UAE Law and Practice Contributed by: Amir Alkhaja, Gerry Rogers, Daria Selivanova and Danila Kriuchkov, Habib Al Mulla & Partners
worked through a locally licensed distributor or agent. This framework has recently evolved with the issuance of Dubai Resolution No 11 of 2025, which marks a significant shift in the way free zone companies can operate within the Emir - ate. Under the new Resolution, free zone entities in Dubai may now carry out activities onshore, provided they obtain the appropriate licence or permit from the Department of Economy and Tourism (DET). The UAE Commercial Agencies Law also plays a significant role in shaping market access for for - eign principals. Under the current regime, foreign companies that wish to sell their products in the UAE via local partners must appoint a registered commercial agent, who must be either a UAE national or a 100% UAE-owned entity. These agencies are typically exclusive and protected by law, meaning they can only be terminated or modified under specific conditions. 2.2 Procedure and Sanctions in the Event of Non-Compliance For investments in sectors requiring special approval (as set out in 2.1 Approval of Foreign Investments ), the process typically involves obtaining a no-objection or licence from the rel - evant Ministry or regulatory authority. The for - eign investor must apply through the Emirate’s economic department, which refers the request to the competent federal or local regulator with - in five working days. The regulator then has 14 working days to decide whether to approve the foreign investment and under what conditions (such as requiring a minimum UAE national shareholding or board representation). If an investment proceeds without the required approval or in violation of ownership restric -
tions, the consequences can be severe. Under the Commercial Companies Law and Com - petition/FDI regulations, authorities have the power to impose fines, nullify licences, or even dissolve companies that violate foreign owner - ship rules. Administrative fines for breach of the foreign ownership provisions can range up to hundreds of thousands of dirhams, and unap - proved foreign ownership arrangements (eg, using side agreements to circumvent the 51% rule in a restricted sector) may be deemed void. In serious cases, criminal sanctions may apply for providing false information or using nominee structures; penalties can include prison sentenc - es and fines up to five times the evaded amount in case of deliberate evasion of the law. Practically, if a company operating in a strategic sector was set up without the proper approval or with an impermissible foreign ownership stake, the Ministry of Economy or relevant authority can order its liquidation or licence cancellation. 2.3 Commitments Required From Foreign Investors The UAE generally does not require foreign investors to make special performance commit - ments to enter the market. Investors only need to meet basic business setup conditions, such as minimum capital and hiring rules that apply to all companies. Foreign investors mostly receive the same treatment as local ones. However, for projects in strategic sectors or large-scale developments, authorities may ask for additional commitments. If an investor enters a regulated sector, they must accept conditions tied to approval, such as ownership or opera - tional rules. Once accepted, the investor may proceed.
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