The Ministry of Economy unveiled a sweeping set of proposals aimed at strengthening financial regulation and rooting out fraud. The proposals would "plug the gaps" in existing legislation covering a wide range of industries and subjects, the ministry said yesterday. The planned legislation covers foreign investment, competition, trade, commercial disputes, intellectual property rights, fraud and corporate governance.
"The UAE is revamping its legal system to reflect the changes in the global economic landscape and maintain its competitive edge as a centre of business," said Sultan al Mansouri, the Minister of Economy. The laws, which are in various stages of the legislative process, must be submitted to the Cabinet and other government departments before they are sent to the Federal National Council and the Ministry of Presidential Affairs for final approval.
They include: A law that would reduce costs for foreign investors through customs exemptions. It would also mandate clearer procedures for licensing and insurance, as well as dispute resolution mechanisms. A competition law that would "reduce monopoly practices in line with the recommendations of the World Trade Organisation during its last review for the trade policy of the UAE".
A law covering trade that would mandate certificates of origin for shipments of goods through the UAE's ports and allow the ministry to "impose fines and penalties" for incorrect documents. A commercial arbitration law that the ministry drafted with the help of experts at the Abu Dhabi Arbitration Centre. A law to spur the growth of small and medium-size businesses in the industrial sector and "enhance the quality of products".
Changes to industrial ownership laws covering intellectual property rights. Among their provisions, the amendments would protect industrial secrets. A law covering auditors who routinely examine the financial statements of firms in the UAE. Auditors have come under scrutiny recently after instances of alleged corporate fraud that went undetected, including the case of Damas International, a Dubai-based jewellery retailer whose owners are alleged to have diverted company money for their personal use. The law aims to strengthen the auditors profession and contribute to "achieving greater transparency and disclosure of the institutions in the UAE".
An anti-fraud law "aimed at protecting the UAE's economic interests". A new law that would make it mandatory for companies to have a basic corporate governance framework "to ensure protecting shareholders' rights and achieve transparency and disclosure of financial results and reports". The law would also reduce the time it takes to form a publicly-listed company to 40 days and mandate a financial year running from January 1 to December 31.
Many countries, including the US and EU members, are looking at strengthening oversight of their financial systems in a bid to prevent another financial crisis. Barack Obama, the US president, has made financial regulatory reform one of his top policies. Some Gulf countries have also begun to pursue reforms. Kuwait's parliament this year passed a law establishing an independent market regulator, and Saudi Arabia's Capital Markets Authority has begun to enforce stock market regulations more aggressively. Dubai's Real Estate Regulatory Agency has also stepped up its activity during the past two years.
The Ministry of Economy's proposed laws represent the UAE's first wide-ranging effort to tighten regulations after the global economic downturn. afitch@thenational.ae
