UAE Law and Practice Contributed by: Amir Alkhaja, Areen Jayousi, Gulsun Ozmen and Alia AlMarzooqi, Habib Al Mulla & Partners
The Negative List The Negative List encompasses activities considered to be of strategic national significance, including cer - tain defence and security activities, oil exploration concessions, specific money exchange and financial services segments, and other designated sectors. For activities on the Negative List, Emirati ownership requirements remain in place, and the degree of per - missible foreign participation (if any) is specified by the relevant Cabinet decision. Foreign investors should verify the current status of their intended activity against the Negative List at the time of application, as the list is subject to periodic revision by the Cabinet. Sector-Specific Regulatory Approvals For regulated industries, including banking and finan - cial services, insurance, securities and investment, telecommunications, healthcare and education, a licence from the relevant sector regulator is required in addition to the standard licence from the emirate’s licensing authority. Each regulator applies its own cri - teria, including fit-and-proper assessments, minimum capital requirements, governance standards and local substance conditions. Sector regulatory approval must generally be obtained before or in parallel with the main commercial licence application. Free zones, by contrast, permit 100% foreign ownership as a baseline, with no nationality restrictions, though free zone entities are generally limited to conducting busi - ness within the free zone or internationally. 2.2 Procedure to Obtain Approval and Sanctions for Non-Compliance The standard procedures generally applicable to all investors establishing a mainland presence in the UAE are as follows. The Licensing Process An investor wishing to establish a mainland presence must apply to the relevant emirate’s Department of Economic Development (DED) or equivalent authority. The principal steps are: • reserving a trade name; • obtaining initial activity approval; • preparing and notarising a memorandum of asso - ciation (MOA) before a UAE notary;
• submitting shareholder identification documenta - tion; and • paying the prescribed fees. Where the activity requires a third-party approval, such as from the Central Bank or the Securities and Commodities Authority (SCA), that pre-approval must be obtained alongside the DED application. A stand - ard limited liability company (LLC) can typically be established within two to four weeks; regulated activi - ties may take considerably longer depending on the regulating authority. Post-Licensing Obligations Once the trade licence is granted, the company must register with the Federal Tax Authority for corporate tax purposes and, where applicable, for VAT. Employ - ers must also register with the Ministry of Human Resources and Emiratisation (MOHRE) before hiring employees and must comply with beneficial owner - ship filing obligations by registering ultimate beneficial owner (UBO) information with the licensing authority within prescribed timeframes. Consequences of Operating Without Approval/ Licence Conducting commercial activity without a valid trade licence or the necessary regulatory approval is a criminal offence under applicable federal and emir - ate legislation. Penalties include administrative fines, mandatory cessation of operations, asset seizure and, in serious cases, criminal prosecution of responsible individuals, which may result in imprisonment. In reg - ulated sectors, unlicensed activity may additionally attract regulatory fines, disgorgement of profits and public censure. Contracts entered into in the course of unlicensed operations may be challenged as void or unenforceable before the UAE courts. 2.3 Commitments Required From Foreign Investors The standard procedures generally applicable to all investors establishing a mainland presence are as fol - lows. Standard Licensing Conditions The relevant licensing authority retains discretion to impose conditions on the grant of a licence. In prac -
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