In a rapidly evolving world, the United Arab Emirates (UAE) continues to stand out as a beacon of opportunity for investors. With its dynamic economy, strategic location, and investor-friendly environment, the UAE remains a top choice for those looking to grow their wealth. However, recent updates in investment laws and regulations have brought about significant changes that every investor – local or foreign – should be aware of. In this article, we’ll explore these changes and provide actionable insights to help you make well-informed investment decisions.
Understanding the Shift: Why Investment Laws Matter.
Investment laws serve as the framework that shapes the rules of engagement for investors and businesses. They define the parameters within which investment activities take place, safeguarding both the interests of investors and the stability of the economy. Recently, the UAE has undertaken a series of changes to enhance its investment landscape, providing a more conducive environment for sustainable growth.
The Impact on Local Investors.
For local investors, these changes signal a commitment to fostering a thriving investment ecosystem. Emphasis has been placed on transparency, fairness, and protection of investor rights. As a result, navigating the investment landscape has become more straightforward, empowering local investors to explore diverse opportunities across sectors.
Welcome to Foreign Investors.
For our international counterparts, the UAE’s updated investment laws signal a warm welcome. The country’s dedication to diversification and expansion is underscored by regulations that provide foreign investors with greater ease of doing business. By loosening certain restrictions and simplifying bureaucratic processes, the UAE has opened its doors wider to global investment.
Actionable Insights for Informed Investment Decisions.
Real-World Example: Navigating Real Estate Investments.
Imagine you’re considering investing in the vibrant Dubai real estate market. With the recent regulatory changes, foreign investors are now permitted to own land in designated investment zones. This change not only expands your options but also underscores the UAE’s commitment to attracting international capital. By partnering with a reputable real estate developer and conducting thorough due diligence, you can capitalize on this opportunity while ensuring compliance with the law.
In Conclusion: Empowering Your Investment Journey.
As an investor, adapting to the changing investment landscape is essential for success. The UAE’s commitment to creating a transparent, investor-friendly environment is a positive stride toward economic growth. By staying informed, seeking professional guidance, and making well-informed decisions, you position yourself to thrive in this exciting era of UAE investments.
Remember, every investment decision you make shapes your financial future. By embracing these changes and taking thoughtful steps, you’re not only protecting your wealth but also contributing to the continued prosperity of the UAE’s investment landscape.
Elevate your UAE investment strategy with Al Safar & Partners, a vital resource in understanding recent shifts in investment laws. Beyond investment insights, we specialize in clarifying these changes, ensuring your decisions align with the evolving legal landscape. Connect at +97144221944 ext. 720 or +971 55 763 0405, or email reception@alsafarpartners.com Explore more http://dubailawyers.ae to fortify your investment acumen with legal expertise.
Disclaimer: This article is for informational purposes only and should not be considered legal advice.
Written By:
Dr. Ahmed Hatem – Partner & Head of Corporate and Commercial department at Al Safar and Partners Law Firm.
As we delve into the dynamic landscape of the UAE’s corporate world in 2023, it becomes evident that businesses are operating in an increasingly complex and interconnected global market. Amidst this backdrop, capital market disputes have emerged as a crucial challenge that can impact the very foundation of organizations. As a corporate and commercial lawyer with extensive expertise in this domain, my aim is to shed light on this topic and provide valuable insights to empower business leaders.
The Impact of Capital Markets Disputes in Businesses.
Capital market disputes encompass a wide range of issues, including regulatory violations, breach of contracts, securities fraud, and shareholder disputes. Such conflicts can severely hinder an organization’s growth, reputation, and financial stability. Businesses may find themselves embroiled in lengthy legal battles, which can drain resources and divert focus from core operations. Moreover, disputes in capital markets can lead to investor skepticism, affecting investor confidence and potential funding opportunities.
Navigating Disputes: Litigation or Arbitration.
Given the complexity of capital market disputes, choosing the right method of resolution is crucial. Two primary avenues available are arbitration and litigation. While both have their merits, arbitration is often favored due to its confidentiality, flexibility, and specialized expertise. As an experienced arbitrator myself, I have witnessed firsthand how this process can lead to swifter resolutions, allowing businesses to mitigate damages and move forward. However, each case is unique, and the decision to pursue arbitration or litigation should be carefully evaluated with the guidance of legal counsel.
The Role of Thought Leadership in Resolution Strategies.
In my journey as a corporate and commercial lawyer, I have found that promoting thought leadership can be a catalyst for effective dispute resolution. Business leaders should seek to collaborate with legal experts who possess in-depth knowledge of capital market intricacies. By engaging in open discussions and exploring potential solutions together, a harmonious environment for conflict resolution can be fostered.
The Power of Prevention: Proactive Strategies for Businesses.
Preventing capital market disputes should be a top priority for business leaders. Implementing robust compliance programs, conducting regular internal audits, and adhering to regulatory best practices are vital steps in reducing the likelihood of disputes arising. When disputes do occur, the presence of clearly drafted contracts and agreements can provide a solid foundation for resolution. As a legal consultant, I have often advised businesses on proactive measures to safeguard their interests and minimize exposure to potential disputes.
An Ecosystem of Growth: Collaborative Approaches.
In the UAE’s vibrant business landscape, fostering an ecosystem of growth and collaboration is essential. Businesses can seek to resolve disputes amicably through mediation and negotiation, avoiding the adversarial nature of legal battles. Emphasizing open communication and maintaining positive relationships with all stakeholders can significantly contribute to preventing and resolving disputes.
Conclusion.
As we navigate the complexities of capital market disputes in 2023, it is crucial for business leaders to stay informed and proactive. By understanding the impact of disputes, considering effective resolution strategies, and promoting thought leadership, organizations can thrive in a challenging environment. As an experienced legal professional with extensive expertise in capital markets, I remain committed to empowering businesses with actionable insights and contributing to the growth of the UAE’s corporate landscape.
To explore how our expertise can fuel your organization’s success, contact our dedicated team at +97144221944 ext. 720 or +971 55 763 0405, or connect with us via email at reception@alsafarpartners.com. To learn more about our track record and comprehensive range of services, visit www.alsafarpartners.com
As you consider the insights shared in this article, kindly note that it is for informational purposes only and should not be construed as legal advice. At Al Safar & Partners, our mission is to empower your business by providing tailored solutions to overcome capital market disputes in the UAE. Let’s collaborate to drive your business towards greater heights of success!
Introduction:
In the dynamic business environment of the UAE, the negotiation and drafting of commercial contracts play a vital role in ensuring smooth transactions and safeguarding the interests of all parties involved. This article aims to provide valuable insights and actionable tips for navigating commercial contracts in the UAE. Drawing on extensive experience and expertise in corporate and commercial law, we will explore effective strategies that can empower professionals in their contract negotiations and drafting processes. By delving into the nuances of commercial contracts in the UAE, this article seeks to equip readers with the knowledge to navigate this landscape successfully.
To effectively negotiate and draft commercial contracts in the UAE, it is essential to have a strong grasp of the local legal landscape. Familiarize yourself with the UAE Civil Code, Commercial Transactions Law, and other relevant legislation that govern contractual relationships. Consider seeking legal advice from qualified professionals who are well-versed in UAE laws to ensure compliance and mitigate risks.
The UAE is a diverse country with a rich cultural heritage. When negotiating and drafting contracts, it is important to be mindful of local clients, practices, and sensitivities. Incorporate cultural considerations into your contracts to promote a better understanding and facilitate smoother business relationships. Respecting local norms can strengthen your position as a trusted and respectful business partner.
Ambiguity in contractual terms can lead to misunderstandings and disputes. When negotiating and drafting contracts, prioritize clarity and specificity in language. Clearly define the rights, obligations, and expectations of all parties involved. Ensure that the terms are unambiguous, leaving no room for misinterpretation. Utilize concise and jargon-free language to enhance comprehension and reduce potential confusion.
Given the influence of Islamic law in the UAE, it is crucial to be aware of and consider Islamic contracts when applicable. Familiarize yourself with the formats of Islamic contracts and their legal implications. This knowledge will enable you to adapt your negotiation and drafting strategies to align with Islamic principles, if necessary, and demonstrate your expertise in catering to diverse client needs.
Commercial contracts should seek to balance the allocation of risks between the parties involved. Identify potential risks associated with the transaction and allocate them appropriately, considering the respective bargaining positions and the nature of the business relationship. This approach promotes fairness and helps build trust among parties, facilitating long-term collaborations.
Compliance with local and international laws and regulations is paramount in contract negotiation and drafting. Conduct thorough legal due diligence to ensure that all contractual provisions adhere to legal requirements. Stay updated on evolving regulatory frameworks and industry-specific guidelines to avoid any potential legal pitfalls.
Include clear and effective dispute resolution mechanisms in your contracts to address potential conflicts. Consider alternative dispute resolution methods such as arbitration or mediation, which are commonly favored in the UAE. These mechanisms can provide quicker and more cost-effective resolutions compared to traditional litigation, while maintaining confidentiality.
Conclusion:
Successfully negotiating and drafting commercial contracts in the UAE requires a deep understanding of local laws, clients, and business practices. By incorporating these tips into your approach, you can navigate the complexities of contract negotiation and demonstrate your expertise as a reliable legal consultant. Remember, each contract is an opportunity to build strong and lasting business relationships. Emphasize clarity, fairness, and compliance, and you will position yourself as a trusted thought leader and influencer in the UAE’s dynamic business landscape.
Connect with Al Safar & Partners to explore successful commercial contracts in the UAE and fuel your organization’s prosperity. Navigate the intricacies of the dynamic business landscape, shape a future where businesses flourish. Contact us at +97144221944 ext. 720 or +971 55 763 0405, or email reception@alsafarpartners.com. Visit www.alsafarpartners.com to learn more. Drive negotiations, craft exceptional contracts, and achieve sustained growth with us.
Disclaimer: The views and opinions expressed in this article are for informational purposes only and do not constitute legal advice.
A contract is an agreement that can be enforced by a one of the parties to it against the other party through a court of law. Thus, when an agreement is backed by law it is said to be a contract. It is essential to understand the basic concepts and elements of a contract as contracts are at the heart of every commercial transaction. When we purchase a loaf of bread from the supermarket, we enter into a contract of sale of the said loaf of bread with the supermarket owner who in turn has a contract of selling the said bread with the manufacturers of the bread. We also enter into a contract with the manufacturer of the bread whereby we can make them liable for any defect or quality/standards lower than the one made known to the consumer or for any other misleading information which resulted in the purchase of the said loaf of bread. Therefore, there may exist a multiple number of contracts behind every commercial transaction that we enter into during our day to day lives.
The contracts entered into in the Emirate of Dubai are governed by the Dubai Contracts Law of 1971 (hereinafter referred to as ‘the law’). This law also has a retrospective effect and therefore also applies to contracts that were entered into prior to the coming into force of the law. This article analyses the law and considers the essential elements that require to be present in a valid contract in accordance with the law.
According to the law, a contract is defined as an agreement that is enforceable by law. Article 12 further elaborates on the same point by describing the terms that may constitute to be a contract. It reads as follows. “It shall be deemed as a contract any agreement made with the consent and election by parties having the capacity to contract against a lawful consideration and for a lawful purpose unless expressly provided hereinafter to be deemed invalid.” Thus the following conclusions about a valid contract are arrived at:
2. The consent of and election by the parties entering into the agreement has to be present.
3. The parties must have the capacity to enter into a contract.
4. The presence of lawful consideration is a must.
5. The contract should be entered into for a lawful purpose.
6. The contract should not fall into the categories of invalid contracts that are provided by the law.
The first necessity is that of the presence of an agreement, which is defined as a set of promises with consideration. Thus it is a promise to do or to abstain from doing some act in exchange for consideration. The important question to be answered here is how a promise comes into being, the answer to which is through ‘offer’ and ‘acceptance.’ Offer and acceptance’ are the two most important elements of a contract.
OFFER
The law defines the term ‘offer’ as ‘the proposal made by a person to another to do or omit to do any act, purported to obtain the consent of the other party to such act or mission.’ In the above example of a supermarket, the consumer while purchasing the loaf of bread puts forward an offer to purchase the said bread for the price inscribed for the same with an intention to obtain consent of the supermarket to accept the same. It is important to note that the display of goods does not amount to offer but only amounts to the invitation to make an offer.
The offer is said to be complete when it is notified to the other party. It can be withdrawn before the acceptance of the other party but not after the other party accepts the offer.
ACCEPTANCE
‘Acceptance’ is defined by law as ‘the expression of consent by the person to whom the proposal is made, and thereby the proposal becomes accepted. When the proposal is accepted, it shall become a promise.’ Thus in the example of the loaf of bread, when the representative of the supermarket owner at the billing counter accepts your offer to buy the loaf of bread for the said price, the promise is said to have come into existence. As this promise is backed with consideration i.e. the price of the bread, the transaction is an agreement where the supermarket promises to give you the loaf of bread in exchange for the consideration which you provide to the supermarket in the form of the price in exchange of the loaf of bread.
The acceptance is said to be complete when the person offering is notified of the same by making him aware of the same through any means of communication.
CONSIDERATION
The term consideration is defined by law as anything done or omitted to be done, is being done or omitted to be done or shall be done or omitted to be done by the promisee and anything that the promisee arranges to do or omit to do, subject to the provisions of this Law, provided that all is done or omitted to be done as demanded by the promisor. Here the promisee is referred to for the party who accepts the proposal and the promisor is referred to for the party who provides an offer for the proposal.
In the example of the loaf of bread, the promise of providing the loaf of bread is the consideration for the consumer in exchange of the promise by the consumer to pay the price of the loaf of bread which is the consideration for the supermarket for providing the loaf of bread.
One of the most important criteria to appreciate is that the consideration must be lawful and must not be prohibited by the law.
FREE CONSENT OF PARTIES
Consent of the parties is said to be free when the following conditions are satisfied:
2. There must not exist coercion on any party to enter into the contract.
3. No party should be under any unlawful and undue influence to enter into the contract.
4. It should not be a case of fraud or temptation.
5. There should be no mistake of facts which leads to the entering of the party into the contract.
Contracts entered into without the free consent of one of the parties are revocable by the same party.
CAPACITY OF THE PARTIES
The parties are said to have the capacity to enter into contracts when they have the mental capacity to understand the nature of transactions and the consequences of entering into such transactions.
The criteria for a party to have the capacity to enter into a contract are as follows:
2. Must be of sound mind, he must be sane.
3. Must not be interdicted from entering into the contract by any other law or by the order of a court of law.
LAWFUL PURPOSE
The purpose of entering into the contract must be lawful, must not be prohibited by law or in contradiction with any of the existing laws. The purpose must not be to defraud another or any such illegal or penalized acts.
INVALID CONTRACTS
Certain agreements are pronounced to be invalid by the law and thus they are not enforceable.
2. Agreement to prevent free trading.
3. Agreement to prevent legal proceedings.
4. Agreements that are not clear and suffer from ambiguity.
5. Wagering agreements.
The above enlisted agreements are not enforceable and thus cannot form valid contracts.
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For legal advice regarding the subject, please call +971 4 4221944, or call 800-LAWYER (529937).
With the ongoing frauds investments always pose a risk of losing all your savings. There have been many cases wherein and individual after investing in some company later finds out that the company has vanished or is liquidated. Also it appears that many Real Estate Buyers or individuals/companies dealing with companies in the UAE are discouraged to initiate legal proceedings against a company that went to or under liquidation.
It often happens that the concerned parties are worried with the method that will be required to be complied with in order to be added with the list of Creditors and whether litigation or arbitration, as may be provided for in the Agreement between the parties, permit such method of recovery of the debt owed.
The answer to this dilemma is found in Commercial Companies Law (CCL). The CCL permits for a claim to be referred to the court or arbitration to recover a debt from a company under liquidation. Unlike insolvency where court actions shall cease, court actions can be filed or can be continued with in case of liquidation (Article 691 of the UAE Commercial Code). The UAE Commercial Companies Law No. 8 of 1984 (“CCL”) states that immediately upon its dissolution the company shall be considered to be in liquidation. During the liquidation period it shall retain its corporate personality to the extent required for the liquidation formalities. The authority of the managers or the board of directors shall cease with the dissolution of the company. The company institution shall continue to exist during the liquidation period, and their authorities shall be limited to liquidation business that is not within the authority of the liquidators. The liquidator shall perform all the required liquidation functions, particularly to represent the company before the courts of law, settle the company debts and sell its movable assets or real estate by auction or any other method unless the document appointing the liquidator stipulates that the sale should be performed in a specific method.
Thus, as a matter of law, when the company is dissolved and liquidated, the company conserves its corporate body during the liquidation process and the liquidators represent the company under liquidation before the court of law.
Thus, as only the representatives of the company change, no extinction of the corporate body occurs before the liquidation completion and closure. There is neither assignment nor transfer of any agreement that intervenes between the company and the liquidators to consider the latter as a party to court or arbitration proceedings.
As to the appropriate method of recovery of a debt it is commonly found in the agreement between the parties, namely a clause stipulated the method of solving a dispute. Such method is complimentary to any other method of a debt recovery available to the creditor under the Law.
This means that a creditor can either follow the rules provided for a debt recovery at the CCL or initiate arbitration or court proceedings. Any other interpretation to the contrary shall be deemed as undue limitation of a constitutional right to litigate. The creditors can always contact lawyers and take the appropriate legal action against the debtor company.
The debtor may insist that the creditor should not or did not submit a formal claim to the Company’s liquidators and as such shall be responsible for the costs of arbitration or litigation. However, there are certain procedures the liquidators shall have to comply with. The UAE Companies Law No. 8 of 1984 states that the purpose of liquidation is to ensure that all the company’s affairs have been dealt with properly. This involves:
• Ensuring all company contracts are completed;
• Transferred or otherwise brought to an end;
• Ceasing the company’s business;
• Settling any legal disputes;
• Selling any assets;
• Collecting in money owed to the company;
• Distributing any funds to creditors and returning share capital to the shareholders.
The Company in liquidation or its liquidators shall formally and as required by the law to contact the creditors in order to review their claims that they may have against the Company under liquidation and to invite them to present their claims in the liquidation. However, even if the liquidators failed to formally notify creditors of the liquidation in 2 local newspapers, the liquidators shall nevertheless make all reasonable provisions to pay all claims and obligations, including all contingent, conditional or un-matured contractual claims known to it at the time of liquidation. Provisions also need to be made as reasonably likely to be sufficient to provide compensation for any claim against the debtor company.
Thus, the liquidation proceedings do not affect the rights and claims that the creditors may have under the Agreement(s) with the debtor company as the arbitration or litigation proceedings are necessary in order to preserve the claims of the creditors and the repayment of the same by the liquidators to the creditors.
Therefore, the creditors can always enforce their rights to be paid the amount due to them by the company under liquidation through the Dubai Courts. For further details as to how to go about with the legal procedures for debt collection one must consult lawyers.
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For legal advice regarding the subject, please call +971 4 4221944, or call 800-LAWYER (529937).
The procedure for termination or dissolution of companies in the United Arab Emirates can be examined under the provisions Commercial Companies Law. This Article talks about termination of companies under this Law.
Companies located in Free Zones and Offshore companies are not governed by the Commercial Companies Law. Apart from Free Zone Regulations and Dubai offshore company, termination of companies is covered by the Commercial Companies Law (hereinafter referred to as ‘the law’).
The law provides that a company can be dissolved for any of the following reasons:
A company can be incorporated for a fixed period of time which is to be incorporated in its articles of association. On expiry of this fixed period the company dissolves automatically.
b. completion of the objective for which the company was established
Sometimes companies are incorporated only for specific projects or tasks and therefore they continue to be in existence only till the completion of the said project or task after which they are terminated.
c. loss of all or most of the company’s assets
In order to run, a company needs to have sufficient assets without which it is not possible for it to continue to function and needs to be terminated.
For the dissolution of the company to be effected, in case the share capital of a limited liability company is half, directors are to put the matter of dissolution before a general meeting. In case the losses suffered by the company amount to more than half of the capital, the partners who hold 1/4th of the capital may request dissolution.
Liquidation is to be carried out by one or more liquidators to be appointed by the partners or the general meeting approved by the majority by which the company’s decisions are taken.
Further a notice is to be given of the dissolution of a company by entry in the Commercial Register, and publication of dissolution notice in two Arabic newspapers.
A company has a legal personality only to the extent required by the liquidation process and it is thereby required that the name of the company should have the suffix “under liquidation” added.
Immediately upon his appointment and by agreement with the Board of Directors, the liquidator is to take stock of the company’s assets and liabilities, and the Board of Directors are to make available to the liquidator all ledgers, accounts and documents of the company. The Liquidator is then to undertake the following tasks:
2. Do everything necessary to safeguard the assets and the rights and obtain all company’s claims and deposit the monies received into the company bank account as soon as received.
3. Perform all the tasks required by the liquidator, including settlement of the company’s debts and sale of the company’s movable and immovable property by public auction. However, liquidator cannot commence any new business, and if he does he will be personally liable.
4. Inform all the creditors by registered letter inviting them to present their claims. Notification shall be made in two Arabic daily newspapers. Time limit for submission of claims shall be not less than 45 days.
5. In case the company’s assets are not sufficient for the settlement of all debts, the liquidator is to discharge the debts proportionately without prejudice to the rights of the privileged creditors.
6. Liquidator is obliged to submit to the partners or the general meeting a provisional account every six months of the liquidation process.
7. Assets of the company resulting from the liquidation shall be divided among the partners after settlement of its debts and at the division each partner shall receive a sum equal to the value of the stake in the capital he contributed. Remainder of the company’s assets shall be divided between the partners in proportion to their respective share in the profit.
8. If the net assets of the company are insufficient to repay the partners stake in full, the deficit shall be distributed between them in accordance with the proportion laid down for the distribution of losses.
9. Upon completion of the liquidation, the liquidator is to submit a final account to the partners or the general meeting for the liquidation process. Such process is to be concluded with the approval of the final accounts. Furthermore, liquidator is to record the conclusion of the liquidation in the Commercial Register and request that the entry of the company be deleted from the Commercial register.
It is to be noted that liquidator is held liable to the company if its affairs are mismanaged during the period of liquidation. The authority appointing the liquidator also has the power to dismiss the Liquidator and appoint another liquidator as his replacement (Article 312).
Apart from the above mentioned procedure for termination of a company. A company can also be terminated due to it being declared bankrupt. Bankruptcy and composition with creditors are separately governed by detailed provisions of the Commercial Transactions Law.
A commercial company may be declared bankrupt if it ceases to pay its commercial debts at the time they fall due because of disruption of its financial operations. A company may be declared bankrupt even if it is in the process of liquidation.
In case of public joint stock companies and limited liability companies, if the declaration of bankruptcy is requested then the liquidation proceedings are suspended, and it may not be liquidated before completion of the bankruptcy.
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For legal advice regarding the subject, please call +971 4 4221944, or call 800-LAWYER (529937).