legal framework for these new legal forms and excludes them from some provisions of the Companies Law through a decision issued by the SCA to regulate the work of these forms of companies; ensure their effectiveness and economic feasibility; and enhance growth and positive impact on the business environment.
Abolish the maximum and minimum percentage of the founders' contribution to the company's capital at the time of the public offering, and cancel the legal limitation of the subscription period, and leaving the two matters to what is specified in the prospectus.
- Eliminate the requirement for the nationality of the members of the board of directors and uphold the organization shareholders' decisions in the election of board members, in accordance with the terms and conditions set by the competent authority.
- Allow companies to transform into a public joint stock company and sell its shares or offer new shares in a public subscription without being restricted to a certain percentage, by following the price-building mechanism of the security.
- Allow companies to divide and create legal rules governing division operations, thus contributing to diversifying the company's activities and fields of work and increasing its projects and growth opportunities.
- Allow companies to determine the face value, and to determine the percentage of the offering.
- Find financing solutions for companies through the issuance of other types of shares.
- Allow branches of foreign companies licensed in the country to transform into a commercial company with UAE citizenship.
The law aims to make the Economic Register a comprehensive reference for economic activities in the country that helps investors and companies develop their businesses based on documented, integrated and accurate information. The registry will serve as a leading platform that accelerates the growth of economic sectors and enhances the position of the UAE as a destination for future investments and innovative ideas in new economic sectors.
- Supports the knowledge economy enablers and promotes directing investment towards the knowledge and scientific sectors, advanced technological industries and areas of the new economy, by providing supporting data through the economic registry.
- Supports the UAE strategy 2021-2025 for digital transformation in terms of providing a world-class digital infrastructure and a unified digital platform that provides integrated, easy and fast digital services for all sectors and economic activities in the country, and in a manner that supports the integration of economic data for business sector services in the UAE.
- It also supports the UAE strategy 2021-2025 by ensuring the availability of participatory data, through real-time linking with the licensing authorities and the competent authorities, in a way that supports national ambitions, investment-attraction programs and the country's influential position on the global investment landscape.
- Supports the country's efforts to enhance services based on artificial intelligence and support the national strategy in this regard to enable transition to a new phase after the smart government, during which, future services, infrastructure and digital sector will align with the goals of the UAE Centennial 2071.
The law serves all members of the society and the concerned authorities in the government and the private sector inside and outside the country. It specifically targets anyone who carries out an economic activity in the country, including companies to which the provisions of the Commercial Companies Law apply; Civil corporations that take a form of commercial corporations; Companies established or contributed by the federal government or local governments and carrying out commercial activity in the country; Companies and institutions that carry out a professional activity; Companies established by law or pursuant to a law or decree to carry on a commercial activity; Branches, offices and agencies of foreign companies; Companies and establishments that carry out their activities in the free zones in the country; Sole Proprietorship Enterprises.
Most prominent provisions and amendments to the law: - It establishes the economic register as the official reference for data and information for establishments with economic activity in the country.
- Enables use of the unified economic register number as a digital identity for establishments.
- Through the Economic Register, a unified database is provided to all registrants in the Commercial Register, trademark owners, commercial agency activities, etc., and information related to merchants and economic activities licensed in the country, and any updates or modifications to this data, ensuring its validity, accuracy and updating periodically.
- Provides a comprehensive and reliable digital knowledge base that can be accessed via advanced digital platforms available at any time and from anywhere to serve businessmen, investors, policy makers, economic researchers, academics, students and all stakeholders.
- Facilitates the provision of official data to economic consultancy, research, classification and evaluation institutions, and relevant international organizations, and supports analysis and research related to economic activities, market trends, and current and promising future opportunities in the country.
- Enables data sharing, integrating economic information from the concerned authorities in the country, and provides advanced services based on partnership in order to facilitate customer journey. Eliminates the need to submit the same data more than once to more than one party in the country.
- Allows all transactions to be conducted through the unified economic registry number, without the need to re-use documents and data across different government entities.
It provides integrated protection for trademarks and new mechanisms that enhance the effectiveness and efficiency of government work, which accelerate the pace of adoption of emerging concepts and innovative methods, leading to a more competitive trademark and intellectual property system.
It contributes to increasing the momentum and competitiveness in the country's markets and enhancing the reputation of the national economy as an attractive destination for major regional and global companies and brands. It is vital to increasing investor confidence on the UAE's developed legislative environment and reassures them that their rights will be preserved in accordance with advanced legal systems compatible with ground realities.
It enhances confidence in the UAE's markets and the business sector, and contributes to combating fraud and counterfeiting, preserving the rights of institutions, companies, and individuals, encouraging the owners of inventions and providing the appropriate climate for transforming creative ideas into applications and innovative solutions that contribute to economic growth and upgrading the country's competitiveness.
It enhances the presence of UAE brands globally, increases the attractiveness of the local product in major markets, contributes to improving the quality of local products by engaging in global competition, and supports the contribution of these brands to the national economy.
It increases the country's attractiveness for foreign direct investment, as well as for expertise, competencies and talents, and stimulates the transfer of knowledge and the best advanced technology methods by attracting international companies and international brand investments to the country's markets.
Expands the scope of legal protection for companies' trademarks, products, innovations and trade name in the country's markets through the protection of new and non-traditional patterns of trademarks, in line with modern technical developments in building a brand for business facilities, and consolidating the country's position as a modern, advanced and reliable destination for successful businesses and companies.
The law serves a wide range of segments of society and the business environment, including entrepreneurs, commercial projects and company owners within the country; foreign companies' investors; investors in entertainment and cultural fields; registered agents, attorneys and legal service providers; anyone interested in protecting, registering or preventing infringement of a trademark; or all members of the society.
Most prominent provisions and amendments to the law:
- Accelerate the issuance of licenses and the completion of government approvals and procedures, which contributes to enhancing integration in the work of service providers and increasing their supportive contribution to SMEs.
- Determine the procedures for registering a mark locally and internationally, providing it with protection and preventing and addressing infringement with deterrent penalties.
- Provide a comprehensive database of trademarks to be open and free of cost to the public, which was formerly a paid service.
- Introduce option to renew the mark within 6 months after the expiry of the period and gives extension of another 6 months, if provided justifications are accepted by the Ministry of Economy.
- Provide legal protection for non-traditional trademarks after developing materials dedicated to these aspects, including smell, sound, hologram, tones and others, which are the latest types of non-traditional trademarks.
- Raise the ceiling of penalties for violators of the Trademarks Law and its executive regulations.
- Introduce new penalties that protect non-traditional trademarks.
- Provide protection for "geographical indications", which encourages research in local geographical indications and presents them to the world, such as "types of date crops" or trees and water and contributes to strengthening the status of the country and its local products globally.
- Allow the submission of multi-category applications, which will encourage companies to protect their trademarks.