Ras Al Khaimah: Business Law

On this Page:

- Ras Al Khaimah Table of Statutes
- Ras Al Khaimah Intellectual Property Law
- Ras Al Khaimah Money-Laundering Law
- Ras Al Khaimah Banking Law
- Ras Al Khaimah Free Trade Zone
- Ras Al Khaimah Investment Authority

Ras Al Khaimah Table of Statutes

This is a non-exhaustive list of the main Dubai statutes affecting offshore and non-resident business. The statutes are listed in alphabetical order – click on the statute for a fuller description of the statute, the legal regime it forms part of, or in some cases the text of the law.

Federal Law No 8 of 1984 (Companies law)
Federal Law No. 9 of 1975 (Registration of professionals)
Federal Law No 10 of 1980 (Central Bank law)
Federal Law No 12 of 1986 (Labour law)
Federal Law No 13 of 1988 (Commercial companies law) 
Federal Law No 37 of 1992 (Trademarks)
Federal Law No 40 of 1992 (Protection of intellectual property)
Federal Law No 44 of 1992 (Protection of industrial property)
Emiri Decree No. (2)/ 2005
RAK Offshore Regulations, 2006
UAE Federal Law (8) 2004 on Financial Free Zones,
UAE Agency Law

Ras Al Khaimah follows the same legal system as the other Emirates of the UAE. Constitutionally, Islamic Sharia Law, based on the Holy Koran, is the basic source of legislation in the UAE. However, as a result of the development of trade and commerce and the enactment of laws and codification at the federal and individual Emirate levels, there is a growing body of civil law on several subjects such as labour relations, maritime affairs, commercial transactions, trade agencies, intellectual property and commercial companies.

Under the UAE legal system, civil courts are parallel to Sharia courts. However, over the years the importance of Sharia courts has decreased and their role in business-related matters is relatively limited.

The federal court structure comprises courts of first instance, courts of appeal and the court of cassation, which is the final appeal. As a general rule, when a court is deciding on an issue it refers to the available body of civil law. If the matter is not addressed in civil law, reference is made to the Sharia law and, in the absence of any reference in the Sharia Law, to the prevailing legislation in other Middle Eastern countries.

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Ras Al Khaimah Intellectual Property Law

In 1992, the UAE passed three laws pertaining to intellectual property: a copyright law, a trademark law, and a patent law. The UAE began enforcing the copyright law on September 1, 1994. The government began registration of trademarks and patents in 1993.

Patents: Federal Law Number 44 protects new inventions, original improvements, new concepts, trade secrets and industrial know-how, industrial patterns and designs. The Ministry of Finance and Industry houses the patent office.

Trademarks: Federal Law Number 37 regulates trademarks. The UAE has a trademark office in the Ministry of Economy and Commerce which is accepting registration applications.

The trademark law provides protection for 10 years, with possible renewal options. Owners of registered trademarks have the right to file legal actions in UAE courts in cases of infringement. The courts are empowered to attach, seize, destroy or re-export counterfeit goods. Criminal penalties can include fines and/or imprisonment.

In 2003, the UAE Ministry of Economy and Commerce invited industry to launch an Intellectual Property Rights (IPR) forum in the UAE.

UAE laws prohibit using illegal software in IT applications and require companies to provide adequate proofs on the usage of original software. According to the findings of the eighth annual BSA Global Software Piracy Study for the year 2002, UAE's leading anti-piracy role in the region for the seventh consecutive year has resulted in the decrease in piracy rates from 86% in 1994 to 36% in 2002 and while this figure has not improved significantly over the following years (35% in 2007), the UAE is recognised as being among those countries with the lowest piracy rates.

The UAE Ministry of Economy and Commerce has also begun to strengthen the working of the trademarks committee and is beginning to look into the various proposals sent to this body besides preparing a list of investigators in order to enhance the implementation of the laws

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Ras Al Khaimah Money-Laundering Law

The National Anti-Money Laundering Committee was formed in July, 2000, with representatives from Central Bank of UAE, Ministry of Interior, Ministry of Finance and Industry, Ministry of Justice, Islamic Affairs and Awqaf, Ministry of Economy and Commerce, the UAE Customs Council, the Secretariat General of Municipalities, the Federation of Chambers of Commerce and Industry.

In December 2001 the United Arab Emirates' Federal National Council (FNC) approved the long-awaited anti-money laundering draft law which covers banking and financial activities in Dubai. After a long debate, FNC members approved the draft with minor amendments and those were mainly concerned with terms and the language used in the draft.

The promulgation of the Federal Law by the UAE authorities regarding the criminalisation of money laundering took place on January 22, 2002. Any person who intentionally commits one of the acts in respect of property derived from any of the crimes listed in Article 2/2 of the Act is an offender under the Anti-Money Laundering Act.

Further, the conversion, depositing or transference of proceeds, for the purpose of concealing or disguising the illicit origin of such proceeds will be considered as a crime under the Act.

The law provides for jail terms of up to seven years and a fine ranging from AED2,000 to AED1 million, or both, in addition to freezing of property, depending on the nature of the crime.

The Federal Law on Criminalisation of Laundering of Property Derived from Unlawful Activity defines money laundering as any act involving transfer, conversion or deposit of property, or concealment or disguise of their true nature, knowing that such property is derived from any of the offences stated in Article 2:

• Trafficking in narcotics and psychotropic substances;
• Kidnapping, piracy and terrorism;
• Offences committed in violation of the environment law;
• Illicit dealing in firearms and ammunition;
• Bribery, embezzlement, and damage to public property;
• Fraud, breach of trust and related offences;
• Any other related offences stated in the international conventions to which the State is party.

The term freezing or seizure under the law means temporarily prohibiting the transfer, conversion or disposition of, or movement of property, on the basis of an order issued by the competent authority.

The law also stipulates permanent deprivation of property by order of a competent court of those found involved in money laundering offences.

Under the law, a Financial Information Unit has been established at the Central Bank to deal with money laundering and suspicious cases. Reports of suspicious transactions will be sent to the Unit from all financial institutions and other financial, commercial and economic establishments.

The law further stipulates that financial, commercial and economic establishments operating in the country will be criminally liable for the offence of money laundering if it is committed in their names or for their financial account.

In March, 2004, the UAE's stock market regulator stepped up the region's campaign against money laundering and terrorist financing. In a circular sent to the Abu Dhabi and Dubai stock exchanges, and to 25 stockbroking firms in the United Arab Emirates, the UAE Securities and Commodities Authority announced that: "You are requested to verify all information and documents when accepting cash or opening accounts for clients."

A UAE-based broker explained that: "You can say it is an official umbrella. Before, we did not have written instruction concerning money laundering. Most of us had refused to accept big amounts of cash before because we wanted to make sure the money is clean and legal. But now the process is more organised and clear as we have official instructions in this respect. You can say that we are now part of the campaign launched by the UAE against money laundering."

Earlier in the year, speaking during a two-day seminar on "Interrogation and Litigation in Money Laundering Crimes" at the Dubai Chamber of Commerce and Industry, American Consul General in Dubai, Jason Davis, praised the cooperation which exists between the United Arab Emirates and the United States with regard to anti-money laundering initiatives.

He suggested that Federal Law No. 4 (2002), which allows financial authorities to seize suspicious funds whilst investigations are taking place, gives the UAE the necessary edge when it comes to combating money laundering and terrorist financing, and highlighted the continued importance of working together and sharing intelligence and expertise.

"We are here today to educate and learn at the same time. We are always interested in benefiting from other people's expertise," he announced, revealing that officials from the US Department of Justice periodically attend similar seminars in the UAE for the purposes of discussion and exchange of information.

Speaking at a Global Banking Strategy Summit held in Dubai in April, 2004, Abdulrahim Mohamed Al Awadi, assistant executive director in charge of the UAE Central Bank's Anti-Laundering and Suspicious Cases Unit announced that the UAE is willing to provide assistance to other countries looking to draft new anti-money laundering legislation and to create financial intelligence units.

He also reiterated the commitment of the United Arab Emirates to its own anti-money laundering and terrorist financing campaign, and suggested that the jurisdiction has shown leadership in the region.

"Being in the vanguard in the global fight against money laundering and financing terrorism, the UAE is keen to share its experience with regulators from other jurisdictions," Mr Al Awadi told delegates.

Outlining initiatives put in place by the authorities in the United Arab Emirates, he revealed that: "The Central Bank of the UAE has set a ceiling of AED40,000 for the amount that may be brought into the country in cash or equivalent without the need for declaration. A regulation has also been issued exclusively to money-changers to ensure that all outward remittances of AED2,000 and above are duly documented with proper identification of customers."

The Central Bank official additionally revealed that under new rules issued by the Securities and Commodities Authority of the UAE, the settlement of transactions amounting to more than AED40,000 is required to be properly documented, and the identity of the investor verified.

Meanwhile, in February 2005, Dubai Financial Services Authority (DFSA) signed two memoranda of understanding with the Isle of Man's Financial Supervision Commission and Insurance and Pensions Authority.

The two agreements aim to provide a framework for the provision of mutual assistance and information exchange between the two jurisdictions with regard to cross-border transactions. In addition, the agreements are designed to improve compliance, thereby helping to prevent money laundering and fraud.

Similar agreements have since been signed with a raft of jurisdictions, including China, Egypt, France, Germany, Greece, Guernsey, Iceland, Japan, Jersey, Jordan, Luxembourg, Netherlands, New Zealand, the Netherlands, Malaysia, Singapore, South Africa, South Korea, Sweden, Switzerland, Taiwan, Turkey and the United States.

In February 2009, the DFSA entered into a Memorandum of Understanding (MoU) with the Anti- Money Laundering Suspicious Cases Unit (AMLSCU) of the Central Bank of the United Arab Emirates, regarding co-operation and exchange of regulatory information. The MoU was signed by Paul Koster, Chief Executive of the DFSA, and Abdulrahim Mohamed Al Awadi, Assistant Executive Director of the CBUAE and Head of the AMLSCU.

Commenting at the time of signing, Koster said: “The signing of today’s MoU has formalised arrangements for co-operation and information sharing that already exists between us. It recognises that both regulators place reliance on the quality of regulatory standards administered in the other’s jurisdiction. Continuing close co-operation and future joint initiatives will reinforce our mutual commitment to ensuring financial stability and promote sound economic growth in the region."

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Ras Al Khaimah Banking Law

In the UAE, the marketing of financial products and services is regulated by the UAE Central Bank under Federal Law No. 10 of 1980 (the Central Bank Law and related banking resolutions). Enforcement of Central Bank policy, however, is often undertaken by the local licensing authorities in the various Emirates.

The Central Bank Law establishes five principal categories of institutions in the UAE - commercial banks, investment banks, financial establishments, financial intermediaries, and monetary intermediaries - all of which must be licensed by both the Central Bank and the local licensing authorities. In addition to these five categories, current practice in the individual Emirates permits the licensing of financial or investment consultants. These consultants are not required to obtain a Central Bank license.

Commercial Banks The Central Bank Law defines a commercial bank as any establishment which customarily receives funds from the public, grants credit and banking facilities, and conducts other banking operations prescribed for commercial banks either by law or by customary banking practice. In the UAE, customary banking practice includes the marketing and sale of investment products and services, including the sale of securities and various funds.

Central bank regulations announced on April 5, 1993, set the minimum capital to risk-weighted asset ratio at 10 percent, which is 2 percent higher than the minimum level recommended by the Basel Concordat committee on banking supervision.

Investment Banks Central Bank Resolution No. 21 of 1988 regulates the activities of investment banks. Investment banks are defined as merchant or development banks or banks which provide medium or long term financing. The Central Bank Resolution authorizes investment banks in the UAE to offer financial products and services, including the issuance of financial instruments and the management of investment portfolios.

On June 1, 1997, the Emirates Bank Group, which is controlled by the Dubai government, launched UAE's first mutual investment fund with an initial capital of about US$ 8.2 million. The fund offered non-UAE nationals their first opportunity to invest in the UAE's tightly restricted equity market up to a limit of DH 500,000. The huge response by foreign investors prompted the UAE Central bank to raise its original ceiling of 20 percent of foreign investment to 49 percent. When the fund closed for public subscription on June 15, 1997 the investment totaled to US$ 74.5 million.

Financial Establishments The Central Bank Law permits financial establishments to lend money and to undertake other financial transactions but does not allow them to accept deposits. The Central Bank has adopted a policy that prohibits financial establishments from offering financial products and services. In comparison to commercial banks, the only activity that financial establishments may undertake which commercial banks may not is the lease of equipment and machinery.

Financial Intermediaries Financial intermediaries are brokers. Regulations issued under the UAE Central Bank Law allow licensed brokers to market and to sell foreign and local shares and financial instruments in consideration for a commission. Local and foreign companies may obtain a brokerage license from the UAE Central Bank.

Monetary Intermediaries Monetary intermediaries are money changers. They are not authorized to market or to sell investment products and services.

Investment Consultants The UAE Central Bank has not published regulations on investment consultancy. Under the existing policies of the individual Emirates, a company licensed as an investment consultant may advise and assist clients in pursuing various investment strategies but may not directly sell investment products. Sales of investment products introduced by consultants are, therefore, typically booked outside the UAE. Consultants are also not expected to receive investment funds from clients, although they may assist in the transfer of those funds. Consultants may not provide credit facilities or open accounts for clients but may assist them in opening accounts with brokers and banks. If properly authorized by the client, the consultant could also manage such accounts.

The UAE Central Bank has recently moved towards a tighter policy regarding investment companies and financial consultants. In the future, such companies will have to obtain a license from the Central Bank and to report under the rules it has established. Investment Companies for the purpose of these regulations have been defined as undertakings which are involved in investment in securities or in the management of trust funds or investment portfolios on behalf of others. At the time of writing, the minimum paid up capital for investment companies (including branches of foreign companies ) is AED25 million, increasing to a larger amount depending on the activities of the company. Financial consultants, on the other hand, are deemed to be individual professionals or groups of professionals providing advice to individuals or companies about the value of securities and other financial instruments or giving recommendation about investing. For these, licenses can be issued with a minimum paid in capital of AED1 million.

Many of the foreign banks in Dubai are established in the Dubai International Financial Centre and the Jebel Ali Free Zone.

Dubai could be said to be over-banked, and there is intense competition to offer technologically-advanced services - services on offer include mobile phone banking and Internet banking. With proposed plans to develop the UAE as a regional e-commerce centre and development of the Dubai Internet City, many banks are working on providing high-tech banking products and services.

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Ras Al Khaimah Free Trade Zone

The Ras Al Khaimah Free Trade Zone was established in 2000.

Free Zone Licensees are not permitted to display or sell their products or services themselves directly in the local market. However, the holder is permitted to operate outside the UAE. Retail trading is not allowed inside the Free Zone Parks.

A Free Zone Company (FZCO) is a limited liability company incorporated with RAK Investment Authority, by more than one shareholder with a distinct legal entity and independent financial liability. The Capital requirement for setting up FZCO with RAK Investment Authority Free Zone is AED250,000.

A Free Zone Establishment (FZE) is 100% owned by either a person or a corporate body. It enjoys the status of a separate legal entity. The Capital requirement for setting up a FZE with RAK Investment Authority Free Zone is AED 150,000.

Local or UAE Branch Licences are issued to companies holding a valid licence from any UAE licencing authority except from other free zones.

Foreign Branch Licences are issued to companies outside the UAE seeking to open a branch in the RAK Investment Authority Free Zone. The ownership of the company must be 100% foreign and sales can be made through a UAE-registered agent or a distributor only. The activity may be industrial, commercial or professional/services-based.

Only after obtaining the necessary licence can a business apply for the approved number of visas and commence business activities in the free zone.

Please see Offshore Legal and Tax Regimes for more details about Free Zone licences and employee visas.

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Ras Al Khaimah Investment Authority

The Ras Al Khaimah Investment Authority (RAKIA) was constituted under an Emiri Decree in 2005 as the vehicle to facilitate and promote investment and economic activity in the fast-growing emirate. RAKIA’s role is to develop and manage the industrial parks which include the free zones and industrial zones in the Al Hamra and Al Ghail areas of Ras Al Khaimah. Within four years of its launch, RAKIA had attracted some USD2.5bn worth if investment in industrial projects in Ras Al Khaimah.

In 2007, RAKIA launched an offshore business registry called RAK Offshore, providing international investors with a low-cost, hassle-free International Business Company option with few restrictions, and with the aim of attracting investors looking for an alternative to traditional offshore financial centres. For RAKIA offshore companies there are no restrictions on the number of shareholders or directors, and they are under no obligation to hold an annual meeting or to file audited accounts. The only information displayed on the register is the name of the company and the date of incorporation, thus a high degree of confidentiality is maintained.

RAKIA offshore companies cannot conduct business locally except with those supplying accounting, audit, legal and banking services, and staff cannot be employed locally. RAKIA offshore companies can acquire local real estate, but they are most suitable for international activities such as trading, consulting, inter-group financing, holding company activities, intellectual property, investment, shipping and e-commerce. RAKIA offshore companies are also useful for accessing the UAE banking system.

Because there is no ‘special’ tax exemption regime in Ras Al Khaimah – a no-tax emirate regardless of company status - companies incorporated in the RAKIA offshore zone may also take advantage of the UAE’s network of double tax agreements, which includes China, France, Germany, India, Italy, Malaysia and Turkey, among other countries.

More than 2,000 companies had registered in the RAKIA Free Zone in the first two years after its launch, attesting to the popularity of the regime. The RAKIA international business regime is established by the RAK Offshore Regulations, 2006. Incorporation typically takes one day and costs USD950 regardless of share capital or type. Annual registration costs USD650.

Regulations are expected soon to allow the registration of trusts, foundations, collective investment schemes and offshore banking services in the RAKIA offshore zone.

In 2007, the RAKIA announced that it is to develop a modern complex known as the RAK Financial City, which is intended to become the home of the RAK Investment Authority’s offshore facility. Developed on an area of 320,000 square meters, it will include 12 towers ranging from 25 to 65 floors. Three of the towers will have offices, eight will be given over to residential use and the remaining tower will be a hotel. The area will have parking facility for over 10,000 cars. The project is being developed with an investment of AED3 billion.

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