Year: 2021

Debt Collection In Dubai UAE 2021

Debt Recovery And Collection In The UAE (No Win, No Fee – Out Of Court)

The United Arab Emirates is a country of amazing opportunities, which consists of approximately of 90% of expats who came to work, live and study in this country, raise and educate their children here, and who are very pleased with their choice thanks to the state policy aimed at harmonious, sustainable development and ensuring security of all who came to the UAE.

However, due to natural circumstances, such as Covid-19 for example, or deliberate illegal actions, organizations and individuals have to face a situation where they cannot receive the money promised to them under the contract or due to them.

Inevitably, they have to face an unpleasant and difficult situation of debt collection, look for ways to get the funds that they owe, as well as compensation and losses that they have suffered because of the delay of promised payments.

Clients of our law firm Hassan Al Reyami & Muhyealdeen International Legal Consultants often turn to us for help in debt collection and over many years of successful work in this area, our team of debt recovery lawyers and experts have been able to accumulate a lot of positive experience in resolving these issues.

Debt Recovery Process

Let’s take a look at the basic stages of debt collection that you have to go through to get a debt, sometimes you have to go through all of them, sometimes we manage to solve the issue at the first stage of collection, depending on the documents provided and the debtor’s ability to pay. They are pretty clear and strong:

  1. Drafting Legal Notice
  2. Mediation
  3. Litigation
  4. Enforcement

In addition, a final stage is – Settlement agreement, which can take place at each stage of debt collection.

Why do I need debt collection lawyers?

In our law practice, we faced with a variety of cases of non-repayment of debt due to different reasons and circumstances, and often the malicious intent of the debtor. The most common situations of non-repayment of debt includes the following:

  • Unpaid Cheques
  • Bounced Cheques
  • Unpaid Invoices
  • Unpaid Salaries
  • Unpaid Loans
  • Unpaid Service Benefits
  • Bad Debts
  • Delinquent Account Receivables
  • Commercial Debts
  • Insurance claims
  • And a lot more

At the first stage, we try to resolve the issue through mediation with the debtor, through negotiations, submission of documents justifying the debt, explaining to the debtor the consequences that non-payment of the debt can lead to, but we also do not forget that our collection case may end up in court, and therefore, we must issue a legal notice to the debtor with an indication of the amount, legal basis and the timing of debt repayment. We also have to take into consideration limitation of time to have a chance to claim the debt.

Quite often in our legal practice, but unfortunately not always, the mediation process leads to resolving the issue of collection in favor of our client.

The best outcome of mediation and negotiations with the debtor on debt collection is the signing of a settlement agreement with him on the repayment of the debt and the release of the relevant documents and the failure to proceed with the process in court proceedings, in which our law firm has accumulated extensive experience, having signed many amicable and settlement agreements and collected debts out of court to deep satisfaction of our customers.

If it is impossible to resolve the issue by an amicable agreement, the client is forced to go to court to resolve the issue of debt collection. Over the years of its more than twenty years of legal practice, Hassan Al Reyami & Muhyealdeen International Legal Consultants has accumulated vast experience in debt collection in the courts and arbitration of the United Arab Emirates.

We had litigated in over 160 international and over 200 local arbitrations and court cases with an outstanding client satisfaction rating of 98% and completed over 5000 court case and arbitrations in total with high success rate. We have accreditation in all the courts in the United Arab Emirates and have local advocates in our team, which can present our clients before local courts.

A debt collection case won in the court is not a guarantee that you will receive your debt. A very important and difficult stage is the collection process, which includes investigating the property, accounts and assets of the debtor. Therefore, in the process of debt collection, it is necessary to legally competently provide that the debtor could not withdraw or hide his assets, thereby depriving you of the possibility of collection.

Why we recommend contacting debt collection specialists

The main reason for the failure of the collection of the tax is that the client is often not familiar with the laws of the UAE or does not understand them well, cannot properly draw up his claim, is in a stressful state, has chosen the wrong strategy for collecting a debt, and sometimes he simply cannot agree or talk in the same language as the debtor or his lawyers. For the creditors is also very important to come into contact with debtors as soon as possible, because he can have another creditors and because of that, there could be a lag behind other creditors demanding payments.

Regardless of the complexity of your debt collection case, Hassan Al Reyami & Muhyealdeen International Legal Consultants can assist you in debt collection in United Arab Emirates, and our legal practice covers all seven Emirates in United Arab Emirates. No win – no fee (out of court settlement), this is the guarantee of our work for you.

dubai skyline sunset

New UAE Commercial Companies Law: 100% Foreign Ownership in LLC Mainland Companies

New UAE Commercial Companies Law: Which companies can claim 100% foreign ownership?

On 1st June 2021, amendments to Federal Law No. (2) of 2015 on Commercial Companies came into effect to allow 100% foreign ownership in LLC mainland companies in the UAE. Until recently, foreign investors could own a maximum of 49% of shares in such companies leaving 51% shareholding for an UAE national. Or, if speaking of a branch of a foreign company, it was prerequisite to have a local service agent to be named in the license.

The amendments were initially introduced by Federal Law by Decree No. (19) of 2018 on Foreign Direct Investment (FDI). This is in line with the UAE Cabinet initiative to loosen restrictions in certain economic sectors thus making it more attractive for foreign investors to run their business in the UAE mainland market, including global startups, and enhancing the positions of the UAE as a leading Middle East economy.

No requirement for nationality is now in place for establishing a company with the 100% foreign ownership. The Law states that “a foreign investor is considered a natural or corporate person who does not hold the nationality of the State (the UAE) and who invests in the State in accordance with the provisions of this Law by Decree”. Such persons will then be eligible for a renewable three years investor or partner visa.

The aim of these changes is to promote and develop the investment environment and promote attracting foreign direct investment in line with the developmental policies of the UAE. In particular:

  • Asserting the position of the State as a major attraction hub for foreign direct investment both regionally and globally.
  • Attracting and encouraging foreign direct investment.
  • Expanding the production base, diversifying it, and transferring and attracting advanced technology, knowledge and training.
  • Increasing the flow of foreign direct investment in the priority sectors to achieve balanced and sustainable development and create job opportunities in various fields.
  • Achieving the best return with the available resources and securing high added values for the State’s economy.

The new regulations are to relax restrictions for companies engaged in one of the 122 business activities which are on the Positive list fixed in Cabinet Resolution No. 16 of 2020 on the Determination of the Positive List of Economic Sectors and Activities Eligible for Foreign Direct Investment and Percentage of their Ownership (enclosed at the end of this article). Activities on the Positive list fall under the following sectors:

  • agricultural sector;
  • manufacturing sector;
  • services sector;

and include such activities as administrative and support services, agriculture, art and entertainment, construction, educational activities, healthcare, hospitality and food services, information and communication, manufacturing, professional, scientific and technical activities, renewable energy, space, transport and storage, etc.

In addition to establishing a comprehensive Positive list, the Resolution sets forth the licensing criteria for commercial companies falling under the FDI law, including the amount of minimum share capital for each activity – varies from AED 2 to 100 mln, minimum percentage of Nationals employed by such a company, the use of modern technology, contribution to R&D, bringing high added-value, and some other conditions for specific business activities.

There are certain exemptions to the 100% foreign ownership rule. Companies carrying out activities of a “strategic impact” will continue to be subject to foreign ownership restrictions. The following activities have already been listed in the Federal Law on Foreign Direct Investment and are on the Negative list:

  • Exploration and production of petroleum materials.
  • Investigations, security, military sectors, manufacturing of arms, explosives and military equipment, devices and clothing.
  • Banking and financing activities, payment systems and dealing with cash.
  • Insurance services.
  • Hajj (pilgrimage) and Umrah services, providing employment and recruitment services for staff and servants.
  • Water and electricity services.
  • Services related to fisheries.
  • Postal services, telecommunications services and audio and video services.
  • Land and air transport services.
  • Printing and publishing services.
  • Commercial agents’ services.
  • Medical retail such as private pharmacies.
  • Blood banks, venom and quarantine centres.

The Council of Ministers is eligible to add or remove activities from this list.

Also, a resolution is to be issued to specify the procedures for registering and renewing the registration of foreign investment companies in a special register at the Investment Unit called “Register of Foreign Direct Investment”.

The introduction of the law on 100% foreign ownership can affect already existing LLC companies with local shareholding which may desire to reconsider their ownership structure. To do so such companies can sell the shares belonging to an UAE national to a foreign national and thus become a 100% owner of the company. Certain charter documents will need to be amended (Memorandums of Association) accordingly. Companies planning to make respective rearrangements can do so by 2 January 2022.

Among other notable changes are:

  • introduction of mandatory corporate governance rules for all companies in the UAE (expected in the near future);
  • general shareholders meetings can now be held with the use of modern technology and be presided by foreign nationals as well as Emirati;
  • a general meeting can be called upon the request of one or more shareholders holding a minimum of 10% of the share capital;
  • the notice period for holding a general meeting has been increased to 21 days;
  • the amount of shares allowed to be sold via IPO has been increased to 70% (as opposed to 30%);
  • the shareholders have been given the right to sue a company in civil court in the event of any failure of duty by its directors that resulted in loss of money or damage;
  • expatriates can now be on the board of directors of joint stock companies;
  • and the authority to recognize required capitalization, shareholding percentages, approve the establishment of an onshore company is now with the local government institutions.

All the novelties introduced both by Foreign Direct Investment Law and the Cabinet Resolution introducing the Positive list are likely to even further open both the UAE mainland market and stock market to foreign investors and international companies, at the same time making UAE business more transparent and attractive for listing by means of introducing proper unified corporate governance standards.

You can view or download the Foreign Ownership Activities (FOA) PDF List by clicking this link: Foreign Ownership Activities (FOA)