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What are the main laws and regulations that apply to entities that are involved in finance and investments generally?


Legislation in the UAE

The Consolidated Constitution of the UAE (as amended) – (Article 7 establishes the Shari’a law as a fundamental source of legislation)

UAE Central Bank Federal Law No. 14 of 2018

UAE Federal Law No. 8 of 2018 on Financial Leasing

Central Bank Circulars

UAE Basel II Guidelines for Banks

Corporate Governance Guidelines 2009

Foreign Account Tax Compliance Act (FATCA)

UAE Federal Law Bo. 10 of 2018 regarding Netting

UAE Civil Code Federal Law No. 5 of 1985

UAE Law of Civil Procedure Federal Law No. 11 of 1992 and Federal Law No. 10 of 2014

UAE Commercial Transactions Law Federal Law 18 of 1993

UAE Commercial Companies Law Federal Law No. 2 of 2015

UAE Insurance Law Federal Law No. 6 of 2007

Central Bank Framework on Stored Values and Electronic Payment Systems of 2017

UAE Federal Law No. 9 of 2018 (Regarding Public Debt)

Free/Special Economic Zones in the UAE

There are over 40 free zones in the UAE currently which are set up under the laws of its host emirate regarding free zone companies and establishments. There is no federal free zone authority (although one was discussed extensively in 2007 and 2008) those free zones are given a degree of freedom to self-regulate so long as such regulation does not violate the provisions of local/national law, or constitute a violation of public morals or be contrary to public interest.

In addition to the free zones generally, Abu Dhabi Global Market (ADGM) and Dubai International Financial Centre (DIFC) are two financial free zones which have their own court system and legislative capacity.

While we do not cover the free zones in any great detail on this site, it is important to recognize that ADGM and DIFC have signed memoranda of understanding and mutual recognition with the local courts and/or federal court systems in their respective Emirates which means a decision from either of ADGM or DIFC can be enforced and executed directly through the local courts respectively without the case being heard ab initio.

Consumer credit

UAE Credit Information Law Federal Law No 6 of 2010 and Cabinet Resolution 16 of 2014 (information requirements and sharing)

UAE Consumer Protection Law Federal Law No 2 of 2006 and Executive Regulations of 2007


UAE Civil Code

UAE Commercial Transactions Law

UAE Central Bank Circular October 2013 established a loan to value ratio for mortgages

Dubai Law No. 8 of 2008 and 9 of 2009

Dubai Mortgage Law Decree No 31 of 2016

UAE Law No. 20 of 2016 on the Mortgage of Moveable Assets to Secure a Debt and its executive regulations (Cabinet Resolutions No. 5 and No. 6 of 2018). This law which came into effect on 15 March 2017 has established the Emirates Moveables Collateral Registry which is an online registry allowing the registration of security over moveables in the UAE.  This law is perceived as a much welcomed addition to the UAE financial landscape (especially for cross-border financing).


UAE Civil Code

UAE Commercial Companies Law Federal Law No. 2 of 2015

Funds and platforms

SCA Chairman's Regulation No. 9 of 2016

SCA Chairman's Regulation No. 3 of 2017

Taken together, these regulations establish procedures for licensing, management, offer document contents, subscription, issuance and listing of funds.

Funds are listed on the Dubai Financial Market and NASDAQ Dubai. There are many trading platforms available including online trading platforms.

Other key market legislation

The United Arab Emirates is a federation of seven independent states, each of which has judicial capacity. In addition, through changes to the UAE Constitution, special free economic and financial free zones have been set up to attract foreign direct inward investment, each of which has its own regulatory authority.

It is possible that in order to establish the regulatory framework applicable to a company, fund, investment scheme, or activity that one or more and potentially all of the following legislation will need to be reviewed:

  • UAE Federal legislation;
  • legislation passed by each individual emirate but note:
    • Ajman, Fujairah, Sharjah, and Umm Al Quwain generally follow the same or substantially similar laws and adhere to the Federal Court System; and
    • Dubai, Abu Dhabi and Ras Al Khaimah have derogated from the Federal Court System and each have their own court system or judicial departments (independent from the federal system) – they pass laws which affect their emirate alone;
  • DIFC Legislation;
  • The Law and Regulations enacted in each other free zone;
  • DFSA Rules and Regulations;
  • ADGM Legislation;
  • UAE Central Bank Circulars and Resolutions; and
  • UAE Securities and Commodities Authority.

Who are the regulators?

This depends on the entity, its location and the relevant regulations and laws that apply.

The UAE is a federation of seven independent emirates each of which has its own judicial capacity. The applicable laws are those federal laws passed by the federal government of the UAE but each can be supplemented by laws passed by the rulers of individual emirates.

The UAE has a federal court system which is followed in the Emirates of Ajman, Fujairah, Sharjah and Umm Al Quwain.  The Emirates of Abu Dhabi, Dubai and Ras Al Khaimah have separate court systems or judicial departments (independent from the federal system).

In addition, through changes to the UAE Constitution, two financial free zones have been created (Abu Dhabi Global Market (ADGM) and Dubai International Financial Centre (DIFC)) which have their own court systems based not on the federal Civil Code but English common law.

The Central Bank of the UAE (Central Bank) and the Securities and Commodities Authority (SCA) are the main regulatory bodies for financial services in the UAE. Pursuant to Federal Law No. 14 of 2018 (New Banking Law), the Central Bank regulates financial institutions, including those who wish to provide financing and engaged in financial licensed activities in or from the UAE. The New Banking Law replaces and repeals the Federal Law No. 10 of 1980 and Federal Law No. 6 of 1985 (together the Old Banking Laws).

Taking this together when considering the question of regulation of a particular entity or activity, it may be possible that any of the following regulatory bodies may have authority:

  • UAE Central Bank;
  • UAE Securities and Commodities Authority;
  • Abu Dhabi Global Market Authority Courts;
  • Dubai International Financial Centre Courts;
  • Dubai Financial Services Authority;
  • a relevant Free Zone Authority;
  • UAE Penal Code; and
  • laws and regulations passed by individual emirates.

What are the authorization requirements and process?

This is dependent upon what type of business/financial activity the firm would be participating in the UAE. Secondly, it depends where the firm is located either onshore UAE or in one the economic free zones (in the case of finance, most likely to be in the Dubai International Financial Centre (DIFC) or Abu Dhabi Global Market (ADGM). The institutions listed in our answer to Regulatory authorization – regulators (ie the Central Bank, DIFC, Dubai Financial Services Authority and ADGM etc) have their own authorization requirements and processes in place.

If in doubt, the first port of call is the relevant Emirate's Economic Development Department who can advise further.

What are the main ongoing compliance requirements?

Whether the firm is located onshore or in a free zone, the firm will have ongoing compliance requirements. For example, if the firm is located in the Dubai International Financial Centre (DIFC) it will have to apply for an annual trading license from the Registrar of Companies and will need to comply with the relevant regulations and rules found in the Dubai Financial Services Authority (DFSA) Handbook. Furthermore, from time to time, the Central Bank will issue circulars with updated regulations/rules which financial firms will need to comply. In order to be clear which compliance regulations apply it is necessary to consider each case on its specific facts. But in any case, failure to comply with ongoing compliance of the relevant regulator can result in sanctions for firms including severe fines.

What are the penalties for failure to be authorized?

Depending on the individual circumstances, this could lead to corporate fines and trading privileges being removed, individual directors and corporate officers being held accountable personally for breaches of fiduciary duties, and in the case of compliance breaches and crimes this can include fines and/or terms of imprisonment of varying degrees of severity.

UAE lenders who enter into financial arrangements with a borrower in the UAE without a license may face imprisonment and/or a fine and the institution may be liable for civil and criminal claims. The relevant UAE authorities, such as the Central Bank of the UAE (Central Bank) and the Securities and Commodities Authority (SCA) may in addition impose administrative sanctions and fines.

In the case of the DIFC, if a relevant lender does not satisfy the requirements of the Dubai Financial Services Authority (DFSA), under the regulatory law and DFSA's Enforcement Rulebook the DFSA can enforce the following actions as punishment:

  • a fine of US$100,000 per contravention;
  • damages or restitution;
  • injunctions and restraining orders;
  • corporate penalties – unlimited fines through the Financial Markets Tribunal (FMT); and
  • a banning order through the FMT.

As a consequence of violating the Financial Services Prohibition section of the regulatory law, lenders will also face censure by way of publication of any enforcement action leading to critical reputational damage (and the loan arrangement may also be considered unenforceable).

What finance and investment activities require authorization?


Everything that is classified as financing and investment activities under various legislation.

Any licensed financial activites onshore in the UAE is governed by the UAE Central Bank. Depending on the category of activity, different rules and regulations and circulars will apply. Accordingly, interested parties should refer to the UAE Central Bank website where all current laws, regulations and circulars are provided. The scope of licensed financial activites is relatively broad and are listed in the New Banking Law. The board of directors of the Central Bank has also the power to review the list of licensed financial activities and add, exempt or remove certain activiites from that list.

Any offshore entities conducting business activities within the UAE will need to be appropriately licensed by the UAE Central Bank. The types of licenses generally issued by the UAE Central Bank include commercial bank, investment companies and investment consultation, branches of foreign licensed institutions.

Anticipated regulatory changes

We understand that the UAE is contemplating reforming the financial services sector's regulations, which is intended to cover, among other things, custody, collective investments and broker dealing. The UAE has recently enacted the New Banking Law. As a result, a number of regulations and circulars are expected to be implemented in the next two to three years. The New Banking Law states that the Central Bank will establish an electronic guideline (i.e. a rulebook) which will include all regulations, standards, decisions and circulars issued by the Central Bank.  Such electonic guideline will be published and regularly updated on the Central Bank’s website. This will be a welcome change in the UAE (and follows the position adopted by the Dubai Financial Services Authority).

However, there currently exists something of a vaccum and market participants and practictionners should pay a close attention to the upcoming implementing regulations.

Are there any possible exemptions?

Tolerated practices

While the relevant legislation clearly prohibits entities or persons from engaging in regulated activities (unless licensed to do so), under the Old Banking Laws (i.e. Federal Law No 10 of 1981 and Federal Law No. 6 of 1985) the UAE Central Bank would not always strictly monitor performance within the regulations. These are generally referred to as the ‘tolerated practices’ in the UAE.

To fall within the scope of the tolerated practices, the activity in question must be:

  • carried out from offshore and not involve local currencu (being dirhams);
  • ‘low profile’ (that is, targeted and marketed to a defined and select group of non-retail customers); and
  • one-off (anything that involved approaching residents on an unsolicited basis, road shows etc are less likely to fall within the scope of these tolerated practices).

It is important to note that the concept of ‘tolerated practices’ is neither a legal concept nor officially recognized by the UAE Central Bank. While it has not been tested in the UAE courts, we are not aware of any examples of any action being taken against foreign entities under the Old Banking Laws. Whether these tolerated practices will be more closely regulated or supervised by the Central Bank under the New Banking Law remains to be seen..

Do any exchange controls or other restrictions on payments apply?

There are no foreign exchange controls in the UAE or restrictions on payments, except to the extent these may violate anti-money laundering rules or international sanctions.

What are the rules around financial promotions?

Under the New Banking Law, financial promotion refers to any form of communication by any means, aimed at inviting or offering to enter into any transaction, or offering to conclude any agreement related to any of the Licensed Financial Activities. Since such communications can influence consumers, entities are restricted from communicating financial promotions unless they are licensed to do so by the UAE Central Bank.


Even though engaging in regulated activities is clearly prohibited (unless the person is licensed to do so), the UAE Central Bank has tolerated certain practices under the Old Banking Laws. To fall within the scope of a tolerated practice, the foreign entity must ensure that, for instance:

  • only a discrete and defined group of pre-identified clients (who are either institutional, professional or sophisticated clients) are approached;
  • no mass advertising campaign is carried on in the UAE;
  • the person marketing the product or service is not resident in the UAE; and
  • marketing activities are performed from outside the UAE (except for ‘low profile’ activities).

It is important to note that the concept of ‘tolerated practices’ is neither a legal concept nor officially recognized by the UAE Central Bank. Whilst it has not been tested in the UAE courts, we are not aware of examples of foreign entities being found liable under the Old Banking Laws. Whether these tolerated practices will be more closely regulated or supervised by the Central Bank under the New Banking Law remains to be seen.

What types of legal entity are generally used to undertake financial or investment activity?


This question varies according to the type of financial activity being practiced and the rules of the emirate and free zone in which the vehicle is set up. 

Pursuant to the New Banking Law:

  • Banks shall take the form of public-joint stock companies (through an incorporating law or though a decree). This does not apply to branches of foreign banks operating onshore UAE. As a general rule, a Bank shall at least have 60% UAE national shareholding.
  • Other Financial Institutions (i.e. any juridical person other than a Bank) carrying one or more Licensed Financial Activities may take the form of joint-stock companies or limited liability companies in accordance with the rules and regulations issues by the board of directors of the Central Bank.
  • Exchange houses and monetary institutions may be a sole propriertorship or take any other form legal form in accordance with the rules and regulations of the board of directors of the Central Bank.

In the Dubai International Finance Centre (DIFC), the type of entity and activity will generally depend on which category of license being applied for.

In each case this question needs to be examined on a case-by-case basis depending on the financial or investment activity to be carried out.

Is it possible to conduct lending or investment business through a branch or establishment?

Generally, it is not possible to engage in lending or investment activities through a branch office.

James Iremonger

James Iremonger

[email protected]
T +971 4 438 6253
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