Golden rules for an investor to follow prior to establishing a company in the UAE

From a Legal perspective, if an investor wants to start a business in the UAE, he/she should follow the golden rules listed below:

1. For most investors, who wish to set up a business in the UAE, their main concern is about the income and expenses. They do not try to familiarize themselves with the culture of the country such as the local customs, traditions as well as the applicable laws and regulations of the UAE. Therefore, as a first rule, it is mandatory for the investor to know the culture of the region in which he wishes to invest and start a business.

2. Based on the activity of the business, the investor can decide whether he wants to start a limited liability company or individual company, mainland or offshore company. In the UAE, there are different categories of companies that the investor can select based on the type, activity, and location of the firm. The second rule is that the investor must be fully aware of the advantages and disadvantages of each type of company and what the consequences of the same are.

3. The investor should be fully aware of the Legal Structure, applicable Laws and Regulations of the city when establishing the company. Of course, I mean that the investor should be familiar with the relevant Labor Laws, Company laws, Rental laws and the nature of court procedures, arbitration center, and all the appropriate authorities. Generally, most of the foreigner investors, are signing Commercial Agreements, and the Dispute Resolution method is Arbitration, and the applicable Law is a Foreign Law. As such, if any dispute arises between the parties, it shall be resolved through the Arbitration Center. Many investors presume that it is not vital to be familiar with the UAE Law since the applicable Law for resolving any dispute is a foreign Law, and by virtue of my legal experience this is one of the biggest mistakes the investors do. Therefore, the third rule is, that the investor must consult an experienced Local lawyer who is fully aware of the applicable Laws and Regulations as well as the court procedures for comprehensive Legal advice so as to avoid any dispute which may occur in future.

For the time being, it is pretty straightforward to get the necessary information’s to learn on how can you to set up your business in the UAE and most investors see that a consulting law firm is a luxury and not important.

However, there is an essential relationship that exists between the investor and the lawyer, and this relationship should start from the beginning not after the dispute arises.

I am fully aware that, all the investors are keen to manage their expenses, but they must put a budget from the business capital to protect themselves and their assets, by referring to the legal advice from a experienced and well-known Law firm in UAE.

– Abdelaziz Alhanaee

Managing Partner