This is a non-exhaustive list of the main
Dubai statutes affecting offshore and non-resident business.
The statutes are listed in alphabetical order –
click on the statute for a fuller description of the
statute, the legal regime it forms part of, or in some
cases the text of the law.
Federal Law No
8 of 1984 (Companies law)
Federal Law No. 9 of 1975 (Registration of professionals)
Federal Law No 10 of 1980 (Central Bank law)
Federal Law No 12 of 1986 (Labour law)
Federal Law No 13 of 1988 (Commercial companies law)
Federal Law No 37 of 1992 (Trademarks)
Federal Law No 40 of 1992 (Protection of intellectual
Federal Law No 44 of 1992 (Protection of industrial
Law No. (1) of 2000 of Dubai Technology,
Electronic Commerce & Media Free Zone
Federal Law on Criminalisation
of Laundering of Property Derived from Unlawful Activity,
No 4 of 2002
Private Companies Regulations For
Free Zone Limited Liability Companies
Decree No 35 (Establishing the DIFC as a Financial Free
Employment Law No 4 of 2005
Law Of Obligations No 5 of 2005
Implied Terms In Contract And Unfair
Terms Law No 6 of 2005
Law Of Damages And Remedies No 7
Law Of Security No 9 of 2005
Personal Property Law No 9 of 2005
Law Relating To The Application
Of DIFC Laws (Amended And Restated) No 10 of 2005
Companies Law: DIFC Law
No 3. of 2006
Limited Partnership Law:
DIFC Law No 4. of 2006
Arbitration Law: DIFC Law No.1
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Dubai Intellectual Property Law
In 1992, the UAE passed three laws pertaining to intellectual
property: a copyright law, a trademark law, and a patent
law. The UAE began enforcing the copyright law on September
1, 1994. The government began registration of trademarks
and patents in 1993.
Patents: Federal Law Number 44 protects new inventions,
original improvements, new concepts, trade secrets and
industrial know-how, industrial patterns and designs.
The Ministry of Finance and Industry houses the patent
Trademarks: Federal Law Number 37 regulates trademarks.
The UAE has a trademark office in the Ministry of Economy
and Commerce which is accepting registration applications.
The trademark law provides protection for 10 years,
with possible renewal options. Owners of registered
trademarks have the right to file legal actions in UAE
courts in cases of infringement. The courts are empowered
to attach, seize, destroy or re-export counterfeit goods.
Criminal penalties can include fines and/or imprisonment.
In 2003, the UAE Ministry of Economy and Commerce invited
industry to launch an Intellectual Property Rights (IPR)
forum in the UAE.
The UAE laws prohibit using illegal software
in IT applications and require companies to provide
adequate proofs on the usage of original software. According
to the findings of the eighth annual BSA Global Software
Piracy Study for the year 2002, UAE's leading anti-piracy
role in the region for the seventh consecutive year
has resulted in the decrease in piracy rates from 86%
in 1994 to 36% in 2002 and while this figure has not
improved significantly over the following years (36%
in 2010), the UAE is recognised as being among those
countries with the lowest piracy rates.
The UAE Ministry of Economy and Commerce has also begun
to strengthen the working of the trademarks committee
and is beginning to look into the various proposals
sent to this body besides preparing a list of investigators
in order to enhance the implementation of the laws.
In September 2005, it emerged that the UAE was reviewing
its intellectual property protection legislation.
The review took place in anticipation of a free trade
agreement (FTA) with the United States.
Speaking to the regional media at the time, the director
of Dubai Media City (DMC), Mohammad Al Mulla confirmed
"It (the IP regime) is still under
review and will be updated in line with and under the
framework of the FTA agreement with the US. Once the
updates come into effect, it will have an impact on
the country's overall business activities, including
In January 2009, the Dubai International
Financial Centre released a draft of its proposed Intellectual
Property laws for public consultation. The new laws
cover intellectual property rights such as copyrights,
patents, trade secrets, trademarks and related rights.
Omar Bin Sulaiman, Governor of the DIFC
and Vice Chairman of the UAE Central Bank commented
at the time that: “By creating a strong legal
framework for protecting proprietary knowledge, which
is one of the financial service industry’s key
assets, the new Intellectual Property laws will enhance
the platform of growth that DIFC offers financial companies.
The new laws will also promote industry growth by creating
the ideal legal environment for product and service
innovation. The laws reinforce DIFC’s strong emphasis
on integrity, transparency and efficiency.”
With the exception of the proposed Trade
Secrets Law, the proposed Intellectual Property laws
are modelled on the UAE Intellectual Property laws which
are in tune with international standards and comply
with the requirements of the TRIPS/WTO Agreement.
The TRIPS/WTO Agreement caters to both
civil law and common law jurisdictions. These drafts
are designed to achieve this alignment without eroding
the DIFC’s image and philosophy as a common law
The proposed Trade Secrets Law was drafted
taking into consideration the salient features of the
Uniform Trade Secrets Act of 1985 (for thresholds) drafted
by the National Conference of Commissioners on Uniform
State Laws based in the United States and the Economic
Espionage Act of the United States of 1996 (for definition
of trade secrets) – both of the aforesaid statutes
are common law instruments, thus, the DIFC Trade Secrets
Law is compatible with the common law.
Dubai E-Commerce Law
LAW NO. (1) OF 2000 OF DUBAI TECHNOLOGY,
ELECTRONIC COMMERCE & MEDIA FREE ZONE
This Law shall be known as "Dubai Technology,
Electronic Commerce and Media Free Zone Law No. (1)
The following words and phrases shall have the following
meaning appearing opposite each of them, unless the
context implies otherwise.
There shall be established by this Law:
a) a free zone to be known as Dubai Technology, Electronic
Commerce and Media Free Zone, which location, area and
boundaries shall be as set out in the map attached to
b) a corporate entity known as Dubai Technology, Electronic
Commerce and Media Free Zone, which shall be financially
and administratively independent and may sue or be sued
in this capacity. Its main premises shall be in the
Free Zone, and it shall be part of the Government.
The Free Zone Authority shall be constituted of:
a a chairman
b a director general
c an executive body.
The Chairman shall be appointed by the Ruler, and shall
undertake the supervision of the Free Zone. The Chairman
shall have the power and authority to issue rules and
regulations necessary for the operation and administration
of the Free Zone, and for the implementation of this
The Director General shall be appointed by the Ruler,
and shall undertake the administration of the Free Zone,
under the supervision of the Chairman in accordance
with the provisions of this Law and the rules and regulations
issued in relation thereto and shall represent the Authority
towards third parties.
The Chairman shall issue a special regulation governing
the recruitment and appointment of employees of the
Authoritys Executive Body, and the terms and conditions
of their employment, dismissal, salaries, duties, rights
and other matters involving them.
The objects of the Authority shall be:
a - to draw up strategies and policies, and methods
of implementation thereof, in order to promote Dubai
as a center for Technology, Electronic Commerce and
b- to prepare researches and advise the Government
in relation to laws appropriate to the regulation and
encouragement of Technology, Electronic Commerce and
Media in the Emirate, including but not limited to:
1 data protection
2 - protection of intellectual property right.
3 - control of crimes associated with Electronic Commerce
c - to establish, own and promote, either solely or
with others, establishments in the Free Zones, including
but not limited to, a University and a research centre.
d - to co-ordinate with the other Free Zones in relation
to matters of mutual interest.
To achieve its objects, the Authority shall undertake
the following functions and responsibilities:
1 - procure infrastructure, buildings, management and
any other services required to achieve the Authoritys
2 - regulate business and activities within the Free
3 - provide telecommunications and Internet services.
4 - authentication of Internet and Electronic Commerce
sites and issuing of the necessary terms and conditions
in relation thereto. The Authority may also license
other establishments within the Free Zone to perform
the authentication process of such sites.
5 - establish and license establishments in the Free
6 - regulate commerce between establishments in the
Free Zone and any other parties outside the Free Zone.
7 - enter into agreements with other Free Zones to
enable the Free Zone establishments to carry on business
in those other zones.
8 - provide the Free Zone establishments, upon request,
with executives, managers technicians, craftsmen and
other workers in accordance with the provisions of this
Law, the regulations issued in relation thereto, and
any terms and conditions agreed upon by the Authority
and these establishments.
9 - enter into leases of plots and buildings that may
extend to periods up to (50) years, with any establishment
in the Free Zone, to enable it to carry on its activity
according to terms and conditions agreed upon.
10- provide of all kinds of services.
11- levy and charge fees for the services it provides.
12- establish an investment fund for providing capital
to the Free Zone establishments, and for investing the
Authoritys funds in the manner and method, and
in the activities and projects, which the Chairman deems
The business and activities carried on in the Free
Zone shall include the following:
1 - the design, development, use and maintenance of
everything relevant to Information Technology .
2 - business of Electronic Commerce
3 - Telecommunications and media services
4 - provision of services through the Internet or through
any other medium including banking, financial services,
insurance, education, call centres, marketing operations,
information and recreation services .
5 - integrated marketing and public relations services.
6 - assembly and packaging of products manufactured
within or outside the Free Zone.
7 - import, export and storage of products.
8 - the development and manufacture of products.
9 - warehousing, logistics, distribution and redistribution
Subject to the provisions of Article (23) of this Law
and the regulations issued in relation thereto, the
Free Zone shall be open to all kinds of products from
all sources, whether local or foreign.
The products brought, manufactured, produced or developed
in the Free Zone shall be exempt from customs duties,
and shall not be subject to any customs duties or any
other fees when exported.
Products kept in the Free Zone, used in any process,
or integrated in the manufacturing of any product in
the Free Zone shall be exempt from customs duties.
Products exported from the Free Zone to the "Customs
Zone" in Dubai shall be deemed to have been exported
from abroad for the first time, and shall be subject
to customs duties.
Free Zone establishments and employees shall be exempt
from all taxes including income tax with regard to their
operations within the Free Zone. They shall also be
excluded from any restrictions on repatriation and transfer
of capital, profits or wages in any currency to any
place outside the Free Zone for a period of (50) years.
This period may be renewed for further similar periods
by a resolution issued by the Chairman. Such period
shall be calculated from the date of the beginning of
work of such establishments or employees.
Assets or activities of the Free Zone establishments
shall not be subject to nationalization or any measures
restricting private ownership, throughout the period
of their activities in the Free Zone.
Free Zone establishments may employ or hire whomsoever
they choose in their operations in the Free Zone, provided
that such employees are not subject to any countries
politically or economically boycotted by the UAE.
The operations of Free Zone establishments or employees,
within the Free Zone, shall not be subject to the laws
and regulations of Dubai Municipality, the Department
of Economic Development of the Government of Dubai,
or the powers and authority falling within their jurisdiction.
Companies with limited liability may be incorporated
in the Free Zone in accordance with the Free Zone Regulations,
and shall be considered as Free Zone establishments.
These companies may have one or more shareholders, whether
natural or corporate persons, local or foreign.
The Authority shall have the power to approve the establishment
and registration of the Free Zone establishments, and
to regulate all procedures and matters relating thereto,
including incorporation and registration of companies
referred to in Article (19), levying registration fees,
setting out terms and rules governing such companies,
regulations regarding their liquidation or any other
matters as the Authority deems necessary for the proper
supervision and control of such companies.
Every limited liability company incorporated in accordance
with Article (19) of this Law, shall set out beside
its name the following particulars, in all its activities,
contracts, notices invoices, correspondence and publications:
a) that the company is incorporated in accordance with
this Law, and that it is a limited liability company.
b) that it is a company in the Free Zone.
in the cases where clause (a) and/or clause (b) of
this Article are disregarded, the companys owner
or owners shall be personally liable for the obligations
of the company.
The Chairman, the Director General or the employees
and workers of the Authority shall not be liable to
any third party for the operations or obligations of
the Free Zone Establishments or their employees.
The following products, goods and services shall be
prohibited in the Free Zone:
a) goods and services in violation of intellectual
property law, including those in violation of laws and
rules relevant to trademark, patent, copyright and design
b) products boycotted by the UAE
c) all goods, products and services prohibited under
the laws in force in the Emirate and/or the UAE.
The Authority shall have power to specify or amend
the list of prohibited products and services in accordance
with the laws of the Emirate, as well as the power to
grant exemptions from such prohibitions.
The following activities shall be prohibited within
the Free Zone:
a - any unlicensed activity by any natural or corporate
person, which requires a license within the Free Zone:
b - any activity contrary to the Free Zone Regulations.
c any willful activities designed to disrupt
computer networks & software such as the creation
and distribution of computer viruses.
Assignment of the license issued by the Authority,
to another party, shall be prohibited without the prior
written consent of the Authority.
The Authority shall have the power to control and inspect
the activities of Free Zone establishments which are
suspected to be in breach of the provisions of this
Law or any other regulation.
The Ruler may establish a court and/or an arbitration
tribunal with the jurisdiction of hearing claims and
suits arising out of, or in connection with, activities
carried out by Free Zone Establishments within the Free
Zone, including claims and suits between these establishments
and any other parties outside the Free Zone.
The Director General may impose civil penalties on
any person who is in breach of any provision of this
Law and the Regulations issued in relation thereto,
or in breach of the terms and conditions of the license
issued by the Authority, all in accordance with a special
regulation to be issued by the Chairman.Following is
an artist's impression of the proposed Dubai Internet
City site plan. The site is located on Sheikh Zayed
Road, next to the American University.This area overlooks
the Emirates hills golf course development.
May 2003, the Dubai Technology and Media Free Zone announced
that the Private Companies Regulations for Free Zone
Limited Liability Companies had been issued.
The regulation was designed to provide a comprehensive
regulatory base for Free Zone Limited Liability companies,
and further enhance the business environment that the
Free Zone’s companies enjoy.
Two other laws developed by the Free Zone’s legal
department in conjunction with international agencies
had already been accepted as Dubai Law at the time –
the Facilitation of Electronic Transactions Law and
the Electronic Crimes Law.
In December 2008, The Dubai International Financial
Centre released its proposed Electronic Transactions
Law for public consultation. The Law is a move towards
creating an efficient, secure legal environment for
companies to undertake electronic transactions. The
law creates clear rules, regulations, and standards
for authenticating electronic messages, records and
Omar Bin Sulaiman, Governor of the Dubai International
Financial Centre (DIFC) and Vice Chairman of the UAE
Central Bank said:
"In furtherance of DIFC's efforts to be a catalyst
for the growth of financial and capital markets, the
new law helps to ensure a strong and supportive legal
framework for electronic transactions undertaken from
within DIFC. The new law forms part of DIFC's efforts
to provide a modern, world-class regulatory framework
that offers the certainty necessary for financial services
companies to carry out a range of transactions at the
level of DIFC's global counterparts. The Electronic
Transactions Law reinforces DIFC's strong emphasis on
integrity, transparency and efficiency."
The proposed Electronic Transactions Law (ETL) is based
on the Uniform Electronic Transactions Act (1999) (UETA)
drafted by a committee of the National Conference of
Commissioners on Uniform State Laws in the US and adopted
by most states in the US. The UETA contains provisions
derived from, among others, the UNCITRAL Model Law on
Electronic Signatures and Canadian law.
The ETL is not a general contracting statute. The substantive
rules of contracts remain unaffected by the ETL. The
ETL does not apply to all writings and signatures, but
only to electronic records and signatures relating to
Following the consultation process, the Electronic
Transactions Law was to be presented to the Ruler of
Dubai for enactment in accordance with Dubai Law No.
9. The Law was expected to be made official by January
2009 but has so far not made it onto the statute book.
Dubai Money-Laundering Law
The National Anti-Money Laundering Committee was formed
in July, 2000, with representatives from Central Bank
of UAE, Ministry of Interior, Ministry of Finance and
Industry, Ministry of Justice, Islamic Affairs and Awqaf,
Ministry of Economy and Commerce, the UAE Customs Council,
the Secretariat General of Municipalities, the Federation
of Chambers of Commerce and Industry.
In December 2001 the United Arab Emirates' Federal
National Council (FNC) approved the long-awaited anti-money
laundering draft law which covers banking and financial
activities in Dubai. After a long debate, FNC members
approved the draft with minor amendments and those were
mainly concerned with terms and the language used in
The promulgation of the Federal Law by the UAE authorities
regarding the criminalisation of money laundering took
place on January 22, 2002.
Any person who intentionally commits one of the acts
in respect of property derived from any of the crimes
listed in Article 2/2 of the Act is an offender under
the Anti-Money Laundering Act.
Further, the conversion, depositing or transference
of proceeds, for the purpose of concealing or disguising
the illicit origin of such proceeds will be considered
as a crime under the Act.
The law provides for jail terms of up to seven years
and a fine ranging from AED2,000 to AED1 million, or
both, in addition to freezing of property, depending
on the nature of the crime.
The Federal Law on Criminalisation of Laundering of
Property Derived from Unlawful Activity defines money
laundering as any act involving transfer, conversion
or deposit of property, or concealment or disguise of
their true nature, knowing that such property is derived
from any of the offences stated in Article 2:
- Trafficking in narcotics and psychotropic substances;
- Kidnapping, piracy and terrorism;
- Offences committed in violation of the environment
- Illicit dealing in firearms and ammunition;
- Bribery, embezzlement, and damage to public property;
- Fraud, breach of trust and related offences;
- Any other related offences stated in the international
conventions to which the State is party.
The term freezing or seizure under the law means temporarily
prohibiting the transfer, conversion or disposition
of, or movement of property, on the basis of an order
issued by the competent authority.
The law also stipulates permanent deprivation of property
by order of a competent court of those found involved
in money laundering offences.
Under the law, a Financial Information Unit has been
established at the Central Bank to deal with money laundering
and suspicious cases. Reports of suspicious transactions
will be sent to the Unit from all financial institutions
and other financial, commercial and economic establishments.
The law further stipulates that financial, commercial
and economic establishments operating in the country
will be criminally liable for the offence of money laundering
if it is committed in their names or for their financial
In March, 2004, the UAE's stock market regulator stepped
up the region's campaign against money laundering and
terrorist financing. In a circular sent to the Abu Dhabi
and Dubai stock exchanges, and to 25 stockbroking firms
in the United Arab Emirates, the UAE Securities and
Commodities Authority announced that: "You are requested
to verify all information and documents when accepting
cash or opening accounts for clients."
A UAE-based broker explained that: "You can say it
is an official umbrella. Before, we did not have written
instruction concerning money laundering. Most of us
had refused to accept big amounts of cash before because
we wanted to make sure the money is clean and legal.
But now the process is more organised and clear as we
have official instructions in this respect. You can
say that we are now part of the campaign launched by
the UAE against money laundering."
Earlier in the year, speaking during a two-day seminar
on "Interrogation and Litigation in Money Laundering
Crimes" at the Dubai Chamber of Commerce and Industry,
American Consul General in Dubai, Jason Davis, praised
the cooperation which exists between the United Arab
Emirates and the United States with regard to anti-money
He suggested that Federal Law No. 4 (2002), which allows
financial authorities to seize suspicious funds whilst
investigations are taking place, gives the UAE the necessary
edge when it comes to combating money laundering and
terrorist financing, and highlighted the continued importance
of working together and sharing intelligence and expertise.
"We are here today to educate and learn at the same
time. We are always interested in benefiting from other
people's expertise," he announced, revealing that officials
from the US Department of Justice periodically attend
similar seminars in the UAE for the purposes of discussion
and exchange of information.
Speaking at a Global Banking Strategy Summit held in
Dubai in April, 2004, Abdulrahim Mohamed Al Awadi, assistant
executive director in charge of the UAE Central Bank's
Anti-Laundering and Suspicious Cases Unit announced
that the UAE is willing to provide assistance to other
countries looking to draft new anti-money laundering
legislation and to create financial intelligence units.
He also reiterated the commitment of the United Arab
Emirates to its own anti-money laundering and terrorist
financing campaign, and suggested that the jurisdiction
has shown leadership in the region.
"Being in the vanguard in the global fight against
money laundering and financing terrorism, the UAE is
keen to share its experience with regulators from other
jurisdictions," Mr Al Awadi told delegates.
Outlining initiatives put in place by the authorities
in the United Arab Emirates, he revealed that: "The
Central Bank of the UAE has set a ceiling of AED40,000
for the amount that may be brought into the country
in cash or equivalent without the need for declaration.
A regulation has also been issued exclusively to money-changers
to ensure that all outward remittances of AED2,000 and
above are duly documented with proper identification
The Central Bank official additionally revealed that
under new rules issued by the Securities and Commodities
Authority of the UAE, the settlement of transactions
amounting to more than AED40,000 is required to be properly
documented, and the identity of the investor verified.
Meanwhile, in February 2005, Dubai Financial Services
Authority (DFSA) signed two memoranda of understanding
with the Isle of Man's Financial Supervision Commission
and Insurance and Pensions Authority.
The two agreements aim to provide a framework for the
provision of mutual assistance and information exchange
between the two jurisdictions with regard to cross-border
transactions. In addition, the agreements are designed
to improve compliance, thereby helping to prevent money
laundering and fraud.
Similar agreements have since been signed with a raft
of jurisdictions, including China, Egypt, France, Germany,
Greece, Guernsey, Iceland, Japan, Jersey, Jordan, Luxembourg,
Netherlands, New Zealand, the Netherlands, Malaysia,
Singapore, South Africa, South Korea, Sweden, Switzerland,
Taiwan, Turkey and the United States.
In February 2009, the DFSA entered into a Memorandum
of Understanding (MoU) with the Anti- Money Laundering
Suspicious Cases Unit (AMLSCU) of the Central Bank of
the United Arab Emirates, regarding co-operation and
exchange of regulatory information. The MoU was signed
by Paul Koster, Chief Executive of the DFSA, and Abdulrahim
Mohamed Al Awadi, Assistant Executive Director of the
CBUAE and Head of the AMLSCU.
Commenting at the time of signing, Koster said: “The
signing of today’s MoU has formalised arrangements
for co-operation and information sharing that already
exists between us. It recognises that both regulators
place reliance on the quality of regulatory standards
administered in the other’s jurisdiction. Continuing
close co-operation and future joint initiatives will
reinforce our mutual commitment to ensuring financial
stability and promote sound economic growth in the region."
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Dubai Banking Law
In the UAE, the marketing of financial products and
services is regulated by the UAE Central Bank under
Law No. 10 of 1980 (the Central Bank Law and related
banking resolutions). Enforcement of Central Bank policy,
however, is often undertaken by the local licensing
authorities in the various Emirates.
The Central Bank Law establishes five principal categories
of institutions in the UAE - commercial banks, investment
banks, financial establishments, financial intermediaries,
and monetary intermediaries - all of which must be licensed
by both the Central Bank and the local licensing authorities.
In addition to these five categories, current practice
in the individual Emirates permits the licensing of
financial or investment consultants. These consultants
are not required to obtain a Central Bank license.
Commercial Banks The Central Bank Law defines
a commercial bank as any establishment which customarily
receives funds from the public, grants credit and banking
facilities, and conducts other banking operations prescribed
for commercial banks either by law or by customary banking
practice. In the UAE, customary banking practice includes
the marketing and sale of investment products and services,
including the sale of securities and various funds.
Central bank regulations announced on April 5, 1993,
set the minimum capital to risk-weighted asset ratio
at 10 percent, which is 2 percent higher than the minimum
level recommended by the Basel Concordat committee on
Investment Banks Central Bank Resolution No.
21 of 1988 regulates the activities of investment banks.
Investment banks are defined as merchant or development
banks or banks which provide medium or long term financing.
The Central Bank Resolution authorizes investment banks
in the UAE to offer financial products and services,
including the issuance of financial instruments and
the management of investment portfolios.
On June 1, 1997, the Emirates Bank Group, which is
controlled by the Dubai government, launched UAE's first
mutual investment fund with an initial capital of about
USD8.2 million. The fund offered non-UAE nationals their
first opportunity to invest in the UAE's tightly restricted
equity market up to a limit of DH 500,000. The huge
response by foreign investors prompted the UAE Central
bank to raise its original ceiling of 20 percent of
foreign investment to 49 percent. When the fund closed
for public subscription on June 15, 1997 the investment
totaled to USD74.5 million.
Financial Establishments The Central Bank Law
permits financial establishments to lend money and to
undertake other financial transactions but does not
allow them to accept deposits. The Central Bank has
adopted a policy that prohibits financial establishments
from offering financial products and services. In comparison
to commercial banks, the only activity that financial
establishments may undertake which commercial banks
may not is the lease of equipment and machinery.
Financial Intermediaries Financial intermediaries
are brokers. Regulations issued under the UAE Central
Bank Law allow licensed brokers to market and to sell
foreign and local shares and financial instruments in
consideration for a commission. Local and foreign companies
may obtain a brokerage license from the UAE Central
Monetary Intermediaries Monetary intermediaries
are money changers. They are not authorized to market
or to sell investment products and services.
Investment Consultants The UAE Central Bank
has not published regulations on investment consultancy.
Under the existing policies of the individual Emirates,
a company licensed as an investment consultant may advise
and assist clients in pursuing various investment strategies
but may not directly sell investment products. Sales
of investment products introduced by consultants are,
therefore, typically booked outside the UAE. Consultants
are also not expected to receive investment funds from
clients, although they may assist in the transfer of
those funds. Consultants may not provide credit facilities
or open accounts for clients but may assist them in
opening accounts with brokers and banks. If properly
authorized by the client, the consultant could also
manage such accounts.
The UAE Central Bank has recently moved towards a tighter
policy regarding investment companies and financial
consultants. In the future, such companies will have
to obtain a license from the Central Bank and to report
under the rules it has established. Investment Companies
for the purpose of these regulations have been defined
as undertakings which are involved in investment in
securities or in the management of trust funds or investment
portfolios on behalf of others. At the time of writing,
the minimum paid up capital for investment companies
(including branches of foreign companies ) is AED25
million, increasing to a larger amount depending on
the activities of the company. Financial consultants,
on the other hand, are deemed to be individual professionals
or groups of professionals providing advice to individuals
or companies about the value of securities and other
financial instruments or giving recommendation about
investing. For these, licenses can be issued with a
minimum paid in capital of AED1 million.
Many of the foreign banks in Dubai are established
in the Dubai International Financial Centre and the
Jebel Ali Free Zone.
Dubai could be said to be over-banked, and there is
intense competition to offer technologically-advanced
services - services on offer include mobile phone banking
and Internet banking. With proposed plans to develop
the UAE as a regional e-commerce centre and development
of the Dubai Internet City, many banks are working on
providing high-tech banking products and services.
Dubai International Finance Centre
During 2002, the Dubai authorities developed plans
for the Dubai International Finance Centre (DIFC), which
was launched in 2003.
The DIFC published its proposed regulatory structure
for consultation in June, 2003.
In July, 2003, the UAE Federal Cabinet approved a Federal
Decree allowing the DIFC a large degree of sovereignty.
The approval of the Decree, which allowed for Financial
Free Zones to be established in the UAE, marked a significant
step forward for the Centre, which hosted a summit between
the World Bank and the IMF in September.
Asset management companies, banks, and other financial
service providers which establish headquarters in the
Dubai International Financial Centre (DIFC) are permitted
to do business with locally-based high net worth individuals.
DIFC Regulatory Authority chief executive, Phillip Thorpe
explained in October, 2002, that although DIFC-based
firms would not be allowed to enter into the retail
market in Dubai, they will be permitted to deal with
individuals whose net worth exceeds Dh5 million.
The DIFC has a separate set of laws, comprising a comprehensive
set of regulations like company law, legislation on
property rights, including laws on security and collateral,
title to goods and securities, commercial transactions
and contracts, and insolvency and data protection.
The Regulatory Authority issues rules to prevent money
laundering, requiring a licensed institution in DIFC
to appoint an appropriately qualified money laundering
The Dubai Financial Services Authority (DFSA) has created
a number of laws and amendments since 2004 and are available
on the DFSA website. These include:
Law on the Application of Civil and Commercial Laws
in the DIFC;
Law Relating to the application of DIFC Laws;
Limited Liability Partnership Law;
Data Protection Law;
Commercial Court Law;
General Partnership Law; and
*now updated, see below for more information.
In April, 2004, a new federal law allowing financial
free zones to be established in the United Arab Emirates
(UAE) received the signatures of the Supreme Council,
comprised of the rulers of each of the Emirates, and
following its publication in the government gazette,
came into force.
Chief executive of the DIFC, Naser Nabulsi observed
that: "The Financial Free Zone Law recognises the unique
nature and importance of the concept of the Dubai International
Financial Centre. We are delighted that this law is
He went on to add: "Its publication is great news for
many of the world's leading financial services businesses
who have endorsed the DIFC by applying for a licence
to operate here or by issuing a letter of intent to
Chief executive of the Dubai Financial Services Authority,
Phillip Thorpe also welcomed the finalisation of the
legislation, suggesting that: "This development is another
step towards ensuring Dubai becomes a world-class financial
centre, supported by laws and regulations of the highest
In July, 2004, The Dubai Financial Services Authority
(DFSA) released a consultation document detailing proposed
legislation to govern Islamic financial operations in
the Dubai International Financial Centre (DIFC).
The paper called for comment on two new pieces of
draft legislation: the Law Regulating Islamic Financial
Business, which creates the regulatory framework for
the conduct of Islamic financial business in or from
the DIFC; and the Islamic Financial Business (ISF) module
of the DFSA Rulebook, which sets out the requirements
for an Authorised Firm undertaking Islamic financial
It also detailed amendments that will be made to other
modules of the DFSA Rulebook as a consequence of the
new Law and Module being enacted.
'The new draft Islamic Finance Law and Rulebook module
are key components of the financial services legislation
for the DIFC. Together with the specific prudential
requirements already set out in our integrated prudential
rules, they will provide a comprehensive regime for
all aspects of Islamic financial business conducted
in or from the DIFC', DFSA Chief Executive, Mr Thorpe
Following the introduction earlier
that year of Federal Decree No. 35, which specifically
established the DIFC as a Financial Free Zone in Dubai,
Sheikh Mohammed bin Rashid Al Maktoum acted decisively
in July 2004 to guarantee the independence of the DFSA,
giving his personal commitment to the independence of
the DFSA and declaring that this will be formally enshrined
in the Dubai Law which will signal the launch of the
In his letter, His Highness said: "We hereby assure
you of our strong commitment to the highest standards
of transparency and of good governance throughout the
DIFC. These standards are very important for the launch
and for the continuing development of the Centre. Accordingly,
we instruct you to secure these high standards wherever
they are relevant in the DIFC. They include transparency
and good governance in handling conflicts of interest
(whether actual or perceived). You are invited to apply
these standards in your own affairs, and to offer advice
to others of what is required.
Dr. Habib Al Mulla, Chairman of the DFSA Regulatory
Council, added at the time that: "The way is now
clear for the DIFC when it launches, very soon, to become
the powerful engine of business and employment creation
that our region needs.
The Regulatory Council is grateful to His Highness
for the speed and decisiveness with which he has acted.
I would like to pay tribute also to the expert and dedicated
staff of the DFSA for the way they have put in place
all the building blocks of what can now be seen as a
regulatory authority of genuine world quality."
David King, Acting Chief Executive of the DFSA added:
"This is an historic decision because it means
the DFSA will be the first regulator in the region free
to operate on the same independent basis as our counterparts
in the major centres such as London, Hong Kong and Wall
Street. We have already drafted and completed in record
time an entire legal and regulatory environment based
on global best practice. We now have the operational
independence needed to give confidence to the global
leaders in banking and international finance to base
their own regional operations in the DIFC. The decision
will also give confidence to other jurisdictions and
international bodies that the DIFC will be an entirely
trustworthy addition to their ranks. Any reservations
there may have been can now safely be set aside.
In June of 2005, the late Ruler of Dubai, Sheikh Maktoum
Bin Rashid Al Maktoum enacted five new laws dealing
with legal obligations, employment and security interests
in relation to the Dubai International Financial Centre,
and the Board of Directors of the Dubai International
Financial Centre Authority has issued additional company
The legislation comprised:
- Employment Law No. 4 of 2005.
This law provides for minimum employment practices
comparable to established international standards,
so as to promote fair treatment of employees and
- Law of Obligations No. 5 of 2005. This
law creates a framework for claimants to seek recovery
for non-contractual claims and sets out the rules
as to when obligations arise and how disputes involving
them are resolved;
- Implied Terms in Contract and Unfair Terms Law
No. 6 of 2005. This law provides
for fairness and certainty in contracts governed
by the laws of the DIFC by providing terms and conditions
not normally included in contracts and assures the
necessary framework for their enforcement;
- Law of Damages and Remedies No. 7 of 2005.
This law creates the structures necessary to assure
the recovery of damages and other forms of relief
to claimants within the DIFC; and
- Law of Security No. 9 of 2005.
This law defines various forms of security interests
as collateral for repayment of debts and prescribes
the process for their perfection and enforcement.
Then in September of that year, a number of new laws
and regulations governing activities within the DIFC,
including those dealing with personal property, insolvency,
collateral security, and the use of electronic stock
instruments were enacted.
The new laws were:
- The Personal Property Law No. 9 of 2005. This
law defines the rights and obligations of parties
in relation to property other than real estate (land
and buildings) located in the DIFC and, among other
things, segregates property belonging to account
holders of the Dubai International Financial Exchange
(DIFX) from the property of the DIFX itself.
- The Law Relating to the Application of DIFC Laws
(Amended and Restated) No. 10 of 2005.
This law, initially passed in September of 2004,
has been amended to harmonize defined terms appearing
in the 2004 version of the law with terms used in
the Personal Property Law as relates to DIFX operations.
The regulations consisted of the DIFC Dematerialization
of Securities Regulations, DIFC Security Regulations
and DIFC Insolvency Regulations which are issued by
the Board of Directors of the DIFCA pursuant to the
authority given to the Board by Law No. 9 of 2004.
The regulations, respectively, provided for the issuance,
trading and registration of securities in electronic
form as required to expedite DIFX operations; the creation,
recordation and enforcement of various forms of collateral
security as guarantees for the payment of loans and
other debt; and the procedures and formalities governing
the dissolution and winding up of insolvent companies.
2006, amendments to the Companies Law came into force.
The amendments sought to simplify dividend distribution
requirements for companies, thus providing greater incentives
for companies to list on the Dubai International Financial
The amendments also created a Limited Liability Company
(LLC) structure for non-regulated companies by the Dubai
Financial Services Authority, which simplifies corporate
administration formalities for the principals of LLCs
whose activities are not regulated by the DFSA.
For full details of the amended Companies Law, please
in 2006, amendments to the DIFC's Limited Partnerships
Law came into force, which were aimed primarily at establishing
a purpose-built vehicle for the formation and operation
of fund management activities in the DIFC.
The Limited Partnership Law deals with matters such
as formation and registration of a limited partnership,
rights and obligations of general and limited partners,
dissolution of the limited partnership and migration
of limited partnerships to and from the DIFC. The regulations
provide the details of the process for registration
and operating a limited partnership in the DIFC.
The Limited Partnership Law follows the enactment in
2004 of the Companies Law, the General Partnership Law
and the Limited Liability Partnership Law to further
extend the range of the company formation offering of
the DIFC in accordance with international best practices.
For full details of the amended Limited Partnership
Law, please see here.
In 2007, the Real Property (DIFC Law No.4 of 2007)
and Strata Title ( DIFC Law No.5 of 2007), as well as
Regulations complementing these laws, were enacted by
Sheikh Mohammed Bin Rashid Al Maktoum. The Laws and
Regulations were effective immediately.
The Real Property Law guarantees ownership of freehold
land and buildings, and other interest in land, within
the DIFC. The Law is based on the underlying principles
of English common law, but also incorporates the Torrens
system of land registration, well known in countries
such as Australia, New Zealand, Canada and Singapore.
Under the Real Property Law, land transactions are
registered in a central register administered in the
DIFC. Once registered, the Law certifies them to be
fully effective. Unlike some other systems of land registration,
title interests registered under the Real Property Law
are “indefeasible”. In practical terms,
this means that persons buying real estate in the DIFC,
lending on the security of real estate in the DIFC,
or taking a lease of real estate in the DIFC, can be
assured that their investment is backed by the full
protection of the Law.
The Strata Title Law establishes a system of guaranteed
freehold title to units in buildings in the DIFC. It
is based on a system originally developed in Australia,
but now in use in many countries around the world, including
in particular Singapore. The Law combines the benefits
of guaranteed title under the Real Property Law with
an administrative structure designed to handle the day-to-day
management of buildings. It is designed to help overcome
the complexities of co-owners association constitutions,
master community declarations, and the like, by introducing
a simple but comprehensive system of rights and responsibilities.
It incorporates many of the key concepts of existing
co-owners association arrangements already in use in
Dubai, but simplifies them and adds a title guarantee.
Also in 2007, the DIFC issued a revised Data Protection
Law (DIFC Law No. 1 of 2007), which prescribed rules
and regulations regarding the collection, handling,
disclosure and use of personal data in the DIFC, the
rights of individuals to whom the personal data relates,
and the power of the DIFC Authority in performing its
duties in respect of matters related to the processing
of personal data as well as the administration and application
of the Law.
Businesses and in particular, banking and financial
organizations, are increasingly processing and exchanging
individual data electronically. The DIFC Data protection
Law embodies international best practice standards,
and is consistent with EU directives and OECD guidelines
and is designed to balance the legitimate needs of businesses
and organizations to process personal information while
upholding an individual’s right to privacy.
In February 2008, the Dubai
International Financial Centre issued consultation papers
seeking comment on a new arbitration law. This has since
replaced the Centre's previous arbitration law.
The law, which contains a significant number of enhancements,
is designed to accommodate and facilitate the set-up
of the DIFC's Arbitration Centre.
The changes, drafted in consultation with internationally
renowned arbitration practitioners, are designed to
make the arbitration law practical and comprehensible
to all arbitration practitioners. They make the system
simpler, more manageable, and therefore more attractive
to the international community.
One of the main changes to the DIFC arbitration law
is the adoption of the UNCITRAL Model Law, with amendments
aimed at improving its provisions. Another important
change is specifically set to widen the scope of arbitrations
which the law governs, to include all types of arbitrations
and parties opting to arbitrate at DIFC.
According to the DIFC, in drafting the new law, all
aspects of legislation necessary to accommodate the
unique set-up of the DIFC jurisdiction and legal framework
were taken into consideration, as well as the importance
of overcoming hurdles presented by the region's unique
market conditions and dynamics.
Sheikh Mohammed Bin Rashid Al Maktoum, Vice President
and Prime Minister of the UAE and Ruler of Dubai, enacted
the new DIFC arbitration law (DIFC Law No. 1 of 2008)
on September 1, 2008.
In November 2008, the DIFC released its proposed updates
on Companies Law and Insolvency Law for public consultation.
The Companies Law has been updated to include the
registration requirements laid down by the DIFC Registrar
of Companies. The Insolvency Law has been updated to
include changes in applications and procedures for winding
up Protected Cell Company (PCC) structures used by insurers
to provide an easy and cost-effective way for smaller
organizations to establish captive insurance units.
Omar Bin Sulaiman, Governor of the DIFC said: “The
updates to the Companies Law and the Insolvency Law
are part of DIFC’s effort to upgrade our regulations
in response to the industry’s needs and concerns.
DIFC’s regulatory framework, created by incorporating
best practices from jurisdictions across the world,
has been constantly evolving since its establishment
to offer a high degree of security, protection and ease
of operations for financial services companies.”
It was expected that following the consultation process,
the Companies Law and the Insolvency Law will be presented
to the Ruler of Dubai for enactment.
In the same month, the DIFC announced that it had enacted
new regulations that enable companies within the financial
district to quickly form Special Purpose Company (SPC)
The new regulations allow companies to create SPCs
for facilitating both Islamic and conventional transactions
as well as vessel registrations. Transactions that can
be facilitated by the new law include acquisitions and
Under the law, Special Purpose Companies can be easily
structured and incorporated, while enjoying exemptions
from some filing and disclosure rules relating to conventional
companies in DIFC. For example, they are not required
to hold annual shareholder meetings, can be administered
by a corporate service provider and are not required
to file annual returns.
The SPC Regulations further enhance the position of
DIFC as a jurisdiction having a wide breadth of laws
where all facets of commercial transactions can be conducted.
They also put DIFC on a par with key offshore jurisdictions
that offer the ability to establish Special Purpose
The procedures for setting up an SPC under the DIFC
Registrar of Companies are quick and straightforward.
The process involves inexpensive fees and minimal annual
In October, 2009, the Dubai Financial Services Authority
issued a Consultation Paper setting out proposals to
enhance the clarity and accessibility of the Islamic
finance rules of the Dubai International Financial Centre
(DIFC). Following the consultation, the DIFC published
five electronic handbooks for Islamic finance in March,
Each handbook contains the parts of the DFSA Rulebooks
which apply to that particular area of activity namely:
• Islamic Banking;
• Islamic Investment Business, other than Operating
• Islamic Insurance;
• Islamic Insurance Intermediation and Management;
• Operation of Islamic Funds.
The Chief Executive of the DFSA, Mr Paul Koster said:
"Islamic finance has witnessed tremendous growth
and as such is an important area of focus for the DFSA.
We want to provide the industry with improved access
to our framework of Laws and regulations which is why
we have created the Islamic finance tailored handbooks.
By improving our delivery of information to Firms conducting
Islamic finance activities, we hope that the handbooks
will help Firms access the requirements that apply to
their Islamic finance activities more easily."
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