Detailed Overview of the Commercial Register Law

Federal Law Decree No. 37 of 2021 Concerning the Commercial Register (Decree-Law) and Cabinet Resolution No. 107 of 2022 promulgating the Executive Regulations (Executive Regulations) are designed to achieve the regulation of commercial and economic activities in the United Arab Emirates. In other words, these laws provide an inclusive framework for establishing, managing, and utilizing the commercial and economic registers in a way that warrants the realization of correct and uniform data related to every aspect of economic activities in the state.

Objectives

Generally, such laws aim to:

1. Regulate the Use of Registers: Ensure the proper use of commercial and economic registers in the UAE is regulated.
2. Accurate Data: Provide an accurate and unified database for all the data related to traders and licensed economic activities in the State and any updates or changes relating thereto.
3. Enhance Transparency: Promote transparency and access to information in business to foster economic development and investor confidence.

Applicability

The provisions mentioned in this law shall apply to all those who practice any economic activity in the State, in particular:

1. The companies that are subject to the provisions of the Commercial Companies Law;
2. The civil companies taking the legal form of a commercial company;
3. The companies established by the Federal Government or Local Governments or in which the same holds an equity stake, and which practice an economic activity in the State;
4. The companies and establishments which practice a professional activity;
5. The companies established under a law or decree for the practice of a commercial activity;
6. Foreign companies’ branches, offices, and agencies;
7. The companies and establishments which practice their activity within the free zones of the State;
8. Commercial sole proprietorships; and
9. Any other bodies added under a Cabinet resolution.

Key Definitions

• Commercial Register: A database to be created at the competent authority and contains the names and data of the persons who are subject to the provisions of this Decree-Law with the competent authorities within their respective areas of competence.
• Economic Register: An identification number assigned to the establishment practicing the economic activity when its name is recorded in the Economic Register at the Ministry.
• Competent Authority: The local governmental entity and the free zone authorities that are vested with the authority for issuing business licenses, including commercial, industrial, tourist, media, and other economic activities licensed in the State.

Registration Process

1. Establishment of the Registers

• Commercial Register: The competent authority shall establish a Commercial Register to record therein the names of the persons who are subject to the provisions hereof, all the data and documents provided for herein, the data specified in the Executive Regulations of this decree law and other laws as well as any changes to such data.
• Economic Register: The Ministry shall create a register to be known as the Economic Register to record therein the data of the persons who are subject to the provisions of the decree law, the data and information of the Commercial Register, and any changes to such data. This register may include any other data described in the Executive Regulations hereof.

2. Application for Registration

Entities practicing economic activities shall submit the application for registration in the Commercial Register. The application for registration shall comprise all the information and documents that shall be determined by the competent authority. Information usually needed refers to but is not limited to the name of the entity, form, address, capital, and owner and management information.

3. Annotating Changes

Any changes in the registration data shall be annotated in the Commercial Register. Such changes would include ownership, business activities, and any other relevant information about said institution. The entity shall file such change(s) to the competent authority within a defined period.

4. Renewal of Registration

Registration shall be periodically renewed as may be required by the competent authority. If not renewed, it may lead to deregistration.

Commercial Register Number

There shall be a unique Commercial Register Number for each entity registered. The number shall appear on all official documents and business premises. The Commercial Register Number constitutes the unique identifier of an entity in all legal and commercial transactions.

Deregistration

Entities can be deregistered from the commercial register under certain conditions, such as the cessation of business activities, failure to comply with some legal requirements or the death of the person in the cases of sole proprietorships. Deregistration is a process motivated by the need to regularize and formalize documentation and procedures. An instance where deregistration may also occur includes the failure to renew registration within the stipulated time.

Judgments of the Court and Annotations

Annotations regarding court judgments imposed on registered entities are to be recorded in the Commercial Register. This ensures that the Register reflects the actual legal status of such entities. An annotated record of court judgments provides transparency and legal security for third parties dealing with such an entity.

Economic Register

The economic register provides reference to economic operations in the United Arab Emirates. It supports investors and firms by providing them with integrated and accurate information. The economic register, in addition to what is in the Commercial Registry, gives supplementary information about annual accounts and indicators of economic results.

Publishing Data

Data included in the commercial and economic registers may be made available to the public by publication for the sake of transparency and access. Sensitive information is secured by controlling the publication process. Published data can be used by government agencies, investors, and researchers to analyze economic trends and make informed decisions.

Probative Force of Registration Data

The information recorded in the commercial and economic registers has probative force, meaning that it is considered true and accurate until proven otherwise. In addition, any data required to be recorded or annotated may only be invoked against Third Parties after the relevant action is carried out.  This legal presumption also renders the content in the registers useful for legal and business transactions.

Liens on Business Premises

The law provides for the annotation of liens in the commercial register on business premises. This ensures that any encumbrances on business properties are publicly recorded. Liens are required to be registered in order to be valid against third parties for the security of creditors.

Compliance and Enforcement

Competent Authorities shall ensure that the provisions contained in these laws are duly enforced. Non-observance of its requirements may be penalized by fines, deregistration of a company, or society. It is at the discretion of the government to carry out inspections and audits regarding the due fulfillment of the registration requirements at any time.

Conclusion

Federal Law Decree No. 37 of 2021 and Cabinet Resolution No. 107 of 2022 provide a sound legal framework for the regulation of all commercial and economic activities within the UAE. Thus, these laws ensure the certainty of accurate data, along with transparency and legal security, once complete commercial and economic records are established for companies that are operating within the state. These registers are one of the most important tools for economic planning, investment decisions, and also for taking proper legal steps toward complete economic development in the UAE.