Change continues to sweep through the UAE business landscape, and the latest one could be brought on by changes to Commercial Agencies Law.
On Sunday 26th December 2021, the Financial, Economic and Industrial Affairs Committee of the Federal National Council issued a statement saying that a draft federal law on regulating ‘commercial agencies’ was part of its agenda.
The stated intention is to update the current provisions of the Law – which came into effect in 1981 – to regulate the activity of commercial agencies in the country and “enhance the role of this vital activity in sustainably supporting the national economy and keeping pace with the economic trends adopted by the state”.
The UAE has also recently effected far-reaching change to the Commercial Companies Law (CCL), which allowed foreign nationals to have 100 per cent ownership of the their business in the country.
“This is the right time to end monopolies,” said Mohammed Al Asoomi, an economist specialising in GCC issues. “Only the Gulf markets were retaining the ‘local agent’ requirement, while the rest of the world had moved on to multiple dealerships and who could offer the best service and price for consumers.
“No one is saying that the current agent should not be included. He can still rely on the infrastructure he built for the brand over the years – but others must be given the opportunity. The Commercial Agencies Law requires a major update to be in tune with the times."
It is expected that the changes to the law will begin to allow agents and principals to negotiate their own contractual arrangements directly, including timelines, termination and renewal provisions that each could enforce with the local courts in accordance with the individual terms of each agreement. It will be very interesting to see how these changes are implemented in the coming months.
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