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The opening up of opportunities between the UAE and Israel

4 December 2020

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The rise of the UAE to its status as a global success story reached a new pinnacle in September 2020 when they signed a peace agreement with Israel, one of the first Gulf countries to establish such a deal. The “Abraham Accords”, brokered by the US and signed amid Covid-19 restrictions, normalises relations between the two states but also opens up a world of opportunities.

What does this mean for you?

The UAE is one of the world’s most ambitious jurisdictions, transforming itself from being solely dependent on the oil and gas sector into a forward-thinking location, attractive for financial services, international trade, tourism and real estate. Now open to Israeli companies for the first time, it emphasises the UAE’s status as a hub for the Middle East and sets it on course to rival many of the traditional jurisdictions. With a reputation for being business-friendly, a focus on good corporate governance as well as maintaining European laws such as GDPR and USO registrations, Abu Dhabi and Dubai are firmly on the map for foreign direct investment.

However, there are more than 40 free-trade zones in the UAE, each of which offers their own unique advantages to companies incorporating in the Middle East. From ADGM, to DIFC and RAK-ICC – what are the advantages of these free zones? Having a good partner on the ground can help you navigate the complexity of this exciting region. Here we offer key insights into four of the UAE’s free-trade zones, to help you stay one step ahead.

Abu Dhabi Global Market (ADGM)

ADGM is located on Al Maryah island in the heart of Abu Dhabi and is an internationally recognised financial centre. Regulated by the Financial Services Regulatory Authority (FSRA), ADGM accommodates a variety of business activities and entity types.

ADGM SPVs are corporate vehicles, typically private companies, established for the purpose of isolating financial and legal risk by ring-fencing assets and liabilities. ADGM Foundations can be used for wealth management and preservation, family succession planning, corporate structuring and general asset protection.

Dubai International Financial Centre (DIFC)

The Dubai International Financial Centre (DIFC) is a UAE financial free zone conveniently located between old and new Dubai. Regulated by the Dubai Financial Services Authority (DFSA), the DIFC is now recognised as a premier financial hub for the Middle East and North Africa. With a diverse client portfolio, the DIFC hosts a range of financial and non-financial firms and retailers from around the globe. The DIFC has a unique offering with the Special Purpose Vehicle (SPV) which allows 100% foreign ownership. The regulations covering the SPV mean that the articles of association must be restricted to performing “Exempt Activities”. Furthermore, the DIFC offers an attractive SPC regime, caters to Fintech start-ups and offers a DIFC Foundation with a depositary receipt option.

UAE Mainland Companies

The UAE Mainland LLC is the most common form of legal entity registered in the UAE, used to set up and operate on the mainland. Each mainland LLC must register with the Department of Economic Development (DED). Foreign investors must also conform to the local ownership requirements, which enforce that all mainland companies have at least 51% of the shares held (directly or indirectly) by a UAE national. Recently, however, 100% ownership has been introduced for 122 economic activities across 13 sectors, such as renewable energy, space, agriculture and manufacturing industry. A UAE mainland branch of a foreign entity can be directly owned by its parent yet must employ a National Service Agent to be named on the local license.

RAK ICC

RAK International Corporate Centre (RAK ICC), is a Corporate Registry operating in the Emirate of Ras Al Khaimah. RAK ICC is a modern, world class Company Registry operating to the highest international standards and best practices in the international business formation industry. RAK ICC enables foreign investors to incorporate operational and non-operational entities for different purposes such as trading, consultancy, holding assets and freehold properties. As far as the real estate investments are concerned, RAK ICC entities are entitled to own properties not only in Ras Al Khaimah but also in the Emirate of Dubai, as per the Memorandum of Understanding (MoU) signed by RAK ICC and the Dubai Land Department in July 2019.

For more information please contact our UAE office.

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