In recent years, the UAE has undertaken an ambitious mission to modernise its legal framework, with a particular focus on fostering innovation and promoting corporate and commercial growth. In this article, we will delve into the myriad ways these new laws and legal reforms are positively impacting the economy and the corporate sector, and the role technology is playing in shaping the future of legal practice in the UAE.
The UAE has witnessed transformative changes and progressive legal reforms, particularly in the corporate and commercial sectors, over the last decade. These changes are propelling the nation towards a new period of economic prosperity and business development.
Recent legal reforms in the UAE have been a positive step in fostering economic growth, particularly in areas such as foreign ownership regulations
One notable reform that has been implemented is the UAE Federal Decree Law no. 32 of 2021 on Commercial Companies, which replaced the provisions of the Federal Law No. 2 of 2015 on Commercial Companies (CCL) and facilitated foreign ownership. Investors can now hold up to 100 per cent ownership in mainland companies, which has spurred an influx of foreign direct investment, strengthened the nation’s economy, and fostered an environment that promotes entrepreneurial growth.
Bankruptcy law reform
Another key legal reform that has had a positive impact on the economy is the Federal Decree Law No. 21 of 2020, amending some provisions of the Federal Decree Law No. 9 of 20216 on Bankruptcy. This has reformed the UAE’s approach to bankruptcy and insolvency laws, providing businesses with increased flexibility when navigating financial distress. The updated framework offers struggling businesses a lifeline, facilitating restructuring and protecting the interests of all stakeholders. Such developments not only ensure economic resilience but also inspire confidence among investors and entrepreneurs.
The introduction of the UAE Central Bank’s Federal Law No. 14 of 2018 concerning the Central Bank and the Organisation of Financial Institutions and Activities is another notable reformation to the legal system. This law has revamped the financial regulatory framework, instilling transparency and accountability in the financial services sector. It paves the way for a robust and well-regulated financial ecosystem that supports the growth of businesses and investments.
AI in legal processes
The incorporation of cutting-edge technology into the legal sector is another defining characteristic of the UAE’s legal modernisation. The integration of artificial intelligence and blockchain technology in legal processes has streamlined operations, increased efficiency, and reduced costs. For example, the use of digital signatures, electronic notarisation, and virtual courtrooms has transformed the legal practice into a more agile and accessible domain.
Furthermore, the deployment of legal technology has facilitated the creation of smart contracts, which are self-executing agreements with the terms directly written into code. These contracts eliminate the need for intermediaries, reducing the potential for disputes and increasing transactional efficiency. This technological leap not only revolutionises the legal landscape but also underscores the UAE’s commitment to embracing the digital age.
The impact of these legal reforms on the UAE economy and corporate sector has been substantial. For instance, the relaxation of foreign ownership restrictions has led to a surge in investment, with foreign direct investment increasing by 44.2 per cent in the first quarter of 2021 alone. Additionally, the updated bankruptcy and insolvency laws have provided struggling businesses with a much-needed lifeline during the Covid-19 pandemic. These reforms, combined with the integration of technology in the legal industry, have revolutionised the economic climate.
In conclusion, the modernisation of the UAE’s legal framework has had a positive impact on economic growth and corporate advancement. The integration of technology in the legal industry, combined with updated legislation on foreign ownership, bankruptcy and insolvency, and financial restrictions, has revolutionised the economic climate. Businesses in the UAE are now better positioned to navigate financial challenges and take advantage of new opportunities. These forward-thinking legal reforms strengthen the economy and reaffirm the UAE’s position.
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– The writer is Head of Consultations, AWS Legal Group