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Know the law: All Israeli investments are protected in UAE

Dubai - Know your legal rights in the UAE.

Question. We are a company in Israel and looking at opening an office in Dubai to do business. Can Israeli companies set up business in the UAE? Will our investment be protected? Do we need a local sponsor?

No one is above the law in the UAE. The emirate of Dubai and the UAE have a well-established, time-tested and robust regulatory and legal framework to protect all investors. Dubai and the UAE laws protect investments of all foreign investors, without any discrimination. Dubai and the UAE are ranked at the top in the Middle East for ease of doing business. The UAE is also among the world’s highest ranked countries for ease of doing business. The UAE Cabinet, chaired by His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, has approved a Resolution to endorse the Abraham Accords Peace Agreement and full diplomatic relations between the UAE and Israel.

Israel and the UAE have a bilateral agreement in place that gives incentives and protection to investors who make investments in each other's countries. In addition, the UAE has signed an investment protection treaty with Israel which strengthens economic ties, encourages competition and increases the attractiveness of investments between the two countries. The said treaty protects investments from non-commercial risks such as nationalisation, confiscation, judicial seizures, freezing assets, establishing licensed investments and transferring profits and revenues in convertible currencies.

Dubai has various industry specific free zones and provides overseas businesses with a choice to set up a business in a free zone or mainland Dubai. If you set up a company in mainland Dubai, the provisions of Federal Law No. (2) of 2015 on Commercial Companies (the ‘UAE Companies Law’) are applicable. Further, there may be a requirement of a UAE national to be a sponsor who will be your nominee/proxy to hold shares in the limited liability company, in mainland Dubai. This is in accordance with Article 10 (1) of the UAE Companies Law, which states: “With the exception of Joint Liability Companies and Simple Limited Partnership Companies where all the joint partners of any of such companies shall be UAE nationals, any company established in the State shall have one or more UAE partners holding at least 51 per cent of the share capital of the company.” A nominee shareholder agreement entered between the investor and this sponsor shall fully protect the investor, for your shares held in the name of this sponsor. However, the aforesaid provision shall not be applicable if you have special authorisation from Dubai government to own 100 per cent shares in the share capital of your entity in mainland Dubai.

Depending upon the activity of your business, you may choose to set up a limited liability company or a branch of a foreign company in Dubai.

Further, there is no requirement of a UAE national to be a shareholder for a branch of a foreign company in the UAE. However, you may need to appoint a UAE national as a local agent if you establish a branch of your company in the UAE and such local agent will only be entitled for annual local agent services fees, as agreed. This is in accordance with Article 329 of the UAE Companies Law, which states: “The agent of a foreign company shall be a UAE national. If the agent is a company, it shall be a UAE company and all its partners shall be UAE nationals. The obligations of the agent to the company and third parties shall be limited to providing such services to the company, without any responsibility or financial obligations in connection with the business or activity of the branch or office of the foreign company inside the State or abroad.”

As you intend to establish your business in the emirate of Dubai, there are various free zones which offer 100 per cent foreign ownership of businesses and you may, therefore, set up your new company or branch of your foreign company in any of such free zones in Dubai.

All investments made by Israel investors and investors from any other country in their businesses in Dubai and the UAE are fully protected as the UAE leadership always continues to provide utmost comfort and support to foreign investors doing business in the UAE.

Know the law

There is no requirement of a UAE national to be a shareholder for a branch of a foreign company in the UAE.

Ashish Mehta is the founder and Managing Partner of Ashish Mehta & Associates. He is qualified to practise law in Dubai, the United Kingdom and India. Full details of his firm on: www.amalawyers.com. Readers may e-mail their questions to: news@khaleejtimes.com or send them to Legal View, Khaleej Times, PO Box 11243, Dubai.