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New laws to accelerate UAE’s economic transition

The reforms will accelerate the transformation towards a new model of the national economy as the nation marks its Golden Jubilee and charts the course of the next 50 years of its ambitious journey

The sweeping law amendments and new economic legislations unveiled by the UAE to mark the Year of the Fiftieth will have a far-reaching positive impact on the business, investment, innovation, environment and intellectual property sectors, the Ministry of Economy said on Tuesday.

The reforms, which are the outcome of the largest legislative amendments of their kind in the history of the UAE, will accelerate the transformation towards a new model of the national economy as the nation marks its Golden Jubilee and charts the course of the next 50 years of its ambitious journey. The reforms seek to enhance the openness and competitiveness of the business climate, the MoE said.

“In total, amendments were made to more than 40 laws with an aim to further enhance the economic environment. The move puts in place proactive legislative frameworks that drive long-term economic growth in the country over the next fifty years of the UAE,” Abdullah bin Ahmed Al Saleh, Undersecretary of the Ministry of Economy, said at a media briefing.

The three laws that have undergone extensive amendments include the Commercial Companies Law, Commercial Register Law and Trademark law.

Al Saleh pointed out that the amended laws represent “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.”

Maryam Al Suwaidi, CEO of the Securities and Commodities Authority, said the reforms keep pace with the UAE’s developmental aspirations and is an unprecedented step forward in building the most competitive economy in the world.

She said the amended laws would enhance the UAE’s economic environment and the investment structure in terms of the country’s attractiveness to foreign investments and its competitiveness among the most dynamic investment destinations in the world.

The reforms contribute 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,” Al Suwaidi said.

"Legislative reforms 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,” Al Suwaidi said.

The Commercial Companies Law (CCL) was amended to enhance 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 ministry said.

The CCL 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

The new amendments include a comprehensive review, during which, 51 articles were replaced, three 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 and flexibility, the Ministry of Economy said

The new CCL abolishes the maximum and minimum percentage of the founders’ contribution to the company’s capital at the time of the public offering and cancels the legal limitation of the subscription period. It eliminates the requirement for the nationality of the members of the board of directors and upholds the organisation shareholders’ decisions in the election of board members, in accordance with the terms and conditions set by the competent authority.

The amendments enable 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. It also allows 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.

The CCL allows companies to determine the face value, and determine the percentage of the offering and enable businesses to find financing solutions through the issuance of other types of shares. It also allows branches of foreign companies licensed in the country to transform into commercial companies with UAE citizenship.

The revamped Commercial Register 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 new Trademark law 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.

— issacjohn@khaleejtimes.com