UAE's commercial agencies law to come into effect on June 16

Conducting business in the sector will be exclusive to UAE citizens

The UAE's new commercial agencies law further strengthens its position as a prime destination for leading regional and international trademarks, the ministry of economy said. Reuters

The UAE's new commercial agencies' law will come into effect on June 16, further boosting the competitiveness and attractiveness of the country's business environment, the Ministry of Economy said.

The Federal Decree Law No. (3) of 2022 on regulating commercial agencies replaces the previous 40-year-long legislation, Abdulla Al Saleh, undersecretary of the Foreign Trade and Industry at the UAE Ministry of Economy, said at a press conference on Wednesday in Dubai.

The new law aims to “strengthen the growth of the commercial agencies sector, diversify its activities, boost its economic performance and increase its contribution to the country's gross domestic product”, Mr Al Saleh said.

The law helps to create a business environment that is favourable for increasing national investments and foreign direct investment (FDI), while ensuring that consumers get high-quality products, he said.

The Arab world's second-biggest economy has implemented an array of reforms aimed at improving the ease of doing business, attracting foreign investors, creating jobs and diversifying its economy away from oil.

The UAE has allowed 100 per cent foreign ownership of companies, reduced visa restrictions, provided various incentives for small and medium enterprises and introduced laws to improve transparency for investors.

The UAE is ranked 16th in the World Bank's Doing Business 2020 report. It scored 80.9 out of 100 for ease of doing business and was the strongest performer overall in the Middle East and North Africa region, according to the last report by the Washington-based lender.

Doing business in the commercial agencies sector will be exclusive to UAE citizens, creating for them an encouraging environment to establish new commercial and investment projects, according to the ministry.

In addition, public joint-stock companies with at least 51 per cent of national capital contribution will be allowed to act as commercial agents.

Any international company under certain conditions and with the approval of the UAE Cabinet will be allowed to act as a commercial agent for its own products, the ministry said.

The ministry also outlined the termination provisions of the agency contract under the law. The termination provisions of the agency contracts will be applied after two years for existing agency contracts.

For contracts with more than 10 years since they were registered or where the size of the agent's investment exceeded Dh100 million, they have a further 10 years to terminate the contract, thereby “protecting stability and national investments in this vital sector”, the ministry said.