Investment projects require significant resources and comprehensive support - legal, economic and strategic. Investing in a new project requires support from investment strategy development to post-investment consulting. Investing in a ready-made business requires thorough due diligence of the investee. Although investment activity is a flexible and effective form of profit making, at the same time, due to the specific legislation of each jurisdiction and modern economic and political realities, many investors do not use their investment opportunities as effectively as possible. Therefore, it is common practice to engage specialised specialists.
Investment activity support is quite a popular service today. It is the high-risk environment and multifaceted legislation that are the main risk factors for many foreign companies to enter the market of a particular country. At the same time, one of the main reasons that lead to negative financial and legal consequences in the implementation of investment projects abroad is the neglect of risks and the lack of a thorough and comprehensive analysis/audit of the investment project being developed.
We provide comprehensive support services for investment projects. We are guided by both the investor's capabilities and the conditions arising from the legislation of the chosen country and external requirements.
Facilitation of investment undertakings in the UAE
Investment in the Arabian Emirates is cultivated by a juridical, regulative, and pecuniary milieu that is pliant to commercial operations. As a realm proclaiming one of the globe's most unrestrained economies, along with a worldwide mercantile spirit, the UAE stands as a safeguarded and alluring universal nucleus for financiers. Extraterritorial Direct Investment (FDI) in the UAE is witnessing proliferation, and the range of opportunities attainable to non-native investors is widening. From participating in bourse dealings to obtaining real estate, private capital, and depositary repositories, an assortment of investment pathways caters to nearly every peril proclivity.
But when deciding to create a startup in the UAE, it is important to take into account the peculiarities of the state policy regarding the regulation of foreign investment. It should not be forgotten that the country consists of 7 emirates, each of which has a certain autonomy in its regulatory approaches to transactions with foreign investments. It is in light of these developments that it is necessary to engage an experienced specialist who is aware of the legal formalities and peculiarities of regulation of investment activities in the UAE, and based on his experience and knowledge will be able to provide the client with competent legal support of the investment project.
In 2023, foreign direct investment (FDI) inflows in the UAE are significantly influenced by government policies. The Emirates government has accorded paramount importance to attracting foreign capital infusion into the UAE, with a strong emphasis on simplifying business procedures, promoting economic diversification, and investing in logistics infrastructure. Company enrollment in the UAE is highly favored among global investors. One contributing factor is the nation's strategic geographic positioning. Given its advantageous location, the Emirates enjoys direct connectivity to over 250 cities worldwide, establishing it as a pivotal player in global commerce. Furthermore, its extensive shipping network encompasses over 400 cities, further enhancing its prominence in international trade.
The government's endeavors have culminated in a substantial influx of foreign direct investment into the UAE, with the Emirates securing the top position in the region in previous years. Apart from its exemplary port and logistics infrastructure, the UAE lays claim to state-of-the-art digital infrastructure in the region, securing the leading spot in the Arab world and the eighth position worldwide in the Online Services Index (OSI) of the UN's Electronic Government Development Index (EGDI). It is essential to take into account other ranking assessments as well, where the Emirates achieved:
- 1st place in macroeconomic stability rating.
- 2nd place in ICT implementation.
- 3rd place in the world in terms of investment in infrastructure projects and facilities.
- 9th place in the area of contract fulfilment.
Government-sanctioned reform initiatives have bequeathed the realm with a considerable level of investment protection, serving the requisites of considerable global corporations, diminutive and intermediate-sized establishments, and lone investors in equal measure. Notably, the Statute concerning Extraterritorial Direct Investment (Federal Statute No. 19 of 2018) was promulgated. This decree lays out perspicuous explanations, ordinances, incentives, and obligations to elevate the investment ambience and stimulate non-native capital inflow in the UAE.
Following the implementation of the Extraterritorial Direct Investment Statute, the relaxation of impediments on non-native proprietorship for 122 enterprises, especially within the realms of production, agriculture, and amenities, was divulged in 2019. These statutory alterations were subsequently fortified on the 17th of March 2020 via a Cabinet Edict. The administration has further overhauled the realm's Insolvency Statute (Federal Statute No. 9 of 2016), streamlining corporate dissolution procedures in the UAE to harmonize with worldwide benchmarks.
What does the concept of "legal support of investment activity" include?
Whether your goal is to go beyond organic growth of your business, improve ROI or enter a new market, subject matter experts can help you develop a winning investment strategy and achieve your desired results by offering customised advisory solutions for clients tailored to the specific challenges and goals of their business.
Investment project support in the UAE includes:
- Assistance in developing an investment model, taking into account the client's specific objectives, asset structure in order to protect these assets and minimise business risks.
- Support in registering a company in the UAE for investment activities.
- Due diligence of the investment project: preparation of a conclusion on existing and possible risks of the investment project, analysis of their consequences for the business, development of strategies to minimise them.
- Checking reputational factors and reliability of partners.
- Assistance in preparation of necessary investment documentation, development and analysis of investment contracts.
- Support of business licensing processes, registration of intellectual property rights.
- Support in carrying out business activities in the country (minimising risks in relations with law enforcement and regulatory authorities).
- Support of exit from an investment project, closing of legal entities on the territory of the Emirates.
Project due diligence
The due diligence (DD) procedure includes an audit of the investee, assets and parties to the transaction. When concluding a transaction, DD helps to assess potential risks and obtain a high level of protection of the parties' interests. Due diligence is also relevant in case of acquisition of any large objects (for example, real estate). This process encompasses:
- Ascertainment of the possessor of the entity.
- Scrutiny of title documents.
- Confirmation of authorization for object transactions.
- Validation of concurrence from third parties, transaction consent.
- Evaluation of preceding object transactions, scrutiny of their legality.
- Inspection for encumbrances and constraints.
- Confirmation of ongoing or concluded legal disputes.
Commencing an investment stratagem in the United Arab Emirates: How are ventures funded?
The nation's economy is swiftly transitioning from a petroleum-dependent economy to an inventive wisdom-rooted economy. Concerning investment undertakings, alluring financial stipulations are at one's disposal in the Emirates. Project funding has been amassing impetus in recent epochs. This approach to funding extensive investment initiatives in the UAE has engrossed the interest of enterprises across the globe.
Below you will find several financing options that capitalists seeking to start a company in the UAE can consider:
- Self-financing (investor's personal savings can be used to launch a new business).
- Bank loans. Most major banks in the Emirates offer favourable lending terms for startups. There are startup funds available in the country, which should not be ruled out if you are looking for funding for your project.
- Crowdfunding in UAE. This is a debt financing option that allows you to raise funds for your project without the intervention of a financial institution.
- Nurturers and hasteners.
- Venture capital (one of the most common options for obtaining funding for a new business).
Investment Activity in the UAE: Priority Sectors for Starting a Business
The UAE has solidified its status as the economic epicenter of the Arab realm, delivering a propitious economic and commercial milieu. While the Emirates is recognized for offering inducements via fiscal benefits and statutes designed to fortify the private sector, the government is progressively concentrating on furnishing pivotal investment motivations for priority domains and distinct geographic zones. Further details on the incentives associated with registering a corporation in the UAE within particular sectors are encapsulated below.
Exploration and Advancement (R&D) commands the preeminent stance in the government's program as it operates as the cornerstone for the swift proliferation of the nation's financial system. Recently, a multifarious range of undertakings and initiatives have been instigated to buttress R&D, encompassing the revelation of the R&D Governance Doctrine in 2021, which culminated in the formulation of an R&D Directorate. Furthermore, a novel National Standard for Quantifying R&D Expenditure within the Civic Sector has been disseminated, and an Advanced Technology Exploration Council has been established. Hence, enrolling a corporation in the UAE with a concentration on R&D currently offers an exceedingly propitious opportunity.
Through the introduction of the R&D Management Policy and the Research and Development Council, the UAE aspires to augment the efficacy and efficiency of the scientific and technological domain, facilitating the establishment of a knowledge-grounded economy and enticing adept specialists. The policy strives to:
- Institute an adaptable and trustworthy nationwide framework for Research and Development (R&D);
- discern a centralized R&D administration entity and stakeholder accountabilities;
- forge a mechanism to normalize data and quantify the efficiency and influence of R&D on a national scale;
- establish criteria to elevate research, advance the effectiveness of domestic R&D undertakings, and advocate optimal methodologies;
- foster the intellectual prowess of the UAE's populace;
- amplify international competitiveness in prospective sectors;
- construct avenues to strategic markets of importance.
In furtherance of the UAE's endeavors to forge a competitive knowledge-based economy, the authorities have committed substantial resources to fashion a globally preeminent regulatory structure for the founding of Information Technology (IT) and Artificial Intelligence (AI) enterprises and firms. They have also laid the groundwork for constructing the superlative infrastructure conducive to shaping an optimal environment for technological investment, catering to startups, Small and Medium-sized Enterprises (SMEs), and multinational corporations.
Artificial Cognition, commonly referred to as AI, constitutes the imminent paramount upheaval of our era. The Emirati administration's aspiration is to ascend as one of the most avant-garde nations in this context. There is a blueprint in place, aiming that by 2030, a noteworthy 14% of the Gross Domestic Product (GDP) will be derived from sectors associated with AI. In 2017, the UAE unveiled its Artificial Intelligence Strategy, designed to amalgamate this technology into various domains in novel manners, while also ensuring that the government can craft bespoke regulations for these nascent sectors. In the view of the authorities, this endeavor will further allure overseas investors seeking to establish enterprises in the UAE within these pioneering realms.
Within the confines of the Strategy, the administration has instituted several regulatory experimental arenas tailored for firms to trial their wares and commercial ventures. These arenas afford regulators the opportunity to assess their regulatory structure in a controlled milieu, characterized by comparatively lenient regulations. The triumph of these experimental arenas serves as a barometer for the comprehensive investment structure that nourishes the established startup ecosystem in the UAE, encompassing diverse initiatives, accelerators, and nurturing environments.
The United Arab Emirates preserves its position as a trailblazer in financial technology (fintech) throughout the Middle East. This stature is maintained through state policies and, of utmost importance, by the implementation of enticing undertakings on both the mainland and within self-reliant precincts, notably The Dubai Intercontinental Financial Hub (DIFC) and the Abu Dhabi Universal Market (ADGM).
The Emirates magnetizes a multitude of investors who opt to initiate fresh enterprises here for a plethora of reasons, comprising:
- Government undertakings: As a segment of the UAE Vision 2022, the governing body has been unwavering and unwavering in its dedication to metamorphose the realm into a preeminent FinTech luminary.
- Progressive legislation: Throughout the past few years, several efficacious decrees have been issued, bestowing increased perspicuity and assurance concerning the enlistment and control of financial technology undertakings within the UAE. While these statutes necessitate particular financial obligations, they are imperative in inculcating stability and confidence in the fintech field.
- Welcoming talent milieu: The UAE flaunts one of the most enticing immigration protocols in the vicinity, extending a genial reception to exceedingly skilled and imaginative staff.
- Advantageous fiscal ambience: Despite the scheduled introduction of corporate profit assessment in June 2023, the UAE will endure as a foremost choice for businesspersons in the locality, notably for companies generating income beneath AED 375,000, which shall be exempt from such imposts, reinforcing the development of startups and Small and Medium-sized Enterprises (SMEs).
Compounded by the UAE's determination to consolidate its reputation as a leading industrial centre. With the authorities' intentions to increase the industrial sector's contribution to GDP to a quarter by 2025, a significant portion of government resources and a number of initiatives/strategies are designed to directly or indirectly deliver results towards strengthening the industrial and manufacturing sectors across the emirates.
Maritime, transport and logistics sectors
Efficient logistics is the backbone of domestic, regional and international trade and also determines the competitiveness and economic viability of a country. Over the years of improving its logistics infrastructure, efficiency of border control and clearance process, quality of trade and transport infrastructure, competitive prices, and quality of logistics services, the UAE has become one of the popular destinations for the incorporation of international companies. The World Bank, in its Logistics Performance Index, named the UAE as the leading logistics centre in the MENA region.
Knowledge of the intricacies of doing business in the UAE, as well as the intricacies of the legal system, legislation and bureaucracy is an important factor. Our team keeps track of all changes in the legislation of this country and is ready to advise our clients in detail on the regulation of investment activities in the UAE.