BUSINESS CENTRAL

Sharjah 2015 | EXECUTIVE GUIDE | REVIEW: DOING BUSINESS

Sharjah is becoming an increasingly attractive center for international businesses. The non-application of value added taxes and income taxes in Sharjah invites many businesses to operate within its borders.

Sharjah has gained a reputable status and demonstrated an undisputed care for culture. It is well known for its museums, cultural artifacts, and special care for education. Many international and local schools, universities, colleges, and other educational institutions start up in Sharjah where basic and higher education is provided at international standards.

Another reason that makes Sharjah an attraction for businesses is the enormous industrial area it offers. Many businesses start up in Sharjah and many others come from various parts of the world and work in this area. Sharjah offers a variety of business activities and opportunities due to its growth in the sector. It alone consists of over 20 industrial areas where many kinds of industrial activities are practiced, such as steel manufacturing, petrochemicals, and many others. There is no restriction imposed on the type of industry practice, however, environmental and safety laws and policies are enforced and followed in such areas.
Furthermore, marine ports in Sharjah offer an easy access linking all seven Emirates, links to nearby Gulf states, and east-west shipping routes. Sharjah's ports are leading in container transshipment, close to free zones, and close to the industrial areas in Sharjah. The three ports in Sharjah are Port Khalid, the Hamriyah Port, and Khor Fakkan Port.

Sharjah International Airport, the first airport in the UAE, is well known for passenger airlines (business airlines and private jets) and cargo services. It is located in the center of Sharjah, and enjoys a strategic location in relevance to the other Emirates, enabling investors the ease of access and transportation when needed.

STARTING UP IN SHARJAH

Registering companies in Sharjah is done before the Economic Department, which offers many types of licenses and companies permitting Emirati and non-Emirati nationals to practice in the commercial field, as per the policies set out and after fulfilling the requirements. The most common types of companies are limited liability companies and sole establishments. In addition, there are several other types of licenses that can be issued, such as a foreign company branch, local company branch, and warehousing. However, there are certain fields of practice that may require a special approval, and some type of licenses that cannot be 100% owned by non-Emirati nationals; in such cases, a partnership is established between a UAE national and the foreigner, while another solution available to foreign investors are the free zones.

Free Zones offer various types of licenses and facilities for investors seeking a full foreign ownership of companies, without adhering to the 51% national ownership restriction in the Companies Law. In Sharjah, the free zones are conveniently located; SAIF is located next to the Sharjah International Airport, whereas the Hamriyah Free Zone is located directly adjacent to the Hamriyah Port. Non-Emirati investors may own and run their own investment in the commercial, general trading, services, and industrial fields by following simple registration and establishment procedures regulated by the free zones after fulfilling the requirements set out by the free zone authorities.

USEFUL TIPS FOR INTERNATIONAL INVESTORS IN SHARJAH

Although Sharjah enjoys an appealing environment to do business, foreign investors should acquire proper legal consultancy. One popular misconception among international investors is that laws and regulations between GCC states are united. In fact, investors shall take into consideration the different body of applicable laws, such as custom laws and required standards and specifications, if they are choosing Sharjah to be the hub of their businesses located in other Emirates or GCC states. We also encourage investors to resort to long-term leases instead of ordinary rental agreements, as tents in long-term leases enjoy more protection in accordance to rental law of Sharjah.

HOW THE LEGAL SYSTEM IN SHARJAH COMPLEMENTS ECONOMIC GROWTH

Sharjah's stability politically and economically continues to influence growth in a positive manner. From a legal perspective, stability of laws and certainty of procedures enables Sharjah to offer entrepreneurs a convenient environment. Moreover, the judicial system in Sharjah, which is a part of the federal judicial system, had proven its independence and efficiency in all encounters. Sharjah International Commercial Arbitration Centre (TAHKEEM) is available to foreign investors, with all parties to arbitration eligible to receive appropriate representation before the tribunal, as arbitration awards are always at risk of nullification in the case of any violation of procedural requirements.

RECENT LEGAL AMENDMENTS

The most important and recent amendments in the Emirati legal system are the amendments of articles in the Civil Procedures Law and Company Law.

The Case Management Administration has also been introduced, which follows up the procedures of the subpoena or summons, submissions, and replies of parties of the dispute, and may require following up with an expert until the export report is delivered. Another important addition to the Civil Procedures Law is introducing the utilization of modern means of communication, which was previously disregarded as acceptable method of communication using emails, phone, and fax numbers to summon the parties of a case. These amendments are believed to be major step in speeding up legal proceedings and reducing the time frame of getting court judgments after filing civil and commercial cases before Sharjah courts, as well as modernizing the means of summoning procedures.

On the other hand, the Companies Law witnessed a major development and is enforced to support the UAE's open economy policies and business development in Sharjah, and the UAE as a whole. One of the most important developments of the recently announced Companies Law is the introduction of a "sole-founder company" principle for limited liability companies and private joint stock companies, which prohibits the competitive actions of company manager(s) toward the limited liability company.