UAE's Ministry of Economy introduces a new commercial agency law
The new law was introduced to offer a legislative framework for companies to promote new economic models.
The United Arab Emirates (UAE) Ministry of Economy has introduced a new commercial agency law called Federal Law No. (3) of 2022 to help companies in the commercial agencies sector. This new law has replaced an earlier 40-year-old legislation and will be effective from June 16.
Abdulla Al Saleh, Under-Secretary of the Foreign Trade and Industry at the UAE Ministry of Economy, said that projects under the commercial agencies sector have helped improve the country's economy over the past years. The new law would help accelerate the sector's growth by promoting the diversification of activities, improving their economic performance, and increasing their contribution to the country's national GDP, he explained.
In the UAE, a commercial agency is hired by an international company to distribute, offer, or negotiate the sale or purchase of goods on its behalf within the UAE market usually for a commision or profit.
Further, the law looks to increase the participation of UAE nationals as commercial agents and encourages them to establish new and innovative commercial and investment projects. It will also look into expanding the flexibility of the national economy and enhancing the country's international competitiveness.
Under the new law, public joint-stock companies with at least 51% of national capital contribution can act as commercial agents. However, the business of all kinds of commercial agencies will be exclusive to only UAE nationals. This will help family-owned companies the new opportunities and fields and support their transformation into public joint-stock companies.
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