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Compare and comment between different aspects of UAE

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02/02/18 Free Law Essays Reference this

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Compare and comment between different aspects of UAE


This essay is a comparative evaluation of the similarities and differences between the UAE company law and UK company law. In the modern world, company law is an important part of legal system specifically dealing with business transactions and related affairs. Countries like UK and UAE, where business has prime importance in creating income and growth, company law also becomes very important.

UAE holds as 33rd on the overall ease of doing business, out of 183 economies worldwide as per the World Bank’s 2010 doing business report. In 2009 rank was 47, now ranks third in the Arab world. The seven categories of business organizations defined by the law are general partnership company, partnership-en-commendams, Joint Venture Company, public shareholding company, private shareholding company, limited liability company, share partnership company, partnerships .partnership companies are limited to UAE nationals only. (Gulf Law, 2008)

The company law provides for the registration of branches and offices of foreign companies. Intellectual property protection is fairly conducted internally and with the help of international bodies, treaties and conventions that safeguard intellectual property, including the world intellectual property organization (wipo), world trade organization (wto), Paris convention, patent cooperation treaty (pct), wipo copyright treaty, wipo performances and phonograms treaty (wppt) and the Rome convention. (UAE Interact, 2009)

President of the UAE, h.h. Sheikh khalifa bin zayed al nahyan in 10 august 2009 amended federal law no 8 of 1984, the company law which removes the minimum capital requirement of aed 150,000 ($40.765) for the establishment of a limited liability company (llc) in the UAE. (Gulf-Law, 2007)

Foreign individuals commencing a business would be required to have a national sponsor. Such establishments have to register in the commercial register UAE penal code specifically makes it illegal to “offer, to give, or to agree to give any gratification to a person who is…expected to be a public servant as an inducement or reward for performing any official act.” (International Business, 2007)

The following steps are required in establishing a limited liability company in Dubai.  Selecting a name for the company and have it approved by the licensing department then making the company’s memorandum of association and has it notarized. (Emirates Update, 2008).

Then comes seeking approval from the economic department and apply for entry in the commercial register; once approval is done, the company will be entered in the commercial register and have its memorandum of association published in the ministry of economy and commerce’s bulletin. The license is issued by the economic department; then only company should then be registered with the Dubai chamber of commerce and industry. (Alloexpat, 2009)


Ease of doing business index tells that UK holds the 4th rank in ease of doing business. UK corporate law is the body of rules that concern corporations formed under the companies act 2006 Which is regulated by the insolvency act 1986, the UK corporate governance code, European union directives and court cases, the company is the primary legal vehicle to organize and run business.

The UK was the first country to implement a simple registration procedure any investors could incorporate, limit liability to their creditors in the event of business insolvency, and where power was delegated to a centralized board of directors. Corporate governance protects the rights and duties among shareholders, employees, creditors and directors. UK law is “shareholder friendly”. The general meeting holds an important place. Through the takeover code the UK strongly protects the right of shareholders to be treated equally and freely trade their shares. Creditors are protected by courts’ power to set aside unfair transactions before a company under performs, or engage in wrongful trading.

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When a company is insolvent, UK insolvency law requires and administrator to attempt a rescue of the company. If rescue proves impossible, a company’s life ends when its assets are liquidated, distributed to creditors and the company is erased.

Public companies can offer shares to the public, must have a minimum capital of £50,000, must allow free transferability of its shares, and typically will follow requirements of the London Stock Exchange or a similar securities market. Businesses may also elect to incorporate under the European Company Statute as a Societas Europaea. An “SE” will be treated in every European Union member state as if it were a public company formed in accordance with the law of that state.

Once the decision has been made about the type of company, formation occurs through registrar at Companies House. Those who invest money in a company will sign a memorandum of association stating what shares they will initially take, and pledge their compliance with the Companies Act 2006. Directors must – one in a private company and at least two in a public company – and a public company must have a secretary, but there needs to be no more than a single member.

Categories of business in which law is spread:

CIC or community Interest Company, Industrial and Provident Society, A Co-operative or charity, General partnership, LLP or Limited liability partnership, LP or Limited partnership, Ltd. Or Cyf (Limited, or Welsh Cyfyngedig): a private company limited by shares, p.l.c. or Ccc (public limited company, or Welsh Cwmni Cyfyngedig Cyhoeddus), Private company limited by guarantee, Unlimited company, Sole proprietorship/Sole trader.

Comparison and arguments:

PLC is a company whose shares may be traded publicly requires an authorized minimum share capital of £50,000; of which it must have allotted shares to the value of at least £50,000 and a minimum of 25% must be fully paid up prior to starting business. Litigation among those within a company has historically been very restricted in UK law.

A LLC in UAE can be formed by a minimum of 2 and a maximum of 50 persons whose liability is limited to their shares in the company’s capital. Such companies are recognized as offering a suitable structure for organizations interested in developing a long term relationship in the local market. In Dubai, the minimum capital is dh.300, 000 (us$ 82,000), in cash or in kind. Foreign equity in the company may not exceed 49%, profit and loss distribution can be prescribed.

When compared to UAE, the UK company law gives more internal freedom. In company law there are three main areas that regulate mergers and acquisitions. They are: Scheme of arrangement, Reconstructions & Takeovers. No provisions are there in UK company law for the 100% free tax benefits in SEZ and free zones. Registration of branches and offices of foreign companies is not given a warm welcome as UAE. Everything is written in English.UK law comprises of 11 types where as UAE comprises only 7 types. The UK company law is more spread than UAE’s. Amendments are more in UAE than UK. UAE company law is less developed when compared to UK. PLC in UK is having higher minimum share capital. The UAE company law is not giving enough freedom as UK does. Here external freedom is more. Everything is written in Arab only some are translated to English in UAE commercial law.

(Wikipedia, 2007)

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