• Corporate Law

    Use of Restrictive Covenants in Commercial Contracts in the UAE

    Use of Restrictive Covenants in Commercial Contracts

    Restrictive covenants can be a useful tool for employers to protect themselves from current and/or former employees who may seek to gain an unfair competitive advantage by, for example, immediately joining a competitor business and/ or misusing confidential information to their own ends.

    It is crucial to be aware that restrictive covenants are, to the extent that they restrict an employee’s activities following termination, a restraint of trade and therefore unenforceable unless they go no further than is reasonably necessary to protect the employer’s legitimate business interests. Accordingly, it is very important that consideration is given to the scope and duration of post-termination restrictive covenants.

    Generally, taking an overly aggressive approach when imposing restrictive covenants may cause difficulties with enforceability. For example, a restrictive covenant imposed on a junior employee which prevents him or her from working with a competitor for twenty-four months may be seen by the courts as going further than is necessary to protect a legitimate business interest and therefore be deemed unenforceable.

    Restrictive covenants must be carefully and well drafted – if they exceed what is considered necessary then they risk being unenforceable. This is something we can assist clients with. Other key tips to take note of are: (a) ensure employment contracts are properly signed to evidence the employee’s agreement to the restrictive covenants; and (b) consider updating such restrictions when employees are promoted to a more senior level. Finally, given the importance of social media, non-solicitation clauses should be drafted to work in this context and alongside a robust social media policy.

    Bespoke drafting of restrictive covenants is vital. Template contracts are unlikely to provide you with sufficient protection as covenants need to be limited to the elements of the business the employee was involved with and to the relationships they shared. The duration of covenants should be no longer than what is necessary (usually up to a maximum of twenty-four months) and what is reasonable will vary depending on the sector and the employee’s role within your company. Consider the shelf life of confidential information and the time it would take to consolidate relationships with customers/the workforce following an employee’s departure.

    Reach out to us for a confidential discussion on Restrictive Covenants or general Employment and/or Corporate matters and to find out how we can help.

    Our team would be delighted to hear from you.

    Rhea Bindra
    rbindra@davidsoncolaw.com

    Yousif Ahmed
    yahmed@davidsoncolaw.com

  • Corporate Law/ Employment/ Property

    Retirement Visas to be made available in the UAE

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    The UAE will offer 5-year visas to expats aged over 55 who meet certain criteria in yet another relaxation of the region’s visa regulations.

    Who can apply?

    This Retirement Visa will be available for expats who are over the age of 55 and have retired from working.

    What are the criteria?

    Applicants must be over the age of 55 and retired. They must also meet one of the following criteria:

    1. Have investments in real estate worth over AED 2 million (~£415,000.00);
    2. Have financial savings of not less than AED 1 million (~£208,000.00); or
    3. Provide proof of a monthly income of over AED 20,000.00 (~£4,150.00).

    How long is the visa valid?

    The visa will be valid for 5 years, providing that one or more of the above criteria is continually met. Initial indications are that the visa will possibly be renewable.

    When can I apply?

    The UAE cabinet recently announced that the application process will open sometime in 2019.

    Who will benefit?

    Given the age requirement, the new retirement visa will benefit those who wish to continue to reside in the UAE full time without the more stringent criteria imposed by work visas.

    For further information on Retirement Visas or for any other legal queries, please contact Victoria Smylie on +971 4 343 8897

  • Corporate Law/ Family Law/ Legal Update/ Wills

    DIFC Wills Service Centre launches new Business Owners Will

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    The DIFC Wills Service Centre (DIFC WSC) has launched a new Business Owners Will to encompass both free zone and UAE onshore company shares (including RAKICC registered companies). The Business Owners Will replaces the DIFC WSC’s Free Zone Company Will, which was previously available to encompass only free zone company shares.

    The new purpose Will can encompass up to five separate shareholdings in any free zone or UAE onshore company incorporated in the Emirates of Dubai and/or Ras Al Khaimah, and will enable non-Muslim testators over the age of 21 to designate which beneficiary(ies) they wish their company shares to be transferred to on their passing. There are many advantages to ensuring that there is a succession plan in place with regards to the ownership and management of any company, including business continuity, sustainability, and reassurance that the business will be left in capable hands.

    The introduction of the Business Owners Will is intended to allow testators to take advantage of the proposed changes to the foreign ownership system of UAE based enterprises, announced by the Cabinet early this year. Once implemented, the new law will allow certain foreign investors to have 100% sole ownership of their enterprise, bringing the position of onshore LLC companies in line with existing free zone and offshore entities.

    The Business Owner Will is available to both UAE residents and foreign investors, and can be registered in person or via the DIFC WSC’s online Virtual Registry.

    For further information on the Business Owner Will or any of the DIFC WSC’s wills, please contact Victoria Smylie or Finlay Donaldson on +971 4 343 8897.

     

  • Corporate Law/ Family Law/ Legal Update/ Private Client

    Davidson & Co admitted to prestigious Legalink global network

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    Davidson & Co is delighted to announce that the firm has been admitted into the prestigious Legalink network, a global legal network comprising more than 60 individually approved and selected law firms from around the globe.

    Davidson & Co prides itself in its ability to offer a full service to clients, and by becoming a member of Legalink, Davidson & Co is now in a position to not only offer clients in-depth legal knowledge of proceedings in the UAE, but also access to dependable, first-hand legal advice from over 3,000 professionals worldwide.

    Davidson & Co recognises that in our ever expanding and internationalised economy, our clients’ private wealth and assets are no longer confined to one jurisdiction, and this most recent accolade cements the firm’s goal to understand the needs of its clients, add value whenever possible, and to ensure ongoing development and success.

    Further information on Legalink or its members can be found at https://www.legalink.ch.

    Alternatively, please contact either Victoria Smylie at vsmylie@davidsoncolaw.com, or Yousif Ahmed at yahmed@davidsoncolaw.com, both of whom would be delighted to answer any questions you may have on the network.

  • Corporate Law/ Economy

    Ministry of Economy: 100% foreign investment proposed for both mainland and free zone companies within the UAE

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    The UAE consists of various corporate structures ranging from sole proprietorships to fully fledged private companies. The mainland companies as well as the businesses operating within the free zones, comprise mostly of Limited Liability Companies (LLC).

    At present, the rule is that only the companies based within the free zones give the foreign investor a full 100% right to ownership of their business. The law within the on-shore civil law jurisdiction that governs companies outside of the free zones in the UAE, requires an Emirati national to possess a majority ownership of 51% while the investor can hold only a 49% ownership. This was done to boost local entrepreneurship and to stimulate national business growth.

    The United Arab Emirates has however proposed a new resolution that encourages greater FDI (Foreign Direct Investment) by way of providing sole ownership to foreign investors, without the need for an Emirati national to be a majority stakeholder in the business.

    Recently in May, at the UAE Cabinet meeting chaired by His Highness Shaikh Mohammad Bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, the regulation for businesses within the free zones was amended to now allow foreign investors to own a full 100% ownership of their companies in the free zones.

    It is unclear as to when the resolution will be implemented but Hamad Bu Amim, President of the Dubai Chamber of Commerce and Industry, has stated that, “The move sends a clear message that the UAE is a competitive market which is open to international investors and conducive to business growth. At the same time, I expect that the new measures will help raise the UAE’s global profile as a preferred investment destination, positively impact the local business environment and ultimately enhance the country’s economic competitiveness”.

    For more information on company set up in the UAE or any other legal requirements please get in touch with Davidson & Co today.

  • Corporate Law/ Employment/ Family Law/ Private Client/ Property

    Andrey Panferov heading up Davidson & Co Russian speaking desk

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    We are delighted to welcome Andrey Panferov to the growing Davidson & Co team.

    Fluent in both Russian and English Andrey has over 12 years of legal experience in both Russia and Dubai and supported by the firm’s talented legal team, Andrey is looking after the firm’s Russian speaking clients.

    Andrey is a fully qualified lawyer with expertise and knowledge across a broad range of areas including corporate law, mergers & acquisitions, commercial contracts, dispute resolution and construction.

    Holding a degree in Law from Russian reputable Law University, Andrey completed his MSc at Heriot Watt University (Dubai Campus) and trained to work with international legal practices.

    Andrey is based in our Dubai office and heads up the firm’s Russian speaking desk and is available to assist with any of your legal matters.

    He can be contacted directly at apanferov@davidsoncolaw.com or on +971 52 752 7758

  • Corporate Law/ Family Law/ Private Client

    Davidson & Co ranked by Chambers and Partners

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    Davidson & Co are pleased to announce that Andrew Young, head of our Private Client Department, has been recognised by Chambers and Partners in their renowned Chambers HNW 2017 guide.

    Andrew is one of only two lawyers to be ranked Band 1 for Private Wealth Law in the UAE. Andrew is described in the publication as “practical and charismatic” and “very experienced”, with his strengths lying in “his connections and timeliness”.

    This is the latest honour for Andrew and Davidson & Co, who were recently ranked amongst the top 50 private client advisors globally in the prestigious Citywealth Leaders List, ranking number one in the Middle East. Both of these recent awards are confirmation that Andrew’s Private Client team, supported by the firm’s talented Corporate team, are expertly placed to advise wealthy individuals and families within the region on their private, transactional and business requirements.

    To find out how the Davidson & Co team could assist your specific requirements please do not hesitate to get in touch.

  • Corporate Law/ Economy/ Legal Update

    The Continued Growth of the DIFC

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    Abu Dhabi Judicial Department (“ADJD”) and the Dubai International Financial Centre (“DIFC”) Courts  

    On the 30th of April 2017, the DIFC announced the execution of a Memorandum of Understanding (“MoU”) with the ADJD concerning legal cooperation between the two parties in light of enhancing the judicial efficiency in the UAE.

    The parties are yet to release more information about the MoU and their mutual goals, however the main objective of the MoU is for both parties to work in partnership in overcoming potential legal obstacles in the UAE. The MoU identifies eight specific fields of corporation between the parties with a view of adding to the list.

    Below are examples of some of the areas of corporation outlined in the MoU:

    1. Exchanging expertise in the field of e-services and information technology with the aim of improving the efficiency of the judicial system (such as in e-management of claims and judicial e-announcements) and improving access to information of the courtrooms for judges and litigants (recording the hearing minutes electronically).
    2. Exchanging opinions on the applicable fees for civil and commercial cases of dual jurisdiction in accordance with all applicable laws & regulations.
    3. Facilitation of the procedures of judicial cooperation, particularly in terms of judgment enforcement in accordance with all applicable laws & regulations.
    4. Exchanging information and opinions on judicial supervision and best internationally adopted practices.

    This MoU is moving towards creating a strong relationship between the parties but also a platform for further growth and cooperation in the future. The MoU also suggests that states in the UAE are working together towards raising the DIFC’s status within the region and also the UAE as a global financial hub.

    Dubai Department of Economic Development (“Dubai Economy”) and the DIFC

    In 2010, the Dubai Economy and the DIFC signed an agreement with a view of unifying licensing procedures in the DIFC and Dubai mainland.

    More recently, on the 1st of May, the DIFC have announced signing an MoU with the Dubai Economy in accordance with which the Dubai Economy would provide companies registered in the DIFC with licenses to operate in Dubai mainland. This is increasingly beneficial for businesses in the DIFC wishing to branch out as this development would enable them to contract with third parties and attract new customers or clients in Dubai mainland.

    The parties have in line with this new plan, concluded to set up a data room which would enable both parties to exchange data and information efficiently.  Such flexibility within the system is likely to improve transparency and increase consumer protection.

    This decision is also likely to further the diversity of services available to third parties and businesses established in Dubai mainland whilst creating some friendly competition between the companies operating in Dubai mainland and those migrating from the DIFC.

    Overall, this move towards simplifying the rules and regulations will create a business friendly environment for investors in the DIFC and is a stepping stone to developing a unified business environment for foreigners in the UAE.

  • Corporate Law/ Legal Update

    A Guide to Corporate Structures in Dubai

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    Setting up in Dubai

    Over the last 30 years, Dubai has transformed itself from a local trading community into one of the most popular and successful destinations for corporate and commercial set ups. With its growing multi-jurisdictional nature, and in the absence of income tax for both mainland registered companies and those registered in the free zones, Dubai has become a major trading hub in the region for local and foreign companies wishing to establish a business presence in the region.

    Mainland Dubai

    Dubai’s Department of Economic Development (DED) is the department for licensing and registration of corporate entities in mainland Dubai and the Commercial Companies Law (CCL), as amended, is the federal law that regulates all entities set up in the UAE mainland, and regulates corporate entities set up in mainland Dubai.

    Limited Liability Company

    A Limited Liability Company (LLC) is the most common form of business set up in Dubai. When forming a LLC, the CCL prescribes that at least 51% of the shares must be registered with a UAE national (natural or legal person).

    Commonly, where a UAE national (otherwise known as a Local Partner) is used and the foreign investor owns 100% of the beneficial interest in the LLC, the LLC’s memorandum of association can be structured in such a way so as to transfer all authorities, rights and powers to operate and manage the LLC to the foreign investor, including for example the ability to appoint the general manager and the company board of directors.

    Another safeguard to protect the foreign investors interests in the LLC can be provided in the form of a unique set of contractual arrangements commonly known as side agreements. This comprises a set of agreements entered into between the foreign investor and Local Partner with the aim of vesting all managerial control, voting and dividend rights in the LLC to the foreign investor. As such, the Dubai LLC formation allows companies to establish flexible, differential profit sharing arrangements with a UAE Local Partner. The Local Partner can be paid a fixed annual fee, a percentage of sales or a percentage of profits.

    The Free Zones

    Dubai is home to over 20 free zone jurisdictions that cater to various industrial and business clusters where foreign investors can enjoy 100% foreign ownership of their companies. Across the UAE, there are designated territorial areas that are considered separate legal jurisdictions from the UAE government, which allows free zone jurisdictions to govern, license and register corporate entities independently.

    Another major advantage to foreign investors is that free zone laws generally prescribe a guaranteed tax-free period of 50 years and there are no restrictions on the repatriation of capital or profits. The main restriction for a free zone corporate entity is that it cannot actively trade outside of the territorial parameters of the free zone unless it appoints a Dubai mainland based commercial agent.

    Offshore Companies 

    Certain free zones, for example the Jebel Ali Free Zone in Dubai offer the concept of an offshore company in the UAE.  Offshore companies are flexible corporate entities which are generally used as holding companies in the UAE.

    Offshore companies are very quick to set up, there are no limitations on foreign ownership and there is no minimum share capital requirement. A minimum of 2 directors (maximum of 5) are required, all of whom must be natural persons (no corporate directors). Shareholder(s) may be either natural persons or corporate entities, any of which may also be non-residents (expatriates).

    Furthermore, offshore companies can open and operate bank accounts as well as own investments inside and outside of the UAE. The other major advantage lies in Dubai property ownership. Select offshore companies such as those incorporated in the Jebel Ali Free Zone can own real estate in Dubai in certain designated areas. Therefore, any income generated from the company’s investments (such as real estate) can be held in the company bank account and repatriated thereafter.

    Davidson & Co is a boutique law firm established in Dubai in 2008, with lawyers and legal consultants drawn from across the globe.  Providing a unique combination of corporate / commercial expertise; dispute resolution solutions; as well as private client advice, we are able to cater to the mass market and offer unparalleled legal services in the region.

     

    For more information about our capabilities and accolades, please visit http://www.davidsoncolaw.com/about.html or contact 04 343 8897 and ask to speak to one of our associates.

  • Corporate Law

    New Jebel Ali Free Zone company guidelines to encourage international investment

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    The Jebel Ali Free Zone (JAFZA) is one of the largest free zones globally and is a leading business hub between Asia, Europe and Africa.

    New guidelines for companies operating out of the Jebel Ali Free Zone have been released designed to simplify regulations and make it easier for international investors to establish a new company.

    The guidelines issued as part of the ‘Jebel Ali Free Zone Companies Implementing Regulations 2016’ enables foreign companies to transfer operations in the free zone without having to establish a new company or branch.

    Some of the key changes are:

    • Different classes of shares are now available which will give business owners more flexibility to offer different voting rights for specific shares.
    • The minimum number of shareholders in a Free Zone Company (FZCO) has been reduced to two and a maximum of 50
    • The new regulations will allow the current FZE and FZCO entities the ability to list their company on the stock exchange through a Public Listed Company (PLC)
    • There is no longer a minimum share capital.  Companies simply need to have sufficient capital to support the core business activity.

    Sultan Ahmed bin Sulayem, Group Chairman and Chief Executive Officer of DP World and Chairman of Ports, Customs and Free Zone Corporation said “The new regulations streamline all the mandatory legalities related to the registration, administration, legal benefits and obligations of organisations in the free zone.  These changes reflect the needs of an ever-evolving market in terms of providing facilities that are prompt, secure and form the best international practices.”

    Davidson & Co have a wealth of experience in company formation and have extensive knowledge of the range of options available across Dubai and UAE.

    Get in touch to find out more and receive expert advice.