Commercial Law of:

• UAE
• Qatar
• Bahrain
• Oman
• Saudi Arabia
• Kuwait

The Business Environment in U.A.E.
UAE offers business sector all the advantages of a highly developed economy. The infrastructure and services match the highest international standards, facilitating efficiency, quality and service. Among the benefits are:
• Free enterprise system.
• Highly developed transportation infrastructure.
• State-of-the-art telecommunications.
• Top international exhibitions and conference venue.
• High quality office and residential accommodation.
• Reliable power, utilities etc.
• First class hotels, hospitals, schools, shops and Cosmopolitan lifestyle.
Obviously, their economic development strategy has been successful and the investment incentives, infrastructures, banking services, insurances and political and social stability created an excellent business climate.

Labour Law
Administered by the Federal Ministry of Labour and Social Affairs, Labour Law in the UAE is loosely based on the International Labour Organisation's model. UAE Law No. 8 of 1980, as amended by Law No. 12 of 1986 (the Labour Law), governs most aspects of employer/employee relations, such as hours of work, leave, termination rights, medical benefits and repatriation. The Labour Law is protective of employees in general and overrides conflicting contractual provisions agreed under another jurisdiction, unless they are beneficial to the employee.

The Ministry issues a model form of labour contract in Arabic which is widely used, but other forms of contract are enforceable, provided they comply with the Labour Law. End of contract gratuities are equivalent to 21 days pay for every year of the first five years of service and 30 days for every year thereafter. The total gratuity should not exceed two years' wages. Employees are entitled to pro-rated amounts for service periods less than a full year, provided they have completed one year in continuous service.

Trade unions do not exist. In the case of a dispute between employer and employee, or in interpretation of the Labour Law, the Ministry of Labour and Social Affairs will initially act as an adjudicator. If a party wishes to appeal any such decision, it can take its case to court. Strikes and lockouts are forbidden.
Currency and Exchange rate
There are no exchange controls in the UAE and its currency, the UAE Dirham, is freely convertible. The Dirham is linked to the US dollar, the currency by which oil prices are measured. The exchange rate has remained at AED 3.675 = US$ 1 since 1977.
Dubai - The Centre of the Middle East Economy
Dubai describes itself as the fastest-growing metropolis on the planet and there is no disputing the fact that it is one of the world's most desirable business centers, with very low or zero taxation, attractive investment incentives, a stable economy, superb communications, well-educated workforce, state-of-art infrastructure, robust economic cluster of technology, media, finance and healthcare hubs. All these make Dubai a viable and attractive proposition for any business and providing investors with a unique and comprehensive value added platform.
Dubai is the world's third-largest export and re-export centre after Hong Kong and Singapore, a fact which has made Dubai Company incorporation increasingly popular in recent years. It has an excellent geographical location close to the various markets in the world and is served by more than 120 shipping lines and 85 airlines to more than 140 destinations around the world and Dubai is also a thriving tourist destination.
Expatriates enjoy an enviable and superior quality lifestyle in Dubai and it is affluent, virtually crime-free, and replete with luxury residential and office accommodation, fine schools and hospitals, shopping facilities and, of course, there's plenty of sunshine. Sporting and leisure facilities are abundant and Dubai’s top class international hotels offer a wide range of dining and entertainment choices. No wonder so many investors are interested in opening a company in Dubai.
Legal Structures for Business
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. The seven categories 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 (LLC)
• Share partnership company
Out of these seven activities LLCs are more commonly used by the foreign investors.
Apart from these seven categories, FDIs are encouraged through Branches and representative offices of foreign companies and 100% foreign owned professional firms . 100% foreign ownership is permitted in the Free Trade Zones too.
Limited Liability Company
A Limited Liability Company can be formed by a minimum of two and a maximum of 50 persons whose liability is limited to their shares in the Company's capital. Most Companies with expatriate partners have opted for this Limited Liability Company, due to the fact that this is the only option which will give maximum legal ownership i.e. 49% to the expatriates for a trading license.
Fifty-one per cent participation by UAE nationals is the general requirement for the Limited Liability Companies. Therefore the normal shareholding pattern for an LLC will be:
Local sponsor - 51% and
Foreign Shareholder (s) - 49%
The minimum capital requirement is AED 300,000 (US$ 82,000), contributed in cash. While foreign equity in the Company may not exceed 49%, profit and loss distribution can be mutually agreed. Responsibility for the management of a Limited Liability Company can be vested in the foreign or national partners or a third party.
The time required to form a company will be approximate 1-2 weeks from the date of receipt of all the documents. The procedure and cost break up will be given upon request.
Branch / representative Offices of Foreign Commercial Companies
The Commercial Companies Law covers the formation and regulation of branches and representative offices of foreign companies in the UAE and stipulates that they may be 100% foreign owned, provided a local service agent is appointed.
A branch office, legally regarded as part of its parent company, is a full-fledged business, permitted to perform contracts or conduct other activities as specified in its license. A branch office may only be engaged in activities similar to those of its parent company.
A representative office, on the other hand, is limited to promoting its parent company's activities, i.e. to gather information and soliciting orders and projects to be performed by the company's head office. Representative offices are also limited in the number of employees that they may sponsor.
Only UAE nationals or companies 100% owned by UAE nationals may be appointed as local service agents. Local service agents -- also sometimes referred to as sponsors -- are not involved in the operations of the company but assist in obtaining visas, labour cards, etc and are paid a lump sum fee per annum. The time required to form a branch of a foreign company will be approximate 3-4 weeks from the date of receipt of all the documents.
Business plan, current profile and last two year financial statements should be submitted to prove the credibility of the company. The Companies who all are got trading nature should have manufacturing units at its country of origin. All branch ventures are subject to an approval from Ministry of Economy. Procedures are almost same for representative office setup except two year financial statements are not mandatory.
The procedure and cost breakup will be given upon request.
Professional Firms
In setting up a professional firm, 100% foreign ownership, sole proprietorships or civil companies are permitted. Such firms may engage in professional or artisan activities. A UAE national must be appointed as local service agent, but he has no direct involvement in the business and is paid a lump sum and/or percentage of profits or turnover.
Licensing
The basic requirement for all business activity in UAE is one of the following three categories of licenses:
• Commercial licenses covering all kinds of trading activity;
• Professional licenses covering professions, services, craftsmen and artisans;
• Industrial licenses for establishing industrial or manufacturing activity.
License for majority of the activities are directly issued by the licensing authority – Department of Economic Development, Dubai.
However certain activities require special approval from the related ministry /department (for e.g.: medical pharmacy etc – Ministry of Health ; air transport. air cargo etc – Dept of civil aviation , Financial institutions, Banks, money exchange etc – Central bank , New industrial project, expansion - Ministry of finance and industry , Publishing, printing, newspaper, advertising, video film, photography etc - Ministry of information, education, training etc – Ministry of Education , Agriculture, Veterinary etc – Ministry of Agriculture , customs clearance, fright forwarding sea cargo etc - Seaports and customs authority , telecommunication equipment- Ministry of Communication , branch of foreign company, insurance company, chartered accountants firm etc- Ministry of Economy , legal consultancy – Rulers office, engineering and constructing etc.. – Municipality.
Free Zones:

It is Dubai where there is number of Free Zones for various activities, but the most popular is Jabel Ali Free Zone.

1. Dubai Internet City

Dubai Internet City was conceived with the mission of creating an infrastructure and environment for Internet and media companies to operate locally, regionally and globally out of Dubai with significant competitive advantage.
Within a short span of time, a dynamic international community of ICT companies has established itself in Dubai Internet City. The global ICT giants are all here: Microsoft, Oracle, HP, IBM, Compaq, Dell, Siemens, Canon, Logica, Sony Ericsson and Cisco, to name just a few. These companies represent a formidable community of over 5,500 knowledge workers.

2. Dubai Media City

DMC has been established by the Dubai Technology, E-Commerce and Media Free Zone Authority to provide the infrastructure and environment that will enable media-related enterprises to operate globally out of Dubai.
Strategically located in Dubai at the crossroads of the Middle East, Africa and South Asia, Dubai Media City is rapidly emerging as a global media hub. DMC is the place where every kind of media business - Broadcasting, Publishing, Advertising, Public Relations, Research, Music, Post Production will thrive and have the Freedom to Create.

3. Jabel Ali Freezone

As one of the largest and fastest growing free zones, Jafza aspires to be the international business hub of the Middle East. The focus on long-term customer relationships, providing creative and innovative solutions for global industrial investors, and fostering alliances with them. The offer to customers’ world-class infrastructure is supported with quality, value-added services and incentives. It further provides community amenities, enhancing a dynamic and thriving business environment. Enabling this, there are people, provided with opportunities to grow and be creative, and supported in their efforts to manage customer needs through technologically advanced support systems.

4. Airport Freezone Dubai

Dubai Airport Free Zone is situated within the vicinity of an airport, so the activities permitted at the Zone are limited to high value, low volume products, which require a rapid access to markets. Therefore, DAFZA is an ideal location for high tech / IT products, luxury items, jewellery, light industry & activities related to the aviation industry.

Free zones in Dubai are getting some serious competition from regional free zones are developing themselves to attract investors from Dubai as well as other Arab countries.
Until recently, Dubai was seen as a safe investment but now analysts are predicting nightmarish inflation rates like 6.5% and higher. The prices have been going up steadily and the high inflation is having a big negative impact on profit margins and several major companies are looking to other countries or regional free zones to avoid this potential crash.
There have been many free zones in Dubai since the 1980s it is only recently this mad rush for them has developed in conjunction with countries developed free trade agreements (FTA) with their neighbours and others wanting to become part of the world trade organization (WTO).
Dubai has pushed hard and fast to become the main business hub in the Middle East, other nations like Egypt, Jordan, and Lebanon other countries have also been developing their free zones and infrastructure without all the noise generated by Dubai. Moreover, those countries are operating with the advantage of hindsight provided by the Dubai free zone fiasco.
There are almost 20 free zones (working or under development) between Egypt, Jordan, and Lebanon. The UAE is far ahead of them with 15 working free zones and another 13 under development but the other countries are quickly catching up and focusing on development of specialized free zones.
Currently, the competition for the global media industry and regional investors is between 3 regional free zones. There is the Dubai Media City (DMC). There are advantages to Dubai but then Media Production City (MPC) in Egypt has a large and cheaper human resources pool. Jordan's Media City has already attracted organizations with offices in Dubai.
Free zones in Dubai have become a risk not only because of the increase in costs but also because of other factors like the establishment of the new export-oriented free zone by Egypt located east of Cairo after the Cairo Zone reached saturation. More recently, auto-parts manufacturers like Rover, BMW, and Land Rover also moved to Egyptian free zones.
Analysts believe that if ever increasing trends in the costs associated with free zones in Dubai is not controlled soon then there might be a massive outflow of companies to cheaper and newer regional free zones that offering the same level of service at lower production and operational cost.
The Dubai Airport free zone recorded a 62% increase in the number of companies operating during 2005 as compared to 2004. There were over 318 multinational and regional companies operating in this free zone in Dubai in 2005 bringing the total number of companies in the free zone to 825.