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Do landlords in the UAE have to decrease or postpone rental payments due to COVID-19? And can tenants terminate tenancy contracts immediately without paying penalty?

These are the questions that will be asked a lot more of in the coming days as the COVID-19 situation impacts on the economy and, by extension, its residents.

Article 249 of the Civil Code provides that if exceptional circumstances of a public nature that could not have been foreseen occur — i.e. a force majeure — as a result of which performance of a contract becomes oppressive for a party, but not necessarily impossible, the judge has discretion to reduce the obligation to a reasonable level.

The tenant must go to court if he seeks to obtain relief under Article 249.

If your income has been reduced due to COVID-19 and the landlord does not want to act with fair solidarity, then you can ask the court to find the fair level of rental relief (decrease or postponement) and let it be legally ordered to the landlord.

Other provisos kick in as well

Article 273 (1) stipulates that if a force majeure event makes a contract impossible, all contractual obligations will cease, and the contract will be automatically terminated.

Article 273 (2) stipulates that in cases where the force majeure event makes only part of the obligations impossible to perform, only that part of the contract will be cancelled. The remainder will continue in effect.

It, however, also permits the tenant to cancel the entire contract on giving notice to the landlord.

If a contract is cancelled under Article 273 (1) or 273 (2), the landlord and tenant are to be restored to the position they were in before they entered into the contract. If that is not possible, damages may be awarded by way of compensation to a party that has suffered a loss as a result of the inability to unwind the contract.

The Civil Code does not exactly specify any definition of what “force majeure” is. The court will decide whether the COVID-19 classifies as one in the context of the specific contract.

In general there are two factors the court looks at while making its evaluation — is there a contract in place and whether the extenuating circumstances made it impossible to fulfill the contract.

What’s pertinent

If your income as a tenant dropped to a level that makes it impossible to pay the rent, you may terminate the contract without having have to pay the penalty on giving a notice to the landlord. And you should pay only pro-rata until the day you vacated the property.

In case the landlord disagrees then he may raise the matter to the court, which will decide whether the tenant’s situation qualifies as force majeure. If landlords do apply penalties for terminating contract regardless of being given the notice by tenant referring to the force majeure, the tenant can forward the matter to the court, which will evaluate the situation and decide whether force majeure is applicable or not.

The following rule of thumb can be used: in case the income of the tenant dropped to a level where he is unable to pay the rent due to COVID-19, this will justify the impossibility condition stipulated by the law. And therefore, the tenancy contract can be terminated immediately without any applicable penalty.

1. Do landlords have to decrease or postpone rents due to COVID-19?

No. But upon tenant’s request (whose income is negatively affected by COVID-19) to the court, the rent relief will be ordered by the court under article 249.

2. Can tenants terminate tenancy contracts without paying penalty?

Yes, in case tenants have been impacted to the level that makes it impossible to pay for rent. For instance, if tenant’s income is smaller than costs in a given month and he cannot pay the rent, the rental contract can be terminated without further obligation.

3. What should landlords do?

Negotiate fair rent relief with tenants if they ask for it. If the tenants are affected, they can walk away from the contract on the spot and leave you without rental income or they can ask the court to provide a fair relief.

In both cases the tenants will obtain a relief which you will not control the financial impact of. To control the conditions of the relief, the best approach is to negotiate and come to fair conditions. For example, a fair relief may constitute an agreement that for the months through which the income of the tenant is affected the rent will be decreased proportionally.

For instance, if a commercial tenant’s revenues decreased by 50 per cent year-on-year due to COVID-19, agree to a 50 per cent rent reduction for three months and visit the agreement after three months or sooner depending on the situation’s development.

Under such an approach you will not risk losing 100 per cent of your rental income for several months and can agree on terms which are in your control catering to your cash needs

4. What should tenants do?

Negotiate with landlords a fair rental relief if your income dropped temporarily, or terminate your tenancy contract in case the loss of income is permanent due to the pandemic. Present the landlord a fair proposal supported by documents you are willing to share year-on-year comparison of revenues to showcase the percentage drop in sales, seeking a proportional relief on rent from the landlords.

For instance, three months with option to revisit the agreement if the situation gets better or takes longer by both parties. In case you do not reach an agreement, approach the court to obtain the relief from the judge or you can terminate the contract without paying any penalty to the landlord.

Ground reality

If tenants cannot pay their rental obligation due to COVID-19 they can terminate their tenancy contracts without having have to pay a penalty or they can ask for a fair relief from the obligations of the tenancy contract the court.

It is better for landlords to negotiate a fair relief with tenants in order to avoid loss of rent for multiple months or to obtain a court order for relief landlords will not have a control over and which may not fit their cash flow needs.

Source : https://gulfnews.com/business/analysis/uae-negotiating-rental-contracts-in-times-of-covid-19-1.70803440

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Dubai is one of the Middle East’s most affluent and cosmopolitan cities, mixing the characteristics of both the East and the West. It is one of the most attractive business destinations in the world.

LLC Company Formation in Dubai

One way of setting up a business in Dubai is through a Limited Liability Company or LLC. An LLC is the most prevalent company type in UAE. It can be created by a minimum of 2 shareholders and a maximum of 50 shareholders, whose liability is limited to their business capital shares.

Many companies opt for an LLC with foreign partners, because this is the only choice that gives maximum legal ownership to an expatriate for a local business, i.e. 49 percent. Since it is compulsory to have a UAE national as a partner in the LLC (51 percent shareholding), the prospective investor has the option of choosing the one UAE national (sponsor) as a partner in the company.

LLC is versatile and provisions for mutual profit sharing are feasible, too. It gives the international investor a huge edge as a local partner has 51 per cent legal equity.

In case one in interested in LLC setup in Dubai, Shaura business set up Delhi Branch provides all the necessary assistance from document registration to finding investor friendly zone.

Setting up LLC company Dubai

The following steps mentioned below are required to set up LLC in Dubai.-

• Registering the company with the Department of Economic Development.
• Drafting and notarizing the company’s Memorandum and Articles of Association.
• Submitting all the required documents and business license application form with the Department of Economic Development.
• Registering with the Dubai Commercial Register.
• Upon incorporation, registering one’s employees with the Ministry of Labor and General Authority for Pension and Social Security.

Dubai LLC Formation Cost

• Commercial license fees -> AED700

• General trading activity Fees ->AED15000

• Non-Arabic trade name fess ->AED3000

• Market Fees ->AED2500

• Name board fees ->AED350

• Service fees ->AED400

• Partner accommodation fess ->AED1000

• Chamber of commerce fees ->AED1200

• Economy ministry fees ->AED3000

• Local fees->AED200

• Commercial license fees ->AED150

Above are some the most commonly fees to be paid, if anyone wishes to set up a LLC in Dubai. The total approx cost for LLC Company set up in Dubai would come around to be AED 28000.

LLC registration Dubai

Compliance is made with the DED by filing the application form for the trade name and the application form for the warrant. If one or both members are corporations, then the LLC Subscription is approved by a copy of the Certificate of Incorporation along with an Association Memorandum and a Board of Directors resolution. It will also be appropriate to have a Power of Attorney authorizing a person to act on behalf of the shareholders having formed the LLC.

Furthermore, copies of shareholders ‘ passports and suggested general manager and directors. The DED will then issue an initial approval to this effect. Supplementary approvals may be required depending on the activities proposed by the LLC. The 2011 Licensing Law officially referred to as the “Law of the Organization of Economic Activities Practice in the Dubai Emirate” simplified the licensing process where the DED obtains approvals from the ministries and/or departments needed.

Once the initial approval and approvals are received from the appropriate ministries and/or agencies, the Power of Attorney holder must sign a LLC formation contract before a notary. Once the contract is fully completed the above mentioned documents need to be obtained for LLC registration in Dubai.

Offshore company in Dubai

A Dubai offshore company is one of the popular company types in UAE as well as internationally. It enjoys a white list status, which means that it does not fall under any official FAFT ‘tax haven black lists’. As such an off shore company in Dubai will enjoy an recognized and accepted status at the international level.

Dubai offshore company is a tax free UAE registered company although a non UAE resident company which is set in UAE economic zone. Dubai offshore company can be beneficial to an investor, as it has many advantages like tax free status, security, confidentiality and unique life style advantages.

LLC Company in Sharjah

Sharjah allows seven types of company formation one of them being LLC. Setting up LLC in sharjah is a wise decision as it comes with a number of advantages. Being a transportation hub due to its geographical location, it a cargo hub both for the Middle East and North Africa. As such it holds a strategic trading location in gulf. LLC Company in sharjah is the most common company formation. The rules for registration follow the same process to that of Dubai. Likewise LLC in sharjah must have at least two partners but no more than fifty.

LLC Company in Ajman

Based on its area Ajman is the smallest Emirate. In addition to the oil reserves, economy of the city thrives on its fishing, agriculture, and trade. Ajman provides an environment that is investor friendly. LLC company formation in Ajman is the preferred by investors compared to other business setups. The process for the setup is same requiring 2 partners with local partner who will have 51% share. Ajman also provides investor friendly laws.

LLC Company in Abu Dhabi

LLC Company Formation Abu Dhabi is the most widely adopted company for businesses seeking to enter into business outside the UAE Free Zone. A minimum of 51 percent of a limited liability company’s total shareholding must be purchased by a UAE national or a company wholly owned by UAE nationals. Some other exceptions and rules apply to some industries which differ from Emirates to Emirates. LLC Company establishment in Abu Dhabi has numerous advantages, Investor is shareholder in the company 100% tax-free, No definite minimum capital requirements, and many other benefits.

For more information on these services, please contact us:

The E-trader license in Dubai was introduced by the Department of Economic Development (DED) and is aimed at home entrepreneurs doing business over social media. The E-Trader license will make it easier for individuals or single-owned businesses to sell their services and products on social media. It will also bolster customers’ confidence when they’re shopping online. The announcement of the E-trade license by DED followed in the wake of the efforts to crackdown on counterfeit and fake products being sold on social media platforms like Instagram. The license aims to regulate the sale of products and services conducted through social media in Dubai.

DO YOU NEED THE E-TRADER LICENCE IN DUBAI?

If you are an individual who promotes or sells products and services through your social media accounts or a personal website, then you do need an E-trader license in Dubai. For instance, this home business license would apply to stay-at-home mothers promoting handmade products or photography services and selling on Instagram in Dubai.

Home entrepreneurs who don’t have or require a physical office space are eligible to apply for the E-trade license in Dubai, as it does not require you to submit any Ejari documents. It’s ideal for single-owner home-based businesses that don’t require a local partner and freelancers. UAE and GCC Nationals and expats of certain other nationalities can apply for the E-trader license in Dubai, with the condition that the individual is based in Dubai and is over the age of 21 years.

WHAT CAN YOU DO WITH THE E-TRADER LICENSE IN DUBAI?

With this license, individuals can legally promote and sell products and services through their social media accounts including Instagram, Facebook and more, or on a personal website. You can also feature their products and services on online marketplaces such as Souq.com. With this home business license in Dubai, individuals and single-owned businesses can legally participate in and reach out to customers at exhibitions and conferences. It will also protect your trade name and any other intellectual property. An E-trader license is strictly for a single-owner home-based business in Dubai or freelancer. Individuals with this home business license in Dubai cannot open a physical shop or issue visas.

With the E-trade license in Dubai, you can sell your products and services within the emirate. Should you want to sell in other emirates, you must approach the respective Department of Economic Development for that emirate and ask for approval. You may have to obtain another E-trader license to sell in that emirate.

It’s important to note there are conditions on what you can sell on social media with an E-trader license in Dubai. UAE and GCC National entrepreneurs with the license can conduct commercial activity (i.e. sell physical products and goods) and professional activity (i.e. sell professional services) on their social media accounts. For all other expats, the conditions for what individuals can sell and promote on social media depends on nationality. On a general note, non-GCC expats can sell professional services through their social media, but not physical products. This could include maintenance, repair, event management and photography services. You can find out more about which nationalities are eligible for the license and what you can sell through social media when you register for the license.

While food products are most often not allowed under this license. The E-trader license Dubai fees currently is AED 1,070 and the license must be renewed every year.

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Opening a bank account in Dubai for the companies who are located outside of Dubai is not a hefty process anymore. The economic and financial stability of United Arab Emirates is due to its highly regulated banking sector. UAE banks are well known for providing a high level of customer support and compliance with modern banking requirements. However, there are certain conditions which have to be met before you can open a bank account in Dubai. Firstly, if an individual is the owner or part of an onshore or an offshore company then he has the option to open a corporate account for banking transactions of his company. If a person is resident or non-resident, then he has the option to open a private bank account.

For offshore banking, there are not many restrictions placed by UAE financial Institutions. There are many advantages for an offshore bank account in Dubai as compared to other countries. These advantages include,

Complete privacy of client’s information. No client information is disclosed by the bank.

Complete tax exemption. Dubai offers zero tax charges for offshore companies. Every client has his own needs to set an offshore account whether be it to attain secrecy or for conducting international business or obtaining access to those facilities given by foreign bank that are not available locally. Tax optimization is one of the benefits.

The main requirements to open an offshore bank account are;

Presence of company shareholder in the application process is required for the creation of an offshore account. If this cannot be possible then there are two ways, either a representative of a bank will meet a client in his native country or the client will visit the bank’s foreign branch in another country for personal identity confirmation.

Following documents will be required by the bank if you want to start offshore banking,

• Shareholder’s passport copy with the stamp of entry in the United Arab Emirates.

• Copy of main pages of MD passport, in case he/she is not a shareholder.

Company License

Some banks may also require additional documents such as CV of a shareholder, existing contracts, reference letter from business partners, business plan, Memorandum and Articles, the disclosure of the source of funds, Company structure tree diagram on Company Letterhead, Certificate of good standing etc. If the account is to be opened in a Shareholder’s Company name, then the shareholding company’s documents notarized by court and MOFA are also required.

For offshore accounts, it should be considered that banks have “know your customer” policy that is to identify individual creating an account and if necessary to identify beneficial owner. The Central bank has directed the banks to perform its client’s due diligence procedures for offshore accounts. This is why banks will further collect information regarding client’s primary business area, a total number of deposits, revenues, main suppliers, customers etc. Banks adhere to strict and international rules and regulations to identify money of criminal origin.

The opening of an offshore account is guaranteed if you have a correctly filled application form and provided all the documents that were required by the bank.

The process of opening an account may take from few days to three weeks usually but for offshore accounts, it may take more time due to bank’s financial compliance and management approval.

The fees will be competitive and interest rates will be high.

Bank account holders have the option to utilize online banking. This is beneficial for those who cannot go to the bank for every single transaction.

The process of opening an offshore bank account in Dubai varies from bank to bank. This is because each bank has its own policies and requirements that you will have to cater to. If you are an entrepreneur looking to set up a new business in Dubai, a process of creation of an offshore account can be complex and time-consuming.

The BIE will now work with member states and organisers of Expo 2020 Dubai to consider revising the dates.

The Expo 2020 steering committee, comprising officials from the UAE and foreign countries participating in the event, have recommend to the International Bureau of Exhibitions, which is the intergovernmental organizsation responsible for the International Expo, to study the issue of postponing the opening of Expo 2020 for a year within the legal framework.

The BIE will now work with member states and organisers of Expo 2020 Dubai to consider revising the dates.

The General Assembly of the International Bureau of Exhibitions alone has the right to take the final decision on the postponement.

Article 28 of the agreement of the International Bureau of Exhibitions stipulates that any amendment to the dates necessitates a vote of Member States by a two-thirds majority.

Expo 2020 Organisers reaffirmed the UAE’s commitment to working hand in hand with its international partners to deliver a World Expo which holds true to its founding purpose: providing an inclusive global platform to address shared challenges, and seek solutions in the sprit of international cooperation and global solidarity. The global platform that Expo 2020 will provide will be needed more than ever.

Elaborating on the decision, Reem Al Hashimy, UAE Minister of State for International Cooperation and Director General, Expo 2020 Dubai, said: “The global situation is fast moving, and remains unpredictable. Over the last several weeks, we have been consulting with key UAE and international stakeholders to review the ongoing impact of COVID-19 on our plans and preparations for Expo 2020 Dubai.

“While they remain firmly committed to Expo 2020, many countries have been significantly impacted by COVID-19 and they have therefore expressed a need to postpone the opening of Expo 2020 Dubai by one year, to enable them to overcome this challenge. The UAE and Expo 2020 Dubai have listened. And in the spirit of solidarity and unity, we supported the proposal to explore a one year postponement at today’s Steering Committee meeting. We look forward to welcoming the world, which we are certain will only come out of this pressing challenge stronger, and more resilient than it ever was.”

“We will follow due BIE processes on making the decision to delay Expo 2020. We remain firm in our collective commitment to deliver an Expo that’s true to its time and to our shared, urgent priorities. We believe that in light of this global challenge, humanity needs to come together to remember what unites us. That remains the collective ambition of all those involved in this Expo,” she added.

Dimitri S. Kerkentzes, Secretary General of the Bureau International des Expositions (BIE), welcomed the Expo 2020 organisers’ approach and the Steering Committee’s recommendations. He said: “The World is facing extraordinary and unprecedented circumstances and we all expect the challenges to continue in the months to come. Today’s agreement by the organiser and the members of Expo 2020 Dubai’s Steering Committee to explore options for a one-year delay to the opening of the World Expo is welcome. In the spirit and in accordance with the Paris Convention of 1928, any decision on the World Expo needs to be collaborative. and agreed upon collectively in a vote of the countries that form the BIE. We will move forward in supervising the process to follow in accordance with the rules and regulations of the BIE convention.”

“I am confident that we will collectively overcome the challenges caused by this global crisis. The UAE’s decision to support a one year postponement demonstrates pragmatism, openness, and commitment to delivering an Expo that lives up to our shared ambition. We retain full confidence in the UAE’s ability to host a World Expo that inspires and delights millions, when the time is right.”

Pyung-oh Kwon, President and CEO of the Korea Trade-Investment Promotion Agency (KOTRA) and Commissioner General of the Republic of Korea at Expo 2020 Dubai, said: “It was heartening to see all the participants of Expo 2020 coming together with a strong message of solidarity and support. World Expos are a place where the world comes together to showcase the best of humanity, and at what is a difficult time in many places, it is more important than ever that this Expo comes to life in the best possible way and at an appropriate time. We are thankful for the proactive approach of the organisers and their full support.”

Erik Linquier, Commissioner General of France at Expo 2020 Dubai, said: “We applaud the Expo 2020 organisers and the UAE for their openness, dynamic engagement, and support to participants in these extraordinary circumstances we are all facing. Gathering humanity in one place to celebrate all the things that unite us is something that will be more necessary than ever once this pandemic passes. We remain fully committed to playing our part in making this a truly memorable World Expo that can be experienced and enjoyed by anyone, and so we fully agree with today’s collective decision to explore the best options for our Expo family.”

Dr Malick Diop, Commissioner General of Senegal at Expo 2020 Dubai, said: “Around the world we can see the best of humankind as people work together to save lives and contain this virus. Expos are about the best of humanity and we look forward to coming together in Dubai when the conditions are right for what we confidently expect will be an incredible global event.”

Dody Edward, Commissioner General of Indonesia at Expo 2020 Dubai said: “Expos are a place where the world comes together. After a year shaped by isolation and distancing, imagine the appetite for human contact and collaboration in 2021. Indonesia is hopeful the postponement will be passed by the BIE General Assembly and we can all look towards a brighter 2021.”

Justin McGowan, Commissioner General of Australia at Expo 2020 Dubai, said: “If the BIE General Assembly decides to postpone it gives us another year to produce an even more inspiring World Expo. In a year’s time, the world will be a very different place and Expo will be an opportunity to highlight our united resilience and vision for the future. At the moment our collective energy needs to be directed elsewhere.”

Expo 2020 Dubai organisers will continue to assess the situation and consult closely with all stakeholders in Dubai, the UAE and internationally.

News Source & Coutesy : https://www.khaleejtimes.com/coronavirus-outbreak/covid-19-expo-2020-dubai-seeks-a-years-delay