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Sharjah 2016 | EXECUTIVE GUIDE | REVIEW: LEGAL

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

Sharjah's stability politically and economically continues to influence economic growth in a positive manner. From a legal perspective, stability of laws and certainty of procedures enables Sharjah to offer businessmen a convenient environment. Moreover, the judicial system in Sharjah, which is a part of the federal judicial system, has proven its independence and efficiency in all encounters as well as the enforcement of international judgments. Sharjah International Commercial Arbitration Centre (TAHKEEM) is available to foreign and local investors. It is argued that arbitration is a more convenient and quicker way of private litigation. Parties to arbitration should receive professional guidance and appropriate representation before the arbitration tribunal, as arbitration awards are always at risk of nullification in case of any violation of procedural requirements.

Sharjah has earned itself a reputable status for doing business. The Emirate is well known for its wealth of museums, cultural artifacts, and its special attention to investing in education. Many international and local schools, universities, colleges, and other educational institutions have established themselves in Sharjah, where basic and higher education is provided at international standards.

Another factor that makes Sharjah an attractive place to conduct businesses is the enormous industrial areas it offers. Many businesses have taken advantage and established themselves in Sharjah, coming from various parts of the world, attracting them with its wealth of opportunities for a variety of business activities. The Emirate 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 on the type of industry practiced; however, environmental and safety laws and policies are in practice and followed in such areas. Furthermore, marine ports in Sharjah offer easy access to 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 industrial areas in Sharjah. The three ports in Sharjah are Khaled Port, 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 relation to the other Emirates, offering investors easy of access and transportation routes when needed.

Starting up in Sharjah

Registering companies in Sharjah is done before the Economic Department, which offers many types of professional licenses, trade 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 the limited liability companies and the sole establishments. In addition, there are several other types of trade licenses that can be issued, like public shareholding company, private shareholding company, holding company, foreign company branch, local company branch, and warehousing. However, there are certain fields of practice that may require special approval, and some type of licenses that cannot be owned 100% by non-Emirati nationals, and in such cases a partnership is established between a UAE national and the foreigner—another solution available to foreign investors are the free zones.

Sharjah's free zones offer various types of licenses and facilities for investors seeking full foreign ownership of companies, without adhering to the 51% national ownership restriction in the Companies Law. In Sharjah, the free zones are located in convenient areas; SAIF ZONE located next to Sharjah International Airport, and Hamriyah Free Zone right next to 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 areas in Sharjah after fulfilling the requirements of the free zone authorities.

Commercial Agencies is another way of getting the foreign investors to provide their goods and services in Sharjah. Corporations may provide their goods and services through a commercial agency that represents them in the UAE. Commercial Agencies are to be registered at the Ministry of Economy. Commercial agencies are subject to the United Arab Emirates Commercial Agencies Law Number (18/1981) amended by Federal Law number (2/2010). The most essential outcomes of this law are that it regulates the relationship between the corporation and local agent, which is applicable in Sharjah.

Intellectual Property

Intellectual property registration and protection is a point of monetary and economic right and drastic efforts have been undertaken nationally and internationally to safeguard intellectual property, which includes copyrights, trademarks, patents, and industrial designs, all of which can be registered and protected through the Ministry of Economy. The policy of economic openness undertaken by the UAE government has been successful in attracting many internationally branded companies to establish operations within UAE borders. Today, countless products from well-known brands around the globe are available to consumers in the UAE. The national authorities have contributed to protecting licensed intellectual property against any violation and infringement, which was apparent through the enactment of strict legislations derived from both the Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement and WIPO. Intellectual property is subject to the United Arab Emirates Federal Trade Mark Law Number (37/1992) amended by Federal Law number (19/2000) amended by Federal Law number (8/2002), and Federal law (7/2002) regarding Copyrights amended by Federal Law number 32/2006.

Advice to international investors

Although Sharjah enjoys an appealing environment to business, foreign investors should acquire proper legal consultancy before entering into agreements. One popular misconception among international investors is that laws and regulations between the Gulf Cooperation Council (GCC) states are united. In fact, investors should 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 business toward the other Emirates of GCC states. We also encourage investors to resort to long-term leases instead of ordinary rental agreements, as tenants in long-term leases enjoy more protection in accordance to rental law of Sharjah.

Recent legal amendments

The most important and recent amendments in the Emirati legal system are the amendments of articles in Civil Procedures Law and Company Law. One addition is Case Management Administration, which follows up the procedures of the subpoena or summons, submissions, and replies of parties of the dispute, and may reach to following up with experts until the export report is delivered. Another important addition to the Civil Procedures Law is the introduction of the utilization of modern means of communication, which was previously disregarded as acceptable method of communication using the 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 UAE's an open economy policies and business development in Sharjah, and the UAE as a whole. The new Companies Law announced important developments, including the introduction of a "sole-founder company" principle for limited liability companies and private joint stock companies, which prohibits competitive actions of company manager(s) toward the limited liability company.


 

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