Major changes in commercial Companies and parallel other Legal reforms 2022

The present Era appeared as the era of legal reform, restructuring, and revolutionary changes in commercial companies law and financial transactions in the United Arab Emirates Specifically the pandemic year 2021 & 2022. The visionary rulers streamlined the legislation to meet the requirements of top world standards and keenly observed the crucial changes to make them critically aligned with the economic reforms initiated in the region that the purpose behind this is to build a flexible business atmosphere in the UAE, one that furthers economic prosperity. The United Arab Emirates is home to a multitude of expat populations, almost ninety percent of the total population, and inculcating the same, the purpose of new laws is to make the country more expat-friendly and adaptable.About 40 laws have been amended to reform and restructure the legislation. The new changes have been made including some of the major changes made to the commercial companies law, the Penal Code UAE , the trademarks law UAE ,and the personal status laws as discussed below:- 

UAE Companies law :

UAE companies Law No. 2 of 2015 has been amended and many  important changes made to the UAE companies law

• The approval of full non-national foreign ownership in respect of commercial and industrial activities. The activities regarding professional business activities are, however, not included in this permission at this stage. With this amendment, a new UAE mainland company can be established with its full foreign ownership rights vested without any disturbance or restrictions. This is a landmark modification as compared to the past regulations wherein it was mandatory that fifty one percent of shareholding must be held with a UAE National shareholder.
• In the past, a non- UAE company was not permitted to constitute a new branch of the business in the UAE unless having the nomination of  a UAE national on the company license as a National service agent.According to new companies law, the branches of foreign companies having license in the country can be converted into commercial businesses in the UAE.
• In another great initiative , foreign National investors are privileged to constitute a single shareholder (LLC) limited liability company. In the past , before these amendments, single shareholder company provision was restricted to UAE National only. The application of Single shareholder company provision for non-National is subject to certain limitations or restrictions as it may not fall under the list of such businesses having ‘strategic impact‘.

Commercial transaction law UAE :

In accordance with Decree Federal Law No (14) of 2020, enforced from January 2022, regarding UAE commercial transaction law known as UAE commercial transaction Federal law no. 18 of 1993 and its relevant changes has narrowed the criminal matters in respect of cheques. According to the amendments, criminal proceedings will be initiated only if the following acts have been committed , for instance :-

• Dishonesty issuance of cheques
• Act of fraud
• Providing fake/bogus cheques
• Withdrawal from the account before the encasement of the cheque to prevent the cheque from being cleared.
• Partial payments are mandatory to be paid if the amount of the cheque is more than the balance available in the payee’s account. With the new amendments, partial payment on the cheque has also become mandatory. This applies if the amount available for payment is less than a given cheque’s value, then the drawee bank is now required to pay the amount partially,unless the bearer rejects partial payment.

Personal Laws:-

The United Arab Emirates in its journey to be a progressive and advanced state made amendments to its law as mentioned below:-

• The amendment has been introduced to Lift the ban on the consumption of alcohol for aged 21 years and more in the UAE.
• The changes also made to decriminalize the act of living together for an unmarried couple

Digital Service Law:-

His Highness Sheikh Mohammed bin Rashid, Ruler of Dubai, has issued Law No. 9 of 2022 regulating the provision of digital services in Dubai , herein referred to as “the Law,” which has been officially published in the Dubai Official Gazette and came into effect as of March 24, 2022.

The Law aims to encourage Dubai’s strategy of having a 100% digital government and improving reliance on technology in the various government sectors. It will also extend to all digital services provided by private service providers, meaning non-governmental players.

It is not a federal law and thus applies only within the Emirate of Dubai. Article 4 extends this application to special development zones and free zones across Dubai, including DIFC.

Trademarks Law:-

The United Arab Emirates (UAE) passed the Federal Decree-Law No. 36 of 2021 on trademarks in January 2022. The New trademark law replaces the old Trade Mark Law. Not unlike the old Trade Mark Law, which required separate applications for different classes of protection, the new UAE Federal Trade Mark Law provides for a multi-class system, which is less costly for the brand owners in the registration and renewal of the trade mark.

Major changes in commercial Companies and parallel other Legal reforms 2022 – Conclusion

The new legal changes enhanced the legal framework of the UAE by paving the way for an innovative and contemporary epoch for the country. It is the milestone that demonstrates its charisma to the comprehensive worldwide financiers and innovators. The amendments are associated with the objective and aspiration of the country to be the most important business focal point with the establishment of a well-diversified financial system. The new amendments are a welcome step that will undoubtedly magnetize more foreign and local direct speculation in the constituency as well as aid in financially viable development. 

Disclaimer: The information provided in this article is for the general knowledge of the public interested in UAE culture, tourism, investment, and opportunities. Professional advice can be sought on all kinds of financial and legal issues from our lawyers and financial professionals with well-diversified legal/financial opinions in respect of any issue.

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