Commercial Law of The United Arab Emirates

by Abby Harnden, April 2015

2100 words

7 pages


The United Arab Emirates is a federation of seven emirates, each with its own unique individuality and character, but all with common goals and purposes. The legal system of the UAE has its roots in the Islamic tradition and is based on laws of Shari’a. However, since 1993, based on the Federal Supreme Court’s decision, Shari’a punishments are not applied to non-Muslims, except for cases of serious criminal offenses and those regulated by family and inheritance law (United Arab Emirates, 2002). According to Article 122 of the UAE Constitution, “The Emirates shall have jurisdiction in all matters not assigned to the exclusive jurisdiction of the Union” (Constitution of the United Arab Emirates (as Amended 1996)). Since the adoption of the Constitution in 1971, the legislative and judicial systems of individual emirates are gradually unified in compliance with federal laws, although each emirate has its own legislation and judicial procedure (United Arab Emirates, 2002). The state belongs to the civil law legal system, recognizing legal statutes as its main source of law, and has the legal system that was significantly influenced by Roman, French and Egyptian law (National Commercial Law Assessment Report of UAE, 2009).

In general, commercial or business law is a rather vast body of law regulating various business and commercial transactions of both private and public nature. In the United Arab Emirates, different areas of commercial law are regulated by the legislation of the different state levels, particularly, by the federal legal acts (for instance, “major legislations relating to … civil and commercial transactions and company law” are prescribed to be within exclusive legislative jurisdiction of the federal government, based on Article 121 of the exclusive legislative jurisdiction), by the emirate legislation (specifically, commercial management of natural resources within a certain emirate), and by both the federal and emirate legal provisions (namely, company establishment and registration) (Ahmed and Bowden, 2009; Constitution of the United Arab Emirates (as Amended 1996)).

All issues regarding the establishment and operation of companies in the UAE are governed by the Federal Law No. (8) of 1984 concerning commercial companies that was amended by the Federal Law No. (13) of 1988, Federal Law No. (15) of 1998 and Federal Law No. (4) of 2000, as well as relevant by-laws of the competent authorities. The main provisions of the Law enlist seven types of companies, namely, general partnership, commandite, joint-venture, public joint-stock, private joint-stock, limited liability company and commandite limited by shares, and provide that at least 51% of any entity’s property must be owned by a local company or individual (Art. (5), (22)). However, companies’ statutes may prescribe any scheme of the profit distribution. The requirement for mandatory 51% share of a UAE resident does not apply to companies registered in financial free zones, those registering their branches or representative offices in the UAE, and professional or trade companies (Art. (313)-(315)). The Law also establishes requirements for shareholders, directors, the minimum amount of capital and the registration procedure, and regulates issues of company’s ownership transfer, merger …

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