Levelling the UAE playing field

The UAE federal government has been attempting to introduce a revised version of the 1984 companies law since 2005. The fact that it has taken so long is a major reflection of just how sensitive the issue is, since the UAE as a pragmatic and fast emerging nation is expected to update its laws periodically.

Just in the past year we have witnessed amendments to the media law, property law and residency law. These amendments and others, although controversial, were introduced without delay. In the UAE, the Dubai International Financial Centre (DIFC) has been carrying out test runs for the proposed changes in similar laws that it calls the DIFC Public Comment Policy. The latter invites the wider public to comment on draft versions of laws that are posted on the DIFC website. For instance, in November 2008, a new proposed DIFC companies law and insolvency law was made available for public consultation for one month and then presented to the ruler of Dubai for enactment. Why isn’t the same policy applied to the federal companies law, one might ask? Simply put, there are various elements that stand to lose should a drastically revised companies law be introduced.

Many UAE citizens operate small and medium size enterprises based on the current law and may be affected by a change in ownership structures in case they have an expatriate business partner. Also, if a new law is introduced that essentially flips the 51 per cent to 49 per cent local to foreign ownership ratio, it will affect major UAE national-owned businesses. Many of these giant corporations have enjoyed a monopoly status for the past four decades.