Abu Dhabi is a thriving, growing and economically advantageous location for many foreign companies or individuals to choose to open a business. The city itself is seen as a primary location for foreign business investments because it is so stable, safe and has a very good track record of accepting foreign companies.
As with any country and location, there are a variety of specific laws and regulations with regards to foreign investments in businesses in the United Arab Emirates. While the process itself is relatively simple, it is always recommended that a foreign company has local representation by a commercial lawyer in Abu Dhabi.
This representation at a local level by an experienced corporate or business lawyer will ensure that everything from the initial proposal to developing contracts and managing franchising and area development agreements can be handled by the same law firm. Not all attorney’s firms in Abu Dhabi have this capacity and capability, so it is important to research different firms and find the service that best meets your needs.
Early Legal Support
Ideally, any company considering a move to the United Arab Emirates should meet with a legal firm in Abu Dhabi very early in the planning stage of the project. As it is important to choose the right firm, taking the time to do research online about the law firms and also to make contact with the firms will be an important part of the process.
For many international companies, an in-house legal team may already be present. This allows the company’s legal experts to meet with the lawyer in Abu Dhabi working to assist the foreign company in getting approval to start the project. Additionally, having the Abu Dhabi law firm familiar with international law is also a benefit as they will have the experience in expertise in assisting other foreign companies in the process.
Without this type of precise, expert and practical support in the country, it is very easy for a foreign company or attorney not familiar with the process to make costly mistakes. In most cases, these can be corrected, but it may delay the approval of the business proposal, which can also have negative business consequences for all companies and partners involved.
To assist in understanding the importance of early support by a lawyer in Abu Dhabi specializing in corporate and commercial law, the basic steps in the process are outlined below. Of course, different industries and business sectors may have specific requirements that fall within any of these steps.
The attorney’s role will be to ensure all of these steps are completed fully and in the correct sequence for approval of the business venture by a foreign investor or international company.
Ownership of Businesses
The attorney in Abu Dhabi will talk to your team about the options for owning a business in the Emirate. It is possible for a foreign company or investor to have full ownership of a business, but only if the business is located in one of the designated free zones.
For all other locations for the business in the Emirate, it will be important for the foreign business or investor to a have at least one partner who is a UAE national partner. These are owners or partners in the company holding at least 51% of the company.
Law firms can be instrumental in setting up these business agreements and providing the necessary documentation to demonstrate the 51% ownership by the local sponsor or partner company or investor. This can become complicated if several UAE national partners are involved, but with legal representation all investing in the project are protected.
For an already established foreign company wanting to have locations in Abu Dhabi, it is possible to select a UAE national service agent. This allows the company to do business in UAE under their established company name. There is yet another possibility, and that is to appoint a commercial agent in the UAE. However, unlike with the UAE national services agent option, the foreign company can only you’re your products or service without your company’s direct presence.
Industry and Economic Type
In the UAE, as in most parts of the world, the government needs to have a very clear picture of the type of business that is being proposed. In general, Abu Dhabi has a liberal and progressive attitude towards businesses and, unlike some areas in the Middle East, it is seen as very welcoming to foreign investors. It is also more open to a wider range of different business types that some of the other areas in the same region.
With that being said, the business proposal by the foreign company has to be very specific. It must identify the category of business, and it has to fall into one of the categories that has been approved by the government. In a broad scope these fall into industrial, commercial or professional, with each requiring specific licenses and permits to operate, so making the correct choice of economic type is very important.
When ownership is involved, it will also be essential to determine the legal form of the business. This can include establishments or companies with several subcategories under the company category.
The business will have to have a unique and individual name. This is called the trade name, and it must be relevant to the type of business and the industry. An attorney familiar with trade name regulations and laws will be essential as there are multiple regulations around the specifically approved options for the naming of a business.
Individuals not familiar with the legal requirements may find it difficult to choose a name that can be approved. Working with an attorney can simplify this process and avoid common mistakes.
All foreign investors and businesses have to obtain what is known as initial approval for a business through the General Directorate of Residency and Foreigners Affairs. Before this initial approval is granted the business cannot obtain a business license, rent the site for the business or have the approval to use the facility for a specific type of business.
Once the initial approval is granted, all of those steps can be completed through the Commercial Protection Division of the Department of Economic Development. Approval for each step of the business must be obtained before proceeding to the next step.
Once the approval for the site and the business is obtained through the Department of Economic Development, the foreign investor can then obtain a business license. It is only at this time that the new business can actually do business in Abu Dhabi.
By working with lawyers in Abu Dhabi familiar with the process, common errors, omissions and oversights can be avoided through the process. For many foreign investors with top legal representation, the process is very streamlined and efficient, typically taking just days once the actual proposal, applications and preliminary research and investigations are completed.
It is also important to realize that Abu Dhabi provides incentives for some types of businesses to move into the area. An experienced and specialized legal firm will be able to provide the investor with information and options on possible incentives that may provide economic benefits to opening a business, branch or location in the area.