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Corporate Law Reform Seen to Enhance Investment Climate |
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08.11.2009 |
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DUBAI -- The UAE business community, corporate consultants and economists greeted the new corporate law amendment scrapping the minimum capital requirement as a key reform with far-reaching positive impact on the nation's business and ?investment climate.
Respondents to an opinion survey conducted by Khaleej Times felt that the move was well-timed as it would revitalise the business sector beset by an economic downturn.
Some voiced hopes that the long-awaited amendment to the law pertaining to 51:49 national-expatriate ownership ratio would also be reformed in due course to ensure better ?investment climate.
Respondents also believe that by reducing the cost of doing business, the move would help enhance the business competitiveness of the country while luring more foreign investment.
Members of the business community said the new rule would help enhance UAE's image as the most investor- friendly and pro-active economy in the region with major thrust on the non-oil related business development.
Dr Nasser Saidi, Chief Economist at Dubai International Financial Centre, said the move, "a very important policy reform, will help the UAE significantly improve its ranking in the World Bank's 'Ease of Doing Business Report' and encourage more business start ups while boosting domestic and foreign investment. The issue of 51-49 ownership is being seriously discussed and hopefully we will see it amended in future to make the local investment climate better."
Yusuffali M.A., Managing Director of EMKE Group and Board Member of Abu Dhabi Chamber of Commerce & Industry, said the amendment was a timely decision when the economy was "really looking forward to some kind of stimulus. This decree will act like a catalyst for further enhancing the role of Small and medium enterprises sector in the economic development of the UAE. No doubt this will lure in more foreign investors as well as encourage the youth to come forward and realise their dreams."
Paras Shahdadpuri, Chairman of Nikai Group of Companies and President of Indian Business and Professional Council, Dubai, said the move would encourage small and medium level entrepreneurs to start new ventures without the hassles of producing a bank deposit of Dh300,000 or Dh150,000 as required in various emirates of the UAE.
Hamad Al Awadhi, Director on the Board of Abu Dhabi Chamber of Commerce and Industry, said that the amendment was part of a move undertaken to update rules, regulations and laws to reform the economy.
Peter Michelmore, Chairman of British Business Group, Abu Dhabi, welcomed the amendment as encouraging Emirati engagement in business opportunities and as a means of reducing the cost of setting up business.
"While a possible reduction in registration time will be welcome, the removal of the minimum capital requirement is unlikely to boost inward investors' confidence," ?Michelmore said.
Dr S. Qaiser Anis, Managing Director of Alliott Management Consulting, said huge borrowing from the banks would become minimal considering the minimum amount required to establish the company. "It is a good step for debt equity ratio from the point of view of investors and the banks," he said.
Hayden Smith, a lawyer with Trowers & Hamlins in Abu Dhabi, said the new corporate rule would encourage more businesses to become limited liability companies. "But this change is unlikely to affect larger foreign businesses as they will be making a substantial investment anyway."
James Mathew, Managing Director the Dubai-based Horwath MAK business consultancy said the much-awaited Company Law amendment has come through.
"However, the expatriate investor's share of capital has still been kept at 49 per cent. There are reasonable grounds to believe that the share ownership of the expatriates will be raised to at least 70 per cent and for certain category of companies to 100 per cent. Since the liability of a shareholder is limited to the extent of paid up capital, the reduction in share capital to will minimise the commitment of the investors."
Ali Al Rahma, Chairman of The Gate Investment LLC, said the UAE always embraced change, and Monday's decree is a tribute to the growth and vision of the leadership of the UAE. "While this law is highly applicable for small and medium businesses rather than larger enterprises, it will certainly help encourage greater investment into the UAE. Furthermore, it will give budding entrepreneurs, particularly the young Emirati nationals, an opportunity to start new ventures without the need to invest significant start-up capital."
Kamal Vachani, Director, Al Maya Group, said the amendment scrapping the capital requirements for establishing new companies was encouraging news for the business community. "The move gives investors more confidence in investing in the UAE which already has good investment environment. The federal government's stance to boost the investment environment and leverage the UAE's standing as a highly competitive economy is commendable."
Jitendra Gianchandani, Managing Director, Jitendra Business Consultants, said UAE's capital requirement, very high by global standard, used to put off many ventures. "The new rule is really welcome move in encouraging new business initiatives. "
"As consultants specialising in company formation, we used to get 200 enquiries in a week. But these numbers had radically declined owing to the economic slowdown. Besides, clients started complaining about UAE's high capital requirements for would-be partners. In many parts of the world, capital requirement by partners of start-up companies ranges from as little as Dh25,000 to Dh75,000," ?he said.
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Source:www.zawya.com |
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