UAE Law and Practice Contributed by: Duncan Pickering, Nicola de Sylva and Sean Cope, DLA Piper Middle East LLP
6. Commercial Leases 6.1 Types of Arrangements Allowing the Use of Real Estate for a Limited Period of Time In Abu Dhabi, the law does not provide a clear distinction between a lease (a personal right) and a usufruct (a right in rem). The law states that long leases (ie, those with a term of 25 years or more) are property rights, but it does not clearly define the characteristics of leases with terms shorter than this. In practice, the DMT has deemed leases for a term of more than four years granted in favour of a non-UAE national (or a company owned in whole or in part by a non-UAE national) in relation to land outside an investment zone, and which contain rights to sublet, to be usufructuary rights (and there - fore not capable of being granted to a non-UAE national outside an investment zone). In Dubai, a long lease is one with a term of ten years or more, and these require registration at the DLD. For leases of less than ten years, reg - istration is required but at a nominal cost on the “Ejari” system. 6.2 Types of Commercial Leases In Abu Dhabi, for leases of less than four years, the DMT requires parties to use a mandatory form of lease that records key provisions (eg, parties, premises, rent and term, etc). It is com - mon for parties to attach supplemental terms to this mandatory form. For leases of over four years, the form of lease is not mandated. In Dubai, for leases of less than ten years, the DLD requires parties to use a mandatory form of lease that records key provisions (eg, par - ties, premises, rent and term, etc). It is common for parties to attach supplemental terms to this mandatory form.
5.5 Applicable Governance Requirements LLC
An LLC must appoint a general manager to man - age the company. The general manager can be of any nationality, but, in practice, rejection of a proposed general manager does occur with - out reason from time to time. An LLC must also appoint a UAE-certified financial auditor before the end of its first year of business. JAFZA Offshore Companies A JAFZA offshore company must appoint a reg - istered agent, to whom notices are served. It must also have at least two directors, a general manager and a company secretary at all times. PJSC Since a PJSC is required to be listed, it has to comply with the governance requirements of the relevant stock exchange, which include various disclosure requirements to be met, the publica - tion of accounts and other statements, as well as mandatory compliance with the Emirates Secu - rities and Commodities Authority’s corporate governance code. Private JSC A private JSC must have a board of directors consisting of between three and 11 directors, and each director’s term must be no more than three years (subject to re-election). There must be a chairman from among the directors, and such chairman must usually be a UAE national. 5.6 Annual Entity Maintenance and Accounting Compliance The annual compliance costs for an entity invest - ing in real estate vary in line with the needs of each individual company.
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