The final Law Update of 2022 is here, and it’s packed full of articles. The double edition features two focus areas, first is a spotlight on Energy and Resources and second we feature a collection of articles on Transport and Logistics. The developments occurring in these sectors in the MENA region are unprecedented and our lawyers cover vast themes for you.
The Energy and Resources focus features topics such as diversifying energy resources, solar PV, mining in the Middle East, renewable energy and green hydrogen. From a transport perspective, we draw attention to the Bahrain metro project, discuss the challenges and remedies associated with the repossession of an aircraft, and there is advice on what to consider should a party vary the terms of a shipping contract.
This edition navigates you through updates from across jurisdictions such as, Oman, Jordan, Saudi Arabia, Egypt, Iraq, Qatar, and the UAE. Each article is timely and provides insights into legal issues and cases that are affecting these sectors across the region.Read the full edition
On 18 January 2020 it was announced that the United Arab Emirates (UAE) Cabinet approved certain proposed amendments to Federal Law No. 18 of 1981, known as the “Agency Law”, that regulates commercial agency and distribution agreements within the UAE.
Under the existing Agency Law, UAE companies wishing to operate a commercial agency as part or all of its business must be wholly owned by UAE nationals to qualify for registration at the UAE Ministry of Economy. Many of those companies which are registered under the Agency Law are a part of the business portfolio of local UAE family businesses.
This acts as a natural impediment to such local family businesses registered under the Agency Law seeking an initial public offering (IPO) because any offering would have to be restricted to UAE nationals only to continue to comply with the 100% UAE ownership requirement under the Agency Law.
Our understanding is that the proposed amendments to the Agency Law will allow registered companies under the Agency Law to become public joint stock companies, enabling them to further grow while ensuring sustainability for future generations. The draft law is not yet available and so it is difficult to tell if there will be specific provisions that relax the local ownership requirements but the fact that the UAE Cabinet has stated that family-owned companies will be given the opportunity to turn into public joint stock companies demonstrates a clear commitment to encourage such companies to come to market. The specific changes to the Agency Law that would allow this are yet to be seen. The UAE Cabinet further stated that it wished to encourage UAE nationals to invest in public shareholding companies while protecting their interests. This gives optimism to both potential issuers and investors.
Whilst the conditions required to allow family businesses with commercial agency portfolios to convert to a public joint stock company are not yet available, it is undeniable that the proposed amendments will significantly boost the appetite of such family-owned businesses to join the UAE’s financial markets. This constitutes a landmark development in the UAE legal field and, in particular, for IPOs.
This major step adds to the consistent efforts made previously by UAE legislators to boost the local IPO market and such enhancements were embedded in the new federal law on commercial companies, the Federal Law No (2) of 2015 (the “CCL”), mainly:
Overall, it is believed that the amendments to the Agency Law as publicized by the UAE Government constitute a landmark step towards encouraging local IPOs. By easing existing restrictions, the appetite of local companies to access the financial markets can only increase. This not only benefits local businesses, but will also positively boost the trading activity of the local financial markets.