This Chapter of the book UAE Company Law and Practice deals with the provisions of the Company Law applicable to foreign companies incorporated in a jurisdiction outside the UAE that wish to establish a business presence in that country through applying for the registration of a company to practice its main activity in the UAE or to operate a branch office therein. With the exception of companies incorporated in the countries of the Arab Gulf Co-ordination Council ("GCC"),  these provisions will apply to companies incorporated in other Arab countries. It does not apply to companies incorporated, with a foreign participation, in accordance with the provisions of the Company Law previously discussed.

Scope of Application

The Company Law regulates the activities and the registration of foreign companies intending to establish a presence in the UAE.  This applies to foreign companies that practice their main activity in the UAE or have their headquarters therein as well as foreign companies that wish to establish a registered branch office.

Limitations of Registration

Foreign companies intending to register a presence in the UAE have to ascertain that the activity intended to be practised by them can be performed by a foreign company. There are specific activities of which performance is generally restricted either to wholly-owned national companies or 51% locally owned companies. General contracting, general trading, company representations and commercial agencies are restricted to wholly-owned national companies. The Emirates now tend to encourage trading to be performed by 51% locally owned companies. While the establishment of industrial projects is being encouraged in the UAE, ownership of such projects is restricted to national companies incorporated in accordance with the applicable laws with a national participation of at least 51% of the capital. Management of the company should be by nationals. Alternatively the majority of the board of directors should be composed of UAE nationals. It is also important to note that the provisions of this Section of the Company Law are drafted in very general terms. 

New Companies

Foreign companies intending to establish a new presence after the application of the Company Law and its By-Laws have to conform to slightly more complex formalities than companies that have already established a presence in the UAE. By-Law (69) provides that a Ministerial Decision shall be issued for the formation of the Foreign Companies Committee at the Ministry ("the Committee")  which will be responsible for:

1.	Specifying the activities which foreign companies can practice in the State.
2.	Adopting the rules and conditions concerning the approval for foreign companies to practice their main activity or establish branches or offices.

Ministerial Decisions shall be issued concerning the decision of the Committee referred to in 1 and 2 above.

3.	Reviewing applications of foreign companies to practice their main activities in the State.

Although the By-Laws do not clarify what is meant by the term 'foreign companies applying to practice their main activity in the UAE', the procedure stipulated for the registration of such companies varies slightly from that adopted for the registration of offices or branches of foreign companies. The application to practice the main activity should be presented to the Competent Office of the Ministry in the Emirate where the foreign company intends to practice the activity. Upon ascertaining that the application fulfils the requirements of the Company Law and the By-Laws regulating such activity, the Office of the Ministry shall refer the application for approval to the Competent Authority in the Emirate in question. The decision of the Authority in this regard is considered final.

The full text contains further explanation which include:

• COMPANIES WITH UAE PRESENCE

• THE PROCEDURAL REQUIREMENTS FOR ESTABLISHING FOREIGN COMPANIES

For further information on UAE Company Law and Practice, it is recommended that the full text be referred to. Click on the link to obtain a copy. For specific legal advise, please contact Gulf Legal Services Ltd or other reputable Law Firm.