How UAE’s Resolution No. 138 Enhances Governance of Foreign Corporate Entities
The UAE Ministry of Economy issued Resolution No. 138 of 2024 on Controls and Procedures for Registering Branches and Representative Offices of Foreign Companies (“Resolution”). The Resolution outlines the regulatory framework for foreign companies wishing to establish a presence in the UAE (“the State”) through branches or representative offices.
The Resolution details the necessary documentation and procedural steps for registering a branch or representative office in the State. It specifies the legal obligations that foreign entities must adhere to, including compliance with local laws, administrative procedures involved, steps of submitting applications, application review process, and how decisions are communicated.
The Ministry will create a reliable register for foreign companies' branches and representative offices to ensure accurate and comprehensive documentation.
Foreign companies' branches and representative offices that wish to practice in the state must apply for an initial approval certificate from the Ministry of Economy within a month of receiving their license from the competent authority. Following the approval, the branch or representative office must be officially registered in a designated register.
The initial approval certificate should include certain key documents, such as reservation of trade name, an authenticated certificate from the foreign company indicating the official name as registered in its home country, the nature of the business or activities the company is engaged in, details of the shareholders of the foreign company, date of incorporation of the foreign company, the amount of capital invested in the company and resolution from the foreign company’s board or relevant governing body approving the establishment of the branch or representative office in the state. This document should state that the company authorizes the creation of the branch or office.
According to the Resolution, the registration-related applications must be submitted via the Ministry of Economy’s e-platform. The application can be for registering a foreign company or amending, renewing of suspending, or deleting the registration. The application supporting documents should be translated into Arabic if they are in English and must be duly authenticated by the competent authority in the foreign company's home country.
However, a foreign company's branch or representative office that fails to renew its registration for two consecutive years will be deregistered.
The Resolution also provides that if a branch office violates relevant rules, the Ministry will issue a notice detailing the specific violation, the associated fine, and a deadline for rectifying the violation within 3 months. If the violation is not rectified within the given deadline, the Ministry will proceed to delete the branch office's registration. This procedure ensures that the branch office has a clear opportunity to address and correct any issues before facing deregistration.
Further, if the foreign company's branch or representative office wishes to cease its activity in the State, an application for deregistration must be submitted to the Ministry.
The foreign company's branch or representative office must appoint an auditor qualified and authorized to conduct audits within the State. This auditor shall be appointed for a term of one renewable year.
Furthermore, the auditor must report to the Ministry any violations or irregularities it might encounter that could constitute a criminal offense while auditing the accounts of the foreign branch.
It is worth mentioning that this Resolution has canceled Resolution No. 377 of 2010 on Approving the Manual of Licensing Procedures for Branches and Offices of Companies Incorporated Abroad and in Free Zones in the State and any other legislation that would contradict this Resolution.