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Business in the UAE

Business in the United Arab Emirates (UAE) is an exciting opportunity for all and can lead to huge returns. When bright-eyed investors or business people come to the UAE seeking such opportunities, they sometimes forget about the legal hurdles which may exist here, which may not exist in their home country.

It is important to understand policy when it comes to starting a business in the UAE. What does this mean? This means that once fundamental policies are understood, then businessmen or investors will be able to approach incorporation process with more flexibility, which is extremely important in this fact-paced, dynamic market.

A situation such as this arose recently when a business person (X) looking to expand his operations to Dubai was setting up a local LLC company. Per regulations, the name of a Local LLC company should contain the activity within the name, and this is generally a well known practice.

From a policy perspective, the reason for this regulation is so that companies adhere to their license designation. For example, if you are trading, then your name should include the word trading. This prevents any untoward business behavior and prevents people from masking their activities or acting outside of their remit. This is a logical policy.

X, however, was somewhat disturbed by this policy and did not want the activity in the name of the business. This added another dimension to the problem, as the chosen name was not something easy to recognize nor was it reflective of the activity.

X had tried to begin the process by himself and was stuck at the first hurdle. The lack of flexibility meant that he was unable to move forward and delays occurred over a few weeks. This illustrates how important it is to get legal advisers involved at the beginning stages of making business decisions.

Another element of decision-making was also taken without legal intervention. This resulted, in the first instance, with the wrong procedure being started. For example, in this very same example, X would not have commenced local company procedures in the first place had he understood the technicalities of business incorporation in the UAE. In fact, as he did not have any business activity occurring within the UAE market itself, it was not necessary for him to opt for a local company.

The overarching principle here is to get your legal advisers involved in this important, life changing process from the very beginning.

Following set-up

So, you have just incorporated your company and you’re rearing to go. You find out at the last minute that you can’t be based in Dubai anymore because you services are required elsewhere.

 

What do you do? How can you ensure that the first steps of your business are secured and carried out by those who you trust most? Do you need to just finish before you even start?

 

There is one very good option in this case, which will allow you to enable those you trust to carry out the first steps of the business. This option is doing this through a Legal Power of Attorney, which will enable you to delegate your authority to those you wish to, to the extent you wish to.

 

A Legal Power of Attorney enables an individual to ensure the smooth running of his company in his absence and it can be either restrictive or completely enabling. The powers which can be delegated including managing the operations of a company, opening, operating and closing bank accounts, signing in front of the competent authorities and so forth. The Power of Attorney must be drafted accurately in order to ensure that only the specific powers which should be delegated are delegated.

 

The next stage following on from this is related to the powers which are delegated and the responsibility which is placed upon the donee. The donee may require an Agreement of Understanding so that they are able to mitigate the risks associated with the powers which they have been granted. These Agreements of Understanding are vital and ensure the smooth transition of power and also a continuing strong relationship between those involved in running the business. We are able to assist with all of these legal documents and agreements.

Ensure Proper Due Diligence Prior to Setting up a Business in the UAE

Setting up a business in the United Arab Emirates is an exciting opportunity for all and can lead to huge returns. When bright-eyed investors or entrepreneurs come to the UAE seeking such opportunities, they sometimes forget about the legal hurdles that exist here, which may not exist in their home countries.
It is important to understand policy in regards to starting a business in the UAE. What does this mean? This means that once fundamental policies are clearly understood, then entrepreneurs or investors will be able to set up an establishment with ease, which is extremely important in a market which quite often lacks transparency.

A relevant situation arose recently when a businessman, Yousuf, looking to expand his operations to Dubai was setting up a local LLC company. As per UAE regulations, the name of a local LLC company should contain the activity of the business within the name, and this is generally a well-known practice.
From a policy perspective, the reason for this regulation is so that companies adhere to their license designation. For example, if you are trading, then your name should include the word trading. This is a logical policy as it prevents people from masking their activities or acting outside of their remit. 
Yousuf, however, was somewhat disturbed by this policy and did not want the activity in the name of the business. This added another dimension to the problem, as the chosen name was not something easy to recognize nor was it reflective of the activity.
Yousuf attempted the process by himself but was unable to overcome the first hurdle. The lack of flexibility meant that he was unable to move forward without approvalsfrom the relevant authorities. Finally, Yousuf contacted a legal adviser who specializes in helping foreign companies set up subsidiaries in the UAE. Yousuf’s story illustrates how important it is to get legal advisers involved at the beginning stages of making business decisions.

The overarching principle here is to get legal advisers involved in this important, life changing process from the very beginning.

http://www.IBCfze.ae

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