The Littler International Guide provides an overview of workplace laws and regulations of over 30 countries and territories. This chapter is focused on labor and employment laws in the United Arab Emirates.
Author: afridi-angell
UAE Electronic Invoicing – Key Points for Businesses
The UAE has introduced a new Electronic Invoicing (e-Invoicing) system under Ministerial Decision No. 243 of 2025, as amended, that will gradually require businesses to issue, receive and exchange invoices electronically through an Accredited Service Provider (ASP).
An e-invoice is a structured electronic record that can be processed automatically and exchanged between businesses, with relevant transaction data reported electronically to the UAE Federal Tax Authority (FTA).
Who will be affected?
The system generally applies to business-to-business (B2B) and business-to-government (B2G) transactions, subject to specific exclusions. Ordinary business-to-consumer (B2C) transactions are generally out of its scope, meaning businesses are not generally required to issue e-invoices under the new system for sales made directly to individual customers who are not carrying on business. Hence, businesses dealing with both corporate and individual customers should review their transactions to determine which invoices fall within the rules.
When does it apply?
Implementation is being phased based mainly on a business’s revenue for its most recent accounting period and whether the entity is a government entity. The timetable is set out in Article 5 of Ministerial Decision No. 244 of 2025, as amended by Ministerial Decision No. 66 of 2026:
Revenue threshold for business | Deadline to appoint an ASP | Mandatory e-Invoicing |
Revenue of AED 50 million or more | 30 October 2026 | 1 January 2027 |
Revenue below AED 50 million | 31 March 2027 | 1 July 2027 |
In-scope Government entities | 31 March 2027 | 1 October 2027 |
What will change?
Once the e-Invoicing system applies, businesses will need to be able to issue and receive structured e-invoices, exchange invoices through their ASP, and issue electronic credit notes, where applicable. Accurate customer, supplier and VAT information will also be essential. The e-invoicing system uses the framework where the seller’s system connects to its ASP, which exchanges the invoice with the buyer’s ASP before it reaches the buyer. Businesses must therefore prepare for both issuing invoices and receiving and processing them from suppliers.
What should businesses do now?
Businesses should start by:
➢ Confirming whether the rules apply to them and identifying their implementation deadline.
➢ Reviewing their accounting/ERP system to identify any required upgrades.
➢ Checking the accuracy of their VAT and customer/supplier data.
➢ Selecting and appointing an ASP within the applicable deadline.
➢ Testing the system integration before the mandatory go-live date.
➢ Reviewing internal invoicing and accounts payable processes and training relevant finance/tax teams.
Are there any exclusions?
Certain transactions are excluded, including specified sovereign activities carried out by government entities, certain airline services and financial services that are exempt from VAT or zero-rated under Article 42 of the VAT Executive Regulation. Therefore, the exclusions should be considered on a transaction-by-transaction basis, rather than assuming that an entire business is either within or outside the system.
On 19 October 2026, the UAE Ministry of Finance (MoF) announced Ministerial Decision No. 197 of 2026, amending Ministerial Decision No. 243 of 2025 with effect from 1 October 2026. The Decision introduces a temporary 24-month exclusion for transactions between members of the same VAT tax group, starting from 1 January 2027. Further, on 26 October 2026, the MoF issued the UAE Electronic Invoicing Guideline, stating that the exclusion is intended to reduce the initial compliance burden for businesses within tax groups. Furthermore, the amendment also removes the requirement to store e-invoicing records within the UAE, allowing businesses to maintain these records outside the country, subject to applicable record-keeping requirements. In addition, businesses are no longer required to notify the FTA within two business days of an e-invoicing system failure.
What if a business does not comply?
Failure to meet applicable e-Invoicing requirements may result in administrative penalties under Cabinet Decision No. 106 of 2025, including AED 5,000 for each month or part of a month for failing to implement the system or appoint an ASP within the prescribed timeframe. Separate penalties may also apply for failing to issue or transmit e-invoices or electronic credit notes within the required timeframe.
Accordingly, for businesses with AED 50 million or more in revenue, the immediate deadline to keep in mind is 30 October 2026 for appointing an ASP, with mandatory e-Invoicing starting from 1 January 2027. Businesses below that threshold have until 31 March 2027 to appoint an ASP, with mandatory implementation from 1 July 2027. ■
Islamic Finance and Markets Law (UAE chapter), Lexology In-Depth
The United Arab Emirates (UAE) has always provided an attractive environment from which to provide Islamic finance services and products into the Gulf Cooperation Council (GCC) and beyond. In addition to being an established and vibrant global financial centre and having its geographical location in the centre of the Asian and Western financial markets, the UAE also provides a legal system and a judiciary that is familiar with the principles of shariah. This chapter provides an in-depth analysis of everything you need to know about the Islamic finance and markets in the UAE.
Termination of Off-Plan Real Estate Sale Agreements in Dubai
Introduction
In the present economic climate, terminating off-plan real estate sale agreements in Dubai is a prominent issue. The procedure and remedies differ significantly depending on whether termination is sought by a developer following a purchaser’s default, or by a purchaser following a developer’s default, including delay in completion.
Governing Legislation:
➢ Dubai Law No. 13 of 2008 (amended by Law No. 19 of 2017 and Law No. 19 of 2020).
➢ Federal Decree-Law No. 25 of 2025 (Civil Transactions Law, effective 1 June 2026).
➢ Federal Law No. 5 of 1985 (Civil Code, applies to transactions prior to 1 June 2026).
1. Termination by Developer for Purchaser Non-Payment
Statutory Basis & Mandatory Procedure
A developer cannot immediately terminate a sale and purchase agreement (SPA) upon purchaser default, which is usually non-payment of a due instalment. A developer must strictly follow the procedures mandated by Article 11(a) of Law No. 13 of 2008, as amended:
a) DLD Notification: Notify the Dubai Land Department (DLD) of the default.
b) Statutory 30-Day Notice: DLD serves a 30-day notice to the purchaser to remedy the breach or reach an amicable settlement.
c) Compliance Document: If the 30-day notice period expires without the breach being remedied, DLD issues an official document confirming procedural compliance and project completion percentage.
d) Unilateral Action: The developer may then terminate the SPA of its own accord without needing a court ruling or arbitration award.
Amounts Retainable by Developer Upon Termination
The project completion percentage determines the developer’s financial remedies under Article 11(a)(4):
Project Completion Status | Allowable Developer Financial Remedies & Options |
More than 80% Complete | Option A: Maintain the SPA, retain all paid amounts, and claim the remaining balance. Option B: Request the DLD to sell the unit via public auction to collect outstanding amounts. Option C: Terminate the SPA, retain up to 40% of the purchase price, and refund the excess within one year (or 60 days of resale). |
Between 60% and 80% Complete | Terminate the SPA, retain up to 40% of the purchase price, and refund the excess within one year (or 60 days of resale). |
Less than 60% Complete | Terminate the SPA, retain up to 25% of the purchase price, and refund the excess within one year (or 60 days of resale). |
Construction Not Commenced (Beyond developer control) | Where non-commencement is not due to the developer’s negligence or omission, terminate the SPA and return all purchase monies to the purchaser. |
2. Termination by Purchaser for Developer Default
Default – Developer Delay in Completion
A purchaser’s rights where the developer delays completion of the unit arise under the SPA, general contractual principles, and the applicable Civil Transactions Law. For SPAs governed by Federal Decree-Law No. 25 of 2025, Article 234 permits a purchaser, following notice, to seek performance or rescission where the developer fails to perform its obligation when due, together with damages where appropriate. For transactions governed by Federal Law No. 5 of 1985, the corresponding principles are set out in Article 272 of the former Civil Code. The applicable law should be determined having regard to the transitional provisions of the 2025 Civil Transactions Law, which came into force on 1 June 2026.
Materiality & Legally Excused Delays
Not all delays entitle a purchaser to terminate. Whether a delay justifies rescission will depend on the terms of the SPA and the circumstances of the case, including the extent and materiality of the delay, any contractual completion date, extension or grace period, any legally recognized justification for the delay, and whether the breach is sufficiently significant to warrant rescission.
In particular, a purchaser’s right to rescind for delay may be displaced or qualified in the following circumstances:
➢ Force Majeure: Under Article 236(1) of the 2025 Civil Transactions Law, true force majeure terminates the contract by operation of law. Mere increased cost, inconvenience or difficulty in performance will not generally amount to force majeure. Whether a particular event constitutes force majeure will depend on the circumstances, including whether the event was beyond the affected party’s control and whether it actually rendered the relevant contractual obligation impossible. However, it requires absolute impossibility of performance (e.g., severe regulatory blocks, infrastructure failures), not just increased costs or difficulties. The burden of proving the force majeure event, and the absence of any fault on its part, lies with the developer.
➢ Grace Periods: Contractual extensions and grace periods in SPAs will generally be relevant and enforceable according to their terms. However, where an SPA constitutes a contract of adhesion (i.e. standardised, pre-written agreement), a court may modify an unfair term, or relieve the adhering party from it, where justice so requires, including potentially an unfair extension provision. This power arises under Article 248 of the 1985 Civil Code and Article 223 of the 2025 Civil Transactions Law, as applicable. Similarly, where an SPA provides for agreed compensation for delay, the amount may be subject to judicial review. Under Article 390 of the 1985 Civil Code, the court may, at the request of either party, adjust the agreed compensation so that it corresponds to the actual loss suffered. Under Article 340 of the 2025 Civil Transactions Law, the court’s power to adjust agreed compensation is subject to the specific grounds set out in that provision, including whether the amount is excessive, the principal obligation has been partly performed, or the creditor has contributed to the loss.
➢ Project Cancellation: The Real Estate Regulatory Agency (RERA) may cancel a project via a reasoned decision, under Dubai Law No. 8 of 2007 concerning Escrow Accounts for Real Estate Development. In that case, the purchaser’s position will generally be governed by the refund and liquidation framework applicable to cancelled projects, including the developer’s obligation to refund amounts paid, rather than by a contractual claim for rescission.
Other Permitted Grounds for Purchaser Termination
Under Article 20 of the Implementing Regulation of Law No. 13 of 2008, issued by Executive Council Resolution No. 6 of 2010, purchasers can apply to courts to terminate if the developer:
➢ Refuses to deliver the final SPA without a DLD-accepted reason.
➢ Declines to settle payments according to RERA construction milestones.
➢ Makes material changes to agreed unit specifications.
➢ Delivers a unit unfit for use due to material construction defects.
➢ Commits any other breach that justifies termination under the law.
Conclusion
Overall, Dubai law strikes a careful balance between the rights of developers and purchasers.
A developer may terminate an SPA for purchaser default without a court order, but only after completing the DLD notification and 30-day notice procedure under Article 11 of Law No. 13 of 2008. The amount it may then retain depends on the stage of completion: up to 25% of the purchase price where the project is less than 60% complete, and up to 40% where it is 60% complete or more, with the further options of enforcing the SPA or seeking a public auction once completion exceeds 80%. Where construction has not commenced for reasons beyond the developer’s control, all amounts paid must be refunded.
A purchaser seeking to terminate for developer delay or other non-performance must rely on the SPA, Article 234 of the 2025 Civil Transactions Law or Article 272 of the former Civil Code (as applicable), and the grounds set out in Article 20 of Executive Council Resolution No. 6 of 2010. The delay must be material, unjustified and outside any contractual grace period. Force majeure will excuse a delay only where performance has become genuinely impossible through no fault of the developer; increased cost or difficulty is not enough. Where RERA cancels a project, the developer must refund all purchaser payments under Dubai Law No. 8 of 2007.
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Afridi & Angell advises and represents purchasers, investors, sellers, developers, brokers and others with respect to real estate and construction-related termination matters. Please feel free to contact us. ■
Commercial Real Estate Financing: Overview (UAE)
This Practice Note discusses the process of financing commercial real estate in the UAE. It provides guidance for borrowers and lenders on common forms of commercial real estate ownership and financing, the priority and perfection of security interests in real property, and the fundamental steps involved in financing commercial real estate, including loan due diligence, key transaction documents and loan terms, and closing mechanics. This Note also discusses lender remedies in the event of a borrower default.
Banking Fraud: Dubai Court of Cassation Affirms Banks’ Duty of Care to Customers
Afridi & Angell recently acted successfully for a client in proceedings arising from a banking fraud, resulting in a significant and relatively rare decision of the Dubai Court of Cassation requiring the bank to compensate the customer for the loss suffered. The decision is particularly significant at a time when banking fraud is becoming increasingly prevalent and sophisticated. The judgment confirms that a bank cannot avoid responsibility simply because the underlying fraud was committed by third parties; the bank’s own conduct must be assessed by reference to the professional duty of care it owes to its customers, including its response once it is notified that a customer’s account has been compromised.
The fraud
Our client’s bank accounts were compromised after fraudsters, impersonating law enforcement officials, coerced him into disclosing his banking credentials. Using those credentials, the fraudsters gained control of the accounts through an ATM. They subsequently registered the accounts for online banking and, within a matter of hours, transferred substantial sums of money through three separate bank accounts without our client’s knowledge or authorisation.
The client promptly notified the bank when he discovered what had happened. His case was that, despite being placed on notice of the fraud, the bank failed to respond with the urgency required to contain its consequences, trace the transferred funds and take effective steps to recover them before they became irretrievable.
The claim asserted
Proceedings were commenced on the basis that the bank had failed to discharge its professional and legal obligations. The central issue was not whether the bank had perpetrated the fraud, which was plainly committed by third parties, but whether the bank had independently complied with the duties arising from its relationship with the customer. The bank argued that no fault was attributable to it because the fraudulent acts had been committed by third parties and not by the bank or any of its employees. Our case was that this did not answer the separate question of whether the bank had discharged its own duty of care.
The courts’ approach
The Court of First Instance rejected the claim, essentially on the basis that the fraud had been committed by third parties and not by the bank or its employees.
The Court of Appeal took a different approach. It considered whether the bank had independently discharged its professional duty of care, including:
➢ Whether the Bank maintained sufficient security measures and fraud detection mechanisms to reasonably protect customers against fraud of this nature;
➢ whether the transactions were sufficiently unusual, having regard to the customer’s established banking history and transaction patterns, to have warranted intervention or further inquiry from the Bank before the transactions were approved; and
➢ whether the bank responded adequately and promptly once it was notified that the account had been compromised and fraudulent transactions had occurred.
Evidence arising from Sanadak’s investigation and later disclosed in these proceedings revealed a number of deficiencies in the Bank’s response, most notably, delays, and in respect of certain transactions, complete omissions, in initiating fund recall efforts after it had been alerted to the fraudulent activity.
The Court of Appeal found the bank in breach of its duty of care and ordered it to compensate the client.
The Court of Cassation upheld that judgment.
Why the decision matters
The significance of the judgment lies in the distinction between the fraudster’s responsibility and the bank’s own responsibility towards customers.
The fact that a third party perpetrated the underlying fraud does not, in itself, discharge the bank from the professional obligations arising from its relationship with its customer. The bank’s responsibility must also be assessed by reference to its own conduct, including what it did – or failed to do – once it became aware of the fraud.
The decision is particularly notable because cases in which a bank is required to compensate a customer for losses resulting from a third-party fraud are relatively uncommon. It therefore provides an important judicial affirmation that a bank is not merely a passive intermediary once its customer’s funds have been fraudulently misappropriated.
Once placed on notice, banks may be required to act promptly, diligently and effectively to mitigate the loss, including by investigating the circumstances, tracing the transferred funds and taking meaningful steps to seek their recovery before the damage becomes irreversible.
A missed opportunity?
None of the courts however considered the relevance of the UAE Central Bank’s Consumer Protection Regulations (Regulations) in cases involving fraud against customers. The Regulations require financial institutions to promptly compensate consumers who fall victim to fraud, save where the consumer is proven to have been grossly negligent or to have engaged in fraudulent conduct in connection with the incident. The Regulations reverse the burden of proof by requiring banks to prove that the customer was grossly negligent in order to avoid liability, as opposed to the customer having to prove negligence on the part of the bank, as would be the case in the ordinary course.
This appears to be a missed opportunity to clarify the interaction between the general principles of civil liability and the specific regulatory protections afforded to consumers, and to establish a principled framework capable of guiding financial institutions, consumers, and lower courts in future cases involving banking fraud.
Practical implications
The central message of the judgment is clear: the question is not only who committed the fraud, but also whether the bank discharged its own duty of care when it had the opportunity to prevent the fraud or mitigate the consequences.
The judgment has significance for both banks and customers.
For banks, it highlights the importance of effective systems for identifying unusual or suspicious transactions, appropriate escalation procedures, and a prompt and documented response once suspected fraud is reported.
For customers, it reinforces the importance of immediate notification to the bank when fraud is discovered, and of preserving a clear record of the notification and the bank’s subsequent response.
For customers who have been affected by banking fraud, the decision highlights the importance of promptly assessing not only the conduct of the fraudsters, but also the bank’s response and the steps taken to mitigate the resulting loss. It likewise demonstrates the importance of acting swiftly through the bank’s internal complaints processes and the avenues of recourse available under the UAE’s banking regulatory framework, including Sanadak and, where necessary, the courts. Our Dispute Resolution team regularly advises and acts in such matters. ■
UAE Pillar Two: Top-Up Tax for Multinational Enterprises
As the UAE Corporate Tax framework continues to evolve, the UAE Federal Tax Authority (FTA) has recently issued another significant decision, Decision 12 of 2026 (Decision 12), that may have far-reaching implications for businesses forming part of Multinational Enterprise (MNE) Groups.
As part of the UAE’s implementation of the OECD’s Global Anti-Base Erosion (GloBE) Rules, the UAE introduced the Pillar-Two framework through Cabinet Decision 142 of 2024 (Decision 142), which applies to financial years beginning on or after January 1, 2025. Under Decision 142, the UAE Domestic Minimum Top-up Tax (DMTT) applies to an MNE Group where the Group has UAE constituent entities and its consolidated revenue is EUR 750 million or more in at least two of the four fiscal years immediately preceding the relevant fiscal year (an in-scope MNE).
Further to the implementation of the DMTT regime, the FTA has recently issued Decision 12 (effective from financial years beginning on or after January 1, 2025), which prescribes registration and de-registration timelines for an in-scope MNE.
What is UAE DMTT?
As the UAE’s jurisdictional Effective Tax Rate (ETR) is below 15% (with Corporate Tax generally applying at 9% or 0%, subject to applicable exemptions), a top-up tax may arise to bridge the shortfall. The DMTT ensures that the additional tax attributable to low-taxed UAE profits of an in-scope MNE is collected in the UAE rather than potentially by another jurisdiction under Pillar-Two framework.
The DMTT rules apply to both UAE and foreign headquartered MNE Groups operating in the UAE. It is relevant to note that DMTT is assessed at the UAE jurisdictional level and is separate from the UAE Corporate Tax regime.
What does this mean for Free Zone tax incentive under the Corporate Tax Law?
The UAE’s 0% free zone corporate tax rate is overridden for in-scope entities. Accordingly, under DMTT, if a UAE free zone entity, that is an in-scope entity, at a group level pays an effective tax rate below 15%, a top-up tax may apply to reach the minimum tax rate. However, domestic groups and MNEs that fall below the Pillar-Two revenue threshold remain unaffected and may continue to benefit from the 0% tax benefits, subject to meeting the relevant Qualifying Free Zone Person conditions prescribed under the UAE Corporate Tax Law (Federal Decree 47 of 2022).
Registration and De-registration Timelines
As a first step towards the practical implementation of Pillar-Two in the UAE, Decision 12 prescribes the registration and de-registration requirements and timelines for an in-scope MNE. The Decision also permits an MNE Group to appoint a Domestic Designated Filing Entity (in accordance with Decision 142), to submit the registration and de-registration applications on behalf of the MNE Group.
Below are the prescribed registration and de-registration timelines:
Registration:
i. General Rule: Registration application must be submitted within 7 months from the end of the first fiscal year in which the entity gets covered within the scope of DMTT.
ii. Transitional Rule: Where the entity’s fiscal year ends before April 30, 2026, registration application must be submitted on or before November 30, 2026.
De-Registration:
iii. General Rule: De-registration application must be submitted within 6 months from the earlier of (a) the date the entity ceases to exist; or (b) the end of the fiscal year in which the entity leaves the MNE Group and is no longer in-scope.
iv. Transitional Rule: An entity that ceased to exist before June 30, 2026 must submit a de-registration application on or before December 31, 2026.
It is relevant to note that the FTA will reserve the right to approve a de-registration application subject to the entity settling all its tax liabilities and penalties payable as well as fulfilling of its filing obligations, including the Top-Up tax return and Pillar-Two information returns, as applicable.
In-Scope and Out-of-Scope Notification
In addition to the above, the FTA has also introduced a notification requirement for entities that are members of an MNE Group that cease to be within the scope of Pillar-Two. The notification must generally be submitted within 6 months from the end of the tested fiscal year and will remain valid for the tested fiscal year and the following 4 consecutive fiscal years, unless the entity subsequently submits an in-scope notification.
To-do list for an in-scope entity:
i. Confirm whether the MNE Group meets the EUR 750 million revenue threshold and identify all such UAE constituent entities;
ii. Assess whether a Domestic Designated Filing Entity should be appointed among the MNE Group entities;
iii. Take steps to submit Pillar-Two registration application to the FTA before the prescribed general and transitional deadlines to mitigate the risk of administrative penalties.
Afridi & Angell would be pleased to assist you with assessing whether your UAE entity falls within the scope of the DMTT and, where applicable, assist with completing its Pillar-Two registration or de-registration with the FTA. ■
DIFC broadens access to Prescribed Companies and introduces a CSP-led compliance regime
The Dubai International Financial Centre (DIFC) has enacted the Prescribed Company Regulations 2026 (the 2026 Regulations), which came into force on 24 July 2026 and amend and restate the Prescribed Company Regulations 2024 (the 2024 Regulations).
The 2026 Regulations remove the qualifying requirements that previously restricted access to the prescribed company regime and introduce a compliance framework centered on corporate service providers (CSPs).
The recent amendments follow the updates to the regime in 2020, 2022 and 2024 since its introduction in 2019. The DIFC observed during the consultation process that opening the regime to all applicants was considered appropriate in light of the UAE corporate tax regime and the UAE’s adherence to global tax reporting standards such as the OECD’s Common Reporting Standard and the US FATCA.
The key changes introduced through the 2026 Regulations are set out below.
Wider access to the regime
Under the 2024 Regulations, an applicant was required to satisfy at least one of four eligibility routes to incorporate or continue a Prescribed Company in the DIFC:
(i) be controlled by one or more GCC Persons[1], Registered Persons[2] or Authorized Firms[3];
(ii) hold or control GCC Registrable Assets[4];
(iii) pursue a Qualifying Purpose[5]; or
(iv) have a director who is an employee of a CSP that had an arrangement with the DIFC registrar.
Where a Prescribed Company relied on the GCC Registrable Asset or Qualifying Purpose routes, its objects and activities were restricted accordingly, and it had six months from licensing to demonstrate to the DIFC registrar that it held or controlled the relevant asset or had begun pursuing the relevant purpose.
Under the 2026 Regulations, the qualifying requirements are no longer conditions to the incorporation or continuation of a Prescribed Company. As a result, any natural or corporate person anywhere in the world may establish a Prescribed Company.
Instead, the 2026 Regulations now require that a non-exempt Prescribed Company (discussed below) must appoint a CSP to act on its behalf for its registered office and the statutory functions specified in the 2026 Regulations.
Exempt Prescribed Companies
A Prescribed Company is exempt if it is controlled by (i) a Registered Person; (ii) an Authorized Firm; (iii) a Government Entity[6]; or (iv) a Publicly Listed Entity[7]. It is worth noting that a “Registered Person” no longer includes a Prescribed Variable Capital Company and a Foundation. Consequently, a Prescribed Company which is controlled by a Prescribed Variable Capital Company or a Foundation does not meet the criterion for an exempt Prescribed Company and will be required to appoint a CSP (unless it separately qualifies as an exempt Prescribed Company).
An exempt Prescribed Company is not required to appoint a CSP, although it may engage a CSP to perform some or all of the duties and obligations of a CSP prescribed under the 2026 Regulations, provided that the arrangement does not relieve either party from any obligations imposed by the 2026 Regulations or applicable law.
A non-exempt Prescribed Company incorporated before 24 July 2026 is required to appoint a CSP within six months of such date, or within a longer period determined by the DIFC registrar on application by the Prescribed Company. Failure to appoint a CSP within such period may result in the imposition of a fine not exceeding USD 20,000. In addition, Prescribed Companies that fail to appoint a CSP within this timeframe risk losing their prescribed company status.
The CSP-led compliance framework
During the consultation process, the DIFC described a CSP as the primary compliance and administrative interface between the Prescribed Company and the DIFC registrar.
The 2024 Regulations permitted the DIFC registrar to enter into arrangements with CSPs under which a CSP could lodge documents and fees and perform specified checks, verifications and certifications in relation to incorporation and continuation of a Prescribed Company. The 2026 Regulations replace such arrangement-based model with express statutory duties. For a non-exempt Prescribed Company, the CSP is required to lodge any documents or forms and pay fees for the incorporation or continuation of a Prescribed Company; make filings and provide documents, forms and notices required to be provided by the Prescribed Company; and maintain current and readily accessible copies of records that the Prescribed Company is required to maintain under the 2026 Regulations or applicable law.
A Prescribed Company is required to provide the documents and information required for the CSP to perform its duties under the 2026 Regulations. Failure to do so may result in the imposition of a fine not exceeding USD 100,000.
The appointment of a CSP is required to be notified to the DIFC registrar in the prescribed form and should include the CSP’s consent. If the CSP ceases to act for a Prescribed Company (whether by resignation or dismissal), the CSP is required to notify the DIFC registrar within ten days from the date of cessation of its services, failing which, the CSP may be liable to a fine not exceeding USD 2,000.
Holding activity, financial services, registered office and workforce
Under the 2024 Regulations, the license of a Prescribed Company established for a Qualifying Purpose was restricted to the activities specific to such Qualifying Purpose, while the license of a Prescribed Company established for any other permitted purpose was restricted to the activity of a holding company. Under the 2026 Regulations, the license of a Prescribed Company is restricted to the activity of a holding company. The consultation paper on the 2026 Regulations confirms that, despite broader access, a Prescribed Company is intended to remain a passive holding vehicle.
The 2026 Regulations further stipulate that a Prescribed Company shall not be used to establish a Fund in the DIFC without the DFSA’s authorization.
An Exempt Prescribed Company may use an affiliate’s registered office, while a non-exempt Prescribed Company must use the registered office of its appointed CSP. The 2026 Regulations clarify that a Prescribed Company is not permitted to maintain a workforce whether through employees or any other arrangement.
Conclusion and action points
The 2026 Regulations recast the Prescribed Company regime around wider access and CSP-led compliance. The removal of the former eligibility gateways materially broadens the potential applicant base, while the mandatory CSP framework introduces a formal compliance interface for non-exempt Prescribed Companies.
New applicants and existing Prescribed Companies should assess the exempt status eligibility, their CSP appointment, registered office arrangements and ongoing information and filing obligations prior to the six-month transitional period ending on 24 January 2027 so as to mitigate the risk of the imposition of a fine and revocation of the company’s prescribed company status. ■
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[1] The 2024 Regulations defined a GCC Person as (a) a natural person who is a citizen of a GCC Member State; (b) a body corporate or body unincorporate, including a company, partnership, or unincorporated association, that is controlled by one or more natural persons who is a citizen of a GCC Member State; (c) a body corporate that has any class of its securities listed on a securities exchange in the GCC; or (d) a Government Entity.
[2] The 2024 Regulations defined a Registered Person as a body corporate incorporated, registered, or continued within the DIFC, excluding (a) a Prescribed Company or a Non-Profit Incorporated Organisation incorporated or continued in the DIFC.
[3] The 2024 Regulations defined an Authorized Firm as a person who holds a licence from the DFSA or a Recognised Financial Services Regulator to carry on one or more Financial Services, excluding a Representative Office.
[4] The 2024 Regulations defined a GCC Registrable Asset as an asset or property interest that must be registered with a GCC Authority to establish legal ownership, secure rights, or encumbrances against it, and to provide public notice of such interests, including: (a) land and real property; (b) shares in companies; (c) partnership interests; (d) intellectual property; and (e) aircraft and Maritime Vessels.
[5] The 2024 Regulations defined Qualifying Purpose as any of the following: (a) an Aviation Structure; (b) a Crowdfunding Structure; (c) an Intellectual Property Structure; (d) a Maritime Structure; or (e) a Structured Financing.
[6] The 2026 Regulations define a Government Entity as any of (a) the federal government of the UAE, the government of Dubai or the government of any UAE Emirate; (b) a government of a Recognized Jurisdiction; (c) a person Controlled by any of the government entities listed in (a) or (b); or (d) a person in which a government entity listed in (a) owns (directly or indirectly) an interest of at least twenty five percent (25%), or such other percentage approved by the DIFC authority.
[7] The 2026 Regulations define a Publicly Listed Entity to mean a body corporate that has any class of its securities listed on a securities exchange in a Recognized Jurisdiction.
Proposed Enhancements to ADGM Transfer Schemes
The Financial Services Regulatory Authority (FSRA) of the Abu Dhabi Global Market (ADGM) has issued Consultation Paper 2 of 2026 (the Consultation Paper), proposing enhancements to the regime governing the transfer of certain financial services business (Transfer Schemes) under Part 7 of the Financial Services and Markets Regulations 2015 (FSMR).
A Transfer Scheme is defined under the FSMR as a scheme resulting in the transfer of:
a) the whole or part of a business carried on by an FSRA-licensed entity or an investment exchange or clearing house authorised by the FSRA to provide trading or clearing services in the ADGM;
b) the whole or part of a business carried on in the ADGM by a firm operating through a branch, or by an overseas investment exchange or clearing house recognised by the FSRA to operate in the ADGM remotely; or
c) fund property to another fund.
The main proposals in the Consultation Paper are:
➢ limiting the requirements for mandatory court sanction of certain Transfer Schemes; and
➢ the introduction of a new “Modified Transfer Scheme” regime permitting certain transfers to proceed without court sanction.
The Consultation Paper will be of particular interest to businesses providing financial services in or from the ADGM, parties interested in acquiring or divesting the whole or part of a financial services business in the ADGM, and their respective professional advisors.
Narrowing mandatory court sanction
Currently, the FSMR mandates that all Transfer Schemes (excluding those involving ADGM-domiciled funds, which are dealt with separately under the ADGM Funds Rulebook) receive court sanction before taking effect.
The FSRA’s proposals aim to narrow the scope of mandatory court sanction to apply only to transfers of insurance business, save for the following two exclusions (being transfers for which court sanction would not be required and would become optional):
a) intragroup transfers of insurance business where the consent of all policyholders has been obtained; and
b) transfers of reinsurance business where the consent of all policyholders, represented by the ceding insurer, has been obtained.
For all other transfers (including the two examples identified immediately above), court sanction would become optional rather than mandatory.
Modified Transfer Schemes — the new safeguards
Where a firm proceeds to implement a transfer scheme without court sanction, the proposed changes would require the transfer to satisfy minimum conditions to qualify as a Modified Transfer Scheme, including the provision of: (i) advance written notice to the FSRA; (ii) direct written notice to affected clients explaining the transfer’s likely impact on them; and (iii) public notice of the proposed transfer.
Banks (and the two insurance business exclusions described above) shall be subject to a further requirement: they must obtain a ‘no-objection’ from the FSRA before proceeding.
Next steps
The FSRA will accept comments on the proposed changes until 21 September 2026, after which date it will consider any modifications before enacting the amendments. While no action should be taken on the basis of the proposals until the relevant rules are published, firms anticipating business transfers or currently relying on the Part 7 process should begin to consider how they may be affected by the new regime. ■
The New UAE Civil Transactions Law: Key Changes to Sale Contracts
Federal Decree-Law No. 25 of 2025, the UAE’s New Civil Code, came into force on 1 June 2026, replacing Federal Decree-Law 5 of 1985 Concerning the Issuance of the Civil Transactions Law (the Old Code).
This article forms part of a series examining the changes introduced by the New Code, and highlights some significant changes affecting sale contracts which seek to provide more commercial flexibility, clarify party obligations, and strengthen protection for purchasers.
What has Changed?
1. Expanded definition of sale
The New Code broadens the concept of a sale and adapts to modern commercial realities by recognizing that the subject matter of a sale may include transferable financial rights and intangible assets and rights, including intellectual property rights.
2. Greater flexibility in pricing mechanisms
One of the more practical changes is the increased flexibility in determining the purchase price. The New Code allows parties to agree on criteria by which the price will be determined at a later stage or to appoint a third party to determine the price. It also provides that a sale may remain valid even where the price is not expressly specified, provided it is clear that the parties intended to adopt the prevailing market price or a price previously applied in their dealings.
This development is particularly relevant for long-term supply arrangements and transactions where pricing depends on future market conditions.
3. Clarification of ownership transfer, delivery and risk
The New Code, for the first time, requires the Seller to take all necessary steps to transfer ownership and not to hinder that transfer.
It also clarifies the rules relating to delivery and risk. Delivery may occur even without actual physical possession where the seller has made the subject matter available to the purchaser and notified the purchaser accordingly.
The New Code also clarifies and consolidates the consequences where the sold property is damaged or destroyed before delivery. Where part of the sold property is damaged before delivery, the purchaser may rescind the contract or accept the remaining part for a proportionate reduction in the price. The purchaser may also, where applicable, maintain the contract in respect of the whole property at the agreed price and seek recourse against the person responsible for the damage portion of the property. While these remedies were also available under the Old Code, they were addressed under separate provisions depending on the cause of the loss or damage. The New Code brings them together within a single provision governing the consequences of damage or destruction of the sold property.
4. Enhanced protection in title disputes
The New Code introduces a more structured framework where a third-party claims ownership of, or rights over, the sold property.
A purchaser facing such a claim from a third party must notify the seller promptly. The seller is then required to intervene in the proceedings or assume conduct of the defence. Failure to do so may expose the seller to liability under the statutory warranty regime.
These provisions encourage early involvement by sellers and provide greater protection for purchasers facing third-party claims.
5. Expanded remedies for latent defects
The New Code significantly strengthens the purchaser’s remedies in cases involving latent defects.
Under the Old Code, where a latent defect existed in the sold property, the purchaser generally had to choose between returning the property or retaining it at the agreed price, and was expressly prevented from retaining the property while claiming a reduction in price. The New Code changes this position by allowing the purchaser to retain the property and assert a claim for a reduction in the price from the seller. The New Code also provides that a seller may avoid liability by providing a replacement.
The New Code also sets out more detailed standards governing the seller’s warranties. The seller is liable where, at the time of delivery, the sold property does not possess qualities which the seller guaranteed, or where the property has a defect diminishes its value or utility. The value or utility of the property is assessed by reference to the purpose stated in the contract, the nature of the property or the purpose for which it was prepared. The seller may be liable in these circumstances even if unaware of the defect.
In addition, the period for bringing a latent defect warranty claim has been extended from six months to one year from the day following delivery, unless the seller has undertaken a longer warranty period. These changes increase the importance of carefully drafted warranty, inspection, acceptance and remedy provisions in sale contracts.
6. New framework for the sale of disputed rights
For the first time, the New Code introduces a specific framework governing the sale of disputed rights. A right is considered disputed where proceedings have been commenced in respect of it or ‘a serious dispute’ (which is not defined in the New Code) has arisen concerning the right.
The New Code does not prohibit the sale of a right merely because it is disputed. However, where a disputed right is sold, the person disputing the right with the seller may extinguish the dispute by reimbursing the price paid by the purchaser and the expenses incurred. This right of recovery must be exercised within 60 days from the date on which that person becomes aware of the sale.
In practice, this mechanism may have significant consequences. For example, if a disputed claim with a nominal value of AED 10 million is sold for AED 3 million, the person disputing that claim may extinguish the claim by paying the purchaser of the disputed right a sum of AED 3 million purchase price together with the relevant expenses. The practical effect may therefore be to extinguish the underlying claim for an amount substantially below its nominal value.
This right of recovery does not apply in certain circumstances, including where the disputed right forms part of a group of properties sold for a single price, where a co-owner or heir sells their share in a jointly held right, where the right is transferred to a creditor in settlement of a debt, or where a right encumbering immovable property is sold to the possessor of that property.
The New Code also imposes conflict-related restrictions on the acquisition of disputed rights. In particular, judges, members of the Public Prosecution, experts and certain court officials may not acquire disputed rights falling within the jurisdiction of the court in which they perform their duties. Similar restrictions apply to arbitrators, conciliators and mediators in relation to matters assigned to them, while lawyers are prohibited from dealing with their clients in respect of disputed rights which they are engaged to defend. Transactions entered into in breach of these restrictions are void.
Why does this matter?
The New Code modernizes several aspects of UAE sale law and addresses areas that previously lacked sufficient legislative guidance. The changes provide greater contractual flexibility, clarify the allocation of obligations and risks between contracting parties, and strengthen purchaser protections in relation to title disputes and defective goods.
Businesses should not assume that existing sale contract templates adequately reflect the new legal framework.
Practical Takeaways
Parties entering into sale contracts should consider:
➢ clearly defining the subject matter of the sale, particularly where financial or intangible rights are involved;
➢ adopting a clear pricing mechanism, especially where the price will be determined in the future;
➢ specifying the procedures for delivery and transfer of ownership;
➢ establishing contractual procedures for dealing with third-party title claims; and
➢ reviewing warranty, inspection and defect provisions to ensure they align with the expanded remedies available under the New Code.
As businesses continue to update their contractual documentation following the introduction of the New Code, sale agreements should be reviewed carefully to ensure they are compliant with these important developments. ■