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null Ministry of Economy reviews new Commercial Transactions Law and its role in supporting & developing UAE’s business environment

12 Jan 2023

Ministry of Economy reviews new Commercial Transactions Law and its role in supporting & developing UAE’s business environment


H.E. Al Saleh: The new law forms the basis of commercial legislation, through which we aim to further enhance the competitiveness of the economy and stimulate investment



 The Ministry of Economy (MoE) held a media briefing today (Thursday, January 12, 2023), to introduce the Federal Decree Law No. 50 of 2022 on Commercial Transactions in the UAE. The session was led by H.E. Abdullah Al Saleh, Undersecretary of the Ministry of Economy, and witnessed the participation of H.E. Ibrahim Al Zaabi, Assistant Governor of the UAE Central Bank for Monetary Policy and Financial Stability; and H.E. Dr. Maryam Al Suwaidi, CEO of the Securities and Commodities Authority (SCA).

Addressing the media, H.E. Al Saleh said that the development of the business sector is a strategic goal for the UAE government and therefore, ensuring a legislative environment that stimulates the sector’s growth is on top of its priorities.

H.E. Al Saleh explained: “The issuance of this new law, developed by the Ministry in cooperation with its partners, replaces the previous legislation that remained in effect for nearly 30 years, and forms part of the comprehensive legislative reform undertaken by the UAE government. The law aims to advance the transition to the new economic model and impart increased levels of flexibility and competitiveness to the UAE’s business climate. These developments will help us address the demands of the future in a way that contributes to achieving the objectives of the 50 and the determinants of the UAE Centennial 2071.”

In addition, H.E. Al Saleh confirmed that the Federal Decree-Law on Commercial Transactions is a new milestone in the development of the legislative system to protect and develop the business environment in the country. He then pointed out that the law will facilitate the conduct of business in the country, facilitate commercial transactions and contracts, enhance their efficiency, reduce the cost of doing business, and enhance commercial stability. Besides, it establishes a dynamic and fertile investment environment that encourages domestic and foreign investment flows, boosts investor confidence in the UAE's business climate, and attracts investments. This in turn will contribute to increasing the number of companies, business establishments, traders, investors and entrepreneurs in the country’s markets.

Furthermore, the Undersecretary pointed out that the law supports the UAE’s commercial interests and enhances compliance with the demands of global trade, thus reinforcing the UAE’s position on the global trade landscape. It helps keep up with international best practices followed in the field of commercial transactions while also ensuring the transparency of these practices. H.E. Al Saleh added that the law is capable of contributing to raising the UAE’s rankings on relevant economic competitiveness indices such as the Global Competitiveness Report and the Ease of Doing Business Report, as well as accelerating digital transformation of the UAE’s business sector. Moreover, it strengthens the UAE's position as a hub for business activities in the fields of technology, innovation, and new economy.

During the briefing session, H.E. Al Saleh highlighted the most prominent provisions and outputs of the new law that confirm the proactive approach of the UAE. These are as follows:

  • With regard to the part related to commercial transactions:
  • Defines the general axes of commercial business as opposed to the specialized commercial federal laws that establish the detailed provisions that apply in this regard, in accordance with the nature of the activities and the businesses regulating them.
  • Allows new age groups to practice business as it reduces the age of legal capacity from 21 to 18 (Gregorian years) to practice business. This will encourage youth participation in the business sector.
  • Enhances opportunities for women to participate in economic and commercial activities, thus enabling them to be major partners in the sustainable economic and social development of the UAE.

The Undersecretary explained that the Decree-Law targets a large segment of society, traders, investors, owners of foreign companies, owners of commercial projects and companies, banks and financial institutions, and dealers in commercial papers such as checks within the UAE, and contractors who take up commercial contracts such as transportation and storage activities. He underlined that the law establishes a legal reference that is the first of its kind in the region, pointing out that the UAE is one of the first countries to develop legislation to govern commercial activities that use modern technology, which is a move that supports the country’s aspirations to transition to the new economy. The law:

  • Introduces the virtual business system, the commercial store, and commercial transactions through modern technology and those conducted via virtual means, in addition to those presented in traditional ways.
  • Considers the delivery of services and practice of business activities related to virtual assets as virtual businesses, and the Cabinet shall issue legislation regulating virtual assets and their providers.
  • Gives authenticity to virtual businesses so that the same provisions apply to similar ones presented in a real manner.
  • Legitimizes and authenticates real and virtual commercial books.
  • Allows sale of movables instead of used movables by public auction and makes bids available through a licensed online platform or through various modern technology means.

H.E. Al Saleh indicated that the law also features the addition of an article on some global sales. The article allows the parties to agree on the validity of the rules regulating international commercial sales issued by the International Chamber of Commerce, instead of the texts contained in the law.

He indicated that the provisions of the law are in line with the UAE Digital Government Strategy, the National Policy for Quality of Digital Life, and the UAE’s Fourth Industrial Revolution (4IR) Strategy, thus strengthening the position of the UAE as a global hub for 4IR tools. It also aligns with the export development policy as it provides a fertile environment for the growth and expansion of national goods and commodities in global markets. Moreover, it is also in alignment with the National Strategy for Wellbeing 2031, and the National Food Security Strategy 2051.

The Undersecretary of the Ministry of Economy concluded the speech by adding that the law marks an accelerated shift towards establishing a legislative structure capable of attracting more domestic and foreign investments; driving economic diversification; providing the best services to consumers; and increasing job opportunities in the country. which contributes to raising the classification of the UAE on competitiveness economic indicators such as the Global Competitiveness Report and the Ease of Doing Business Report, as well as accelerating digital transformation in the economy and strengthening the UAE’s position as a center for business activities in the areas of technology, innovation, and the digital and new economy.

H.E. Ibrahim Al Zaabi, Assistant Governor of the UAE Central Bank for Monetary Policy and Financial Stability, indicated that the law has created a legal reference for commercial transactions for banking institutions. This could help stimulate investment flows and give businesses a broader margin for growth and competition, which will enhance the flexibility of the national economy and support its competitiveness.

The law has the potential to achieve these goals as it:

  •   Reduces the maximum interest rate on a commercial loan, if not stipulated in the contract, to 9 per cent instead of 12 per cent, and prohibits compound interest. This will enhance the investment environment in the country.
  • Obligates banks to obtain sufficient insurance or guarantees in return for the loans they provide in a first-of-its-kind precedent, contrary to the abolished law’s permissibility of obtaining appropriate guarantees in exchange for loans. Thus this provision of the new law is integrated and consistent with the updated text by Central Bank Act (No. 121 bis).
  • Reduces the decline of entrepreneurs and individual institutions as it prevents overburdening them with installments that are disproportionate to their income levels and increases their ability to pay back. This enhances the effectiveness of the Central Bank's actions regarding the regulation of facilities granted to persons and the reduction of the decline rate among clients.
  • Approves the UCP issued by the International Chamber of Commerce and considers them as part of the special system for documentary credits in the country.


Furthermore, H.E. Al Zaabi emphasized that the law supports Islamic banking in the country, thus making it one of the key drivers of growth and enhancing the leadership of the UAE on the Islamic economy map, by:


  • Introducing a chapter on commercial transactions for Islamic banking institutions as the first commercial codification of Islamic financial transactions to regulate contractual relations between their parties, enhance the stability of their transactions, protect their clients, and regulate Islamic business transactions through legislative means and not within an agreement governed by fatwas and provisions issued by specialized agencies.
  •  Commercial transactions, in addition to any transaction under which any applicable legislation is subject to Islamic Sharia, shall be subject to Islamic Sharia as long as they are conducted through an Islamic financial institution.
  • Introducing special provisions for certain types of contracts and obligations to which Islamic financial institutions are a party, such as the contracts as a promise, Murabaha, and Istisnaa financing.

Meanwhile, H.E. Dr. Mariam Al Suwaidi, CEO of the Securities and Commodities Authority, said that the new commercial transactions law forms part of the government's efforts to help citizens and residents and support their needs. It also contributes to enhancing financial stability in the country and reinforcing its position as an ideal investment environment that safeguards the rights of all parties.

“With regard to the field of financial markets, the new Commercial Transactions Law features amended provisions on organizing and establishing financial markets as a key supporter of the national economy. This opens up the path for their sustainable development in line with the requirements of the UAE’s business environment by amending the provisions for the establishment of financial markets and making it mandatory for them to obtain necessary licenses specified by the existing legislation regulating securities in the country”. She added.

H.E. explained that the most notable provisions of the new Securities Sector Law and the Authority are to consider virtual assets business as a commercial business. This provision gives a privilege to the virtual assets sector as the issuance of the new law authenticates virtual asset-related business as commercial business. Consequently, the provisions of this law and other related laws will apply to those who deal in the activities of this sector and benefit from the privileges included in the new law, such as the provisions regulating the merchant and allowing new age groups to practice business. The Cabinet had already issued its decision regulating virtual assets last December, specifying that it will enter into force in mid-January.

She then stated that the new law emphasizes the provisions regulating the operations of the stock market and investment companies, credit funds, financial institutions, all other credit intermediation processes, the brokerage in the stock and commodity markets, securities guarantee lending, and the bank’s securities deposit. All customers in the financial market must keep them in mind when conducting any transactions in the financial market.

H.E. Al Suwaidi also expressed her optimism about the new commercial transactions law as it improves the performance of commercial transactions, including those related to markets and securities. It enhances the national economy’s competitiveness, stability and strength, providing individuals with a highly conducive environment for doing business.

A dialogue session was held on the sideline of the media briefing to discuss the most prominent provisions and axes of the new commercial transactions law, in the presence of Hassan Al Kilani, Legal advisor at the Ministry of Economy, Dr. Essam Al Tamimi, Founder and Senior Partner of Al-Tamimi & Company, Dr. Muhammad Al Nsour, Associate Professor of Commercial Law at UAE University, and the legal advisory, Mr. Ismail Al Balushi.  Hassan Al Kilani said that the decree-law on commercial transactions is the source of commercial legislation in the country and had been drafted with a sophisticated vision that looks to the future, facilitates business and contributes to attracting foreign investment to the Country.

Dr. Essam Al Tamimi, Founder and Senior Partner of Al Tamimi & Company, said that the new commercial transactions law complements a set of legislation issued by the UAE in the last period, establishing an integrated legislative framework in line with global best practices. It contributes to supporting the national economy, and enhances the UAE’s position as an attractive and sustainable FDI destination.

Dr. Mohammed Al Nasour, Associate Professor of Commercial Law at UAE University, said that the new commercial transactions law is the result of tireless government efforts that saw the development of the UAE economic legislation in line with the highest international standards, which will enhance the country's position on international competitiveness indicators.

Ismail Al Balushi, Senior Legal Adviser and Head of the Legal Affairs Department at the Central Bank, noted that the law reflects the significant development witnessed by the business environment in the country and is in line with its transition to the new economy.


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