Dubai, A Hub For Foreign Investment!

Dubai , which attracted the world's attention recently with the inauguration of Burj Khalifa; the world's tallest skyscraper, has always been a prime destination for foreign investment. The Dubai government has been consistent in reviewing and aligning regulatory framework to cater to new challenges in maintaining its leading position as a major commercial, industrial and trading hub in the region.

An area that has witnessed continued governmental attention is easing setting up of companies in Dubai to attract more foreign investment and this article aims to highlight some of the salient initiatives taken by the Dubai government in the very recent past in this regard.

Formal set ups such as limited liability companies entail legal and commercial benefits such as:

Separate legal identity on incorporation; Incorporated entities outlive their founders; Resources can be pooled as multiple shareholders join together to form a company; Better access to financial resources; Bigger pool of human resource and hence more job creation; and Access to special regimes for legal proceedings for instance in case of insolvency. To ease setting up limited liability companies in Dubai, the Dubai government implemented the amendment in Article 227 of the UAE Commercial Companies Law ("CCL") which marked a major shift from the earlier legal position in as much as the said Article removed the requirement for minimum share capital (previously AED 300,000) allowing founders of a limited liability company ("founders") the freedom to determine the company's share capital which could be less than the earlier prescribed bottom line of AED 300,000.

The above amendment has affected three related conditions. One was the letter required from the bank confirming that the investor did have AED 300,000; a document from the auditor and the last one was the smart chip, which is part of the authenticating the licence. It has led to the removal of three obstacles, encouraging founders to establish businesses with genuine information. This has practically reduced the cost and the turn around time of setting up a limited liability company in Dubai . On top of this the DED has reduced by 10% its fees for registering companies.

No wonder then that in recognition of the Dubai governments efforts to further ease corporate setting up, the International Finance Corporation and World Bank ranked the United Arab Emirates at number 33 in its 'Doing Business 2010' report for ease of doing...