PART FOUR – COMMERCIAL LEGISLATION in the UAE Commercial Agencies & Commercial Legislation for Doing Business in the UAE Ch20

1-2 Commercial Agencies Commercial Agencies Commercial Agencies Companies that providing business to business (B2B) services such as: debt collection, insurance, sales, product development, customer services, employment, taxies preparation, real estate….etc

1-3 Commercial Agencies Benefits of hiring Commercial Agencies Benefits of hiring Commercial Agencies -Up to date market knowledge -Work professionally -Long standing customer relationships -Sales specialists -Enable flat organizational structures for the principle -Strategic partners in a globalized world

1-4 Commercial Agencies Drawbacks of hiring Commercial Agencies Drawbacks of hiring Commercial Agencies -Less control of a business -Expensive fees in some industries -Delays on plan execution -Conflicts in goals and objectives

1-5 Commercial Agencies on the UAE UAE Commercial Agencies Law UAE Commercial Agencies Law The UAE Commercial Agencies Law (Federal Law No.18 of 1981, as amended by Federal Law No. 14 of 1988) regulates the appointment of commercial agents, sales representatives, and distributors in the UAE. This law defines a commercial agency as any arrangement whereby a foreign company is represented by an agent to ‘distribute, sell, offer, or provide goods or services within the UAE for a commission or profit’. (Article 1 of the Agencies Law).

1-6 Commercial Agencies on the UAE UAE Commercial Agencies Legislation UAE Commercial Agencies Legislation The Commercial Code (Federal Law No. 18 of 1993) augments the Commercial Agencies Law and establishes the regulatory framework for the various types of commercial agencies permitted under the law The most common type of agency is the contracts agency, whereby the agent undertakes ‘on a permanent basis and in a specific area of activity, the instigation and negotiation of the conclusion of deals, to the advantage of the principal and in return for payment.

1-7 The following conditions apply to commercial agencies: Commercial agents must be UAE nationals or companies incorporated in the UAE and owned entirely by UAE nationals. Commercial agents must be registered with the UAE Ministry of Economy and Commerce to engage in commercial agency activities. The agency agreement must be registered in order for the agent to avail himself of the protections afforded under the law and to have the agency relationship recognized under UAE law. Commercial agents are entitled to an exclusive territory encompassing at least one emirate for the specified products. (Article 5(1) of the Commercial Agencies Law) Unless otherwise agreed, commercial agents are entitled to receive commissions on sales of the products in their designated territory irrespective of whether such sales are made by or through the agent. (Article 7 of the Commercial Agencies Law) Commercial agents are entitled to prevent products subject to their agency from being imported into the UAE if the agent is not the consignee. Commercial agents are entitled to receive compensation from the principal if the agency is terminated without substantial justification or if the agency is not renewed by the foreign principal, and the agent may be able to preclude the foreign party from appointing a replacement agent in such circumstance. The Commercial Agency Law provides for compensation of the agents terminated without due cause only if the agency agreement has been registered with the federal Ministry of Economy and Commerce (MOEC). Many UAE commercial agents will insist on a registered arrangement in order to avail themselves of the protection of the Commercial Agencies Law. Unregistered commercial agencies not governed by the Agency Law are subject to the Commercial (Federal Law No. 18 of 1993) and Civil Code (Federal Law No. 5 of 1985). These codes do not require agents to be UAE national or commercial entities wholly owned by UAE nationals, however such agencies are not common.

1-8 Commercial Agencies on the UAE Examples of UAE Commercial Agencies: Examples of UAE Commercial Agencies: -Emirates Swiss Real Estate Development LLC -Charterhouse- employment agency -Emirates International Law Firm -Skynet Worldwide Express

1-9 Commercial Legislation on the UAE UAE Commercial Legislation UAE Commercial Legislation