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UAE Ministry of Economy update fees for Trademark Enforcement

To ensure efficiency and streamlining with international best practice, namely in trademark prosecution and the enforcement of registered rights, the UAE Ministry of Economy has issued an administrative order to decrease and waive some of the core official fees associated with their trademark registration and enforcement services.

Following an increase to such fees in 2015, the UAE Trademark Office was urged by trademark owners to consider a reform of this decision. Whilst the number of filed and examined marks has somewhat declined since 2015, this decrease can in part be attributed to the reduction of illegitimate marks filed in bad faith and those filed with intention to benefit from pre-existing rights.

The UAE Ministry of Economy has decreased and waived more than 100 nominal fees across different departments and sections, such as commercial agencies, the Trademark Office and Copyright Office. Notably, the Trademark Office has reduced its registration fees by 33%. This follows the introduction of steps to ensure the complete protection of trademark rights with the full integration of an online system for all trademark prosecution services and e-filings. This full electronic integration, operational since January 2019, has reduced the volume of administrative work for officials and has enhanced examination efficiency. On average, it now takes less than 6 months to complete the entire process of filing, examination, publication and registration of new trademarks. In the past, this time frame was considerably longer, taking approximately 12 months or more, to complete the process.

Prior to the reduction in fees for trademark registration, the applicable fees in the UAE were considered among the highest, if not the highest, in the world. As a result, officials received substantial requests to reconsider such rates and bring the cost in line with international standards. Eventually, in July 2019, decision makers at the UAE Ministry of Economy decided to adopt and publish a list of service fees to be reduced and waived relating to trademark registration, renewal inspection in enforcement of trademarks and parallel import complaints. The new nominal fee for trademark registration was reduced by 33%, decreasing the official fee for registration from AED 10,000 to AED 6,700. This move is expected to encourage brand owners to increase their protection in the UAE to cover various elements such as shapes, slogans, terms, colours and other core components of brand integrity.

Additionally, grievances or appeals before the Trademark Appeal Committee from provisional refusal or office action by examiner is now available free of charge. This used to be subject to a fee of AED 5,000.

In addition to the above, officials at UAE Ministry of Economy recognise the necessity to offer an accessible and proactive enforcement system. Therefore, a decision was made to waive the official fees associated with any request or application made by trademark owners to officials at the Trademark Office to investigate incidents of trademark infringement. Registered commercial agents in the UAE also benefited from the wavier of certain fees as they are no longer required to a pay fee to seek protection from parallel import by virtue of issuing administrative circulars to notify registered commercial agencies rights to border authorities, i.e. UAE Customs. These fees were previously mandatory following administrative enforcement action taken before the Ministry of Economy in anti counterfeiting and infringement cases and the enforcement of commercial agencies rights against grey market/parallel import shipments.

BSA is keen to see brand owners benefit from these new arrangements and urges all professionals in the IP field to partake in continuous dialogue with UAE Ministry of Economy to encourage enhanced protection which is both affordable and aligned with international standards.

For any enquiry or additional assistance in trademark prosecution, enforcement of IP rights, commercial agencies or general IP legal services in the UAE and the wider Middle East region, contact Head of Intellectual Property, Munir Suboh.

Compliance | Anti-corruption

In face of the current challenges of advocacy and the world scenario as a whole, and in line with our Values and Beliefs, we started implementing the Promare | Rabb Carvalho Advogados Compliance Program.

Our Compliance Program is focused on creating a set of internal integrity mechanisms and procedures in the fight against corruption, encouraging, through preventive and ostensive measures, the adoption of conduct in accordance with the ethical laws applicable to advocacy as well as to the field of performance of our customers.

Thus, our Program is one of the six main pillars:

  • Identifying and encouraging compliance with laws and regulations, including anti-corruption legislation and policies;
  • The creation of an internal control mechanism for the implementation, execution and monitoring of the program;
  • Encouraging its direct and third-party employees to comply with the Promare Code of Ethics and Conduct and anti-corruption laws and regulations;
  • Preventive action to prevent fraud and illicit;
  • The establishment of disciplinary measures and remediation of possible damages in case of violation to the standards related to Compliance Promare | Rabb Carvalho Advogados
  • The adoption of transparency regarding donation to candidates and political parties.

Our team, aware that the corporate conduct is materialized through the actions of each of its employees, identified three main norms that regulate its activity: the Law Statute, the Penal Code and the Anti-Corruption Law.

Compliance with the rules, besides avoiding the application of penalties, brings other fundamental benefits. The main thing is maintaining a working working environment. Another benefit is the good reputation in the market and the good acceptance of the public opinion, since the Brazilian society does not tolerate more companies with the name related to corruptive practices, valuing even more those that maintains its reputation unblemished.

The RC | LAW Compliance Department is an independent communication channel for members of the office as well as anyone who is aware of the practice of unethical acts by any member of staff. The compliance department´s governed by an anti-recrimination policy, according to which no one will be harmed by making a complaint in good faith.

The communication channel receives reports with the indicated authorship or even anonymous ones, always guaranteeing the confidentiality with respect to the data of the one that uses the Compliance department. The channel is available to all, and can be accessed through the email: [email protected].

Antaq opens hearing on bidding for areas on the Itaqui Port

The National Waterway Transportation Agency of Brazil (Antaq) opened last Monday (1), a public consultation and hearing to receive contributions, subsidies and suggestions for the improvement of the legal and technical information necessary to carry out a public bidding contest related to the leasing of terminals for handling and storage of liquid fuels, located in the Public Port of Itaqui, Maranhão, Brazil.

The legal technical documents related to this public hearing are available here.

Only the contributions, subsidies and suggestions referring to the documents placed in public consultation and hearing will be considered by the Agency. Contributions can be sent to Antaq by 23:59 on July 31, exclusively through the form and electronic form available only on their website: http://portal.antaq.gov.br/.

By means of identification of the taxpayer and within the stipulated period, it will be exclusively possible to attach digital images, such as maps, plans, photos, etc., through the following e-mail: [email protected]. The contributions received by Antaq will be made available on the portal.

By means of identification of the taxpayer and within the stipulated period, it will be exclusively possible to attach digital images, such as maps, plans, photos, etc., through the following e-mail: [email protected].

The contributions received by Antaq will be made available on the portal. A public hearing will be held at a date and place to be timely defined and disclosed by Antaq.

100% Foreign Ownership for 13 Sectors in the UAE

Following the enactment of the UAE Federal Law No. 19 of 2018 on Foreign Direct Investment (“FDI Law”), the UAE Cabinet has announced the positive list of activities covered by and benefiting from Article 7-3 of the FDI Law.

The UAE cabinet has approved 122 economic activities across 13 sectors that will be eligible for up to 100% foreign ownership. These sectors include:

  • Transport and storage;
  • Agriculture;
  • Space;
  • Manufacturing;
  • Renewable energy;
  • Hospitality and food services;
  • Information and communication;
  • Professional, scientific and technical activities;
  • Administrative and support services;
  • Educational activities;
  • Healthcare;
  • Art and entertainment; and
  • Construction.

The eligible sectors will offer new economic opportunities for international investors looking to explore the UAE market particularly for projects involving e-commerce, research laboratories, advancement in biotechnology, logistics and supply chain, production of solar panels, hybrid power plants and green technology.

The UAE Cabinet has further confirmed that it will be left to the discretion of the local governments at an emirate level to decide on the percentage of foreign ownership for each sector/ activity. This announcement represents a much-awaited step towards the development of foreign investment regulations in the UAE. It is expected to considerably boost the level of FDI in the UAE as a whole and cement the role of the UAE as a global business hub for foreign investments.

The list of privileges awarded to Foreign Direct Investment projects (“FDI Companies”) are extensive and include the following:

  • FDI Companies licensed under the FDI Law shall be treated as national companies within the limits prescribed by the legislation in force in the UAE and the international agreements to which the UAE is a party.
  • FDI Companies may transfer their returns outside the UAE including net annual profits, proceeds from the liquidation of the investment or the sale of all or part of their assets; and funds collected from the settlement of disputes in relation to their activities in the UAE.
  • Employees of FDI Companies may transfer their salaries, indemnities and entitlements outside the UAE.
  • FDI Companies shall be guaranteed confidentiality of technical, economic and financial information as well as investment initiatives submitted to the competent authorities or the licensing authority in accordance with the provisions of the FDI Law in a manner that is compliant with UAE applicable laws and regulations including enforced international treaties in the UAE.
  • FDI Companies, subject to obtaining the required approvals, can admit one or more shareholders; sell the business; change their legal form or enter into a merger without losing the privileges awarded to them under the FDI Law.

We will be posting regular updates in respect of the implementation and development of the FDI Law.

How can economic substance rules impact business in the UAE?

There is a multitude of companies in the UAE that are owned by entities incorporated in “no or only nominal tax” jurisdictions (referred to herein as “noons”) such as the British Virgin Islands (BVI), Cayman Islands, Isle of Man, Jersey, Guernsey, Mauritius, Bahamas, Seychelles, Bermuda and the UAE (to name a few). Except for using these entities only to hold shares in UAE entities, these companies in the noons often also hold intellectual property rights and enter into licensing agreements, franchise agreements, management agreements and other similar agreements with UAE entities, aimed at reducing the perceived risks of retaining these funds in the UAE and/or to take advantage of the no or nominal tax regimes of these jurisdictions from which dividends are distributed internationally. The European Union has however, with effect from 1 January 2019 changed, the playing fields regarding the conduct of business in this way as is explained below.

What exactly are “Economic Substance Rules”

The European Union Code of Conduct Group, after assessing the tax policies of jurisdictions with no or only nominal tax, has prescribed certain criteria which need to be followed resulting in the implementation of laws by these noons for the purpose of eliminating the facilitation of corporate structures or arrangements aimed at attracting profits which do not reflect real economic activity in these jurisdictions. As a result, entities incorporated in noons which conduct certain identified business activities need to show “real economic activity” in these jurisdictions or face fines, penalties and possible de-registration by the relevant authorities in the jurisdiction in which they are incorporated. The European Union has further imposed certain measures in order to obtain cooperation from the noons which include “blacklisting” non-complying jurisdictions. In order to avoid “blacklisting”, all affected jurisdictions were required to promulgate “Economic Substance Rules” into law within their respective jurisdictions by 1 January 2019. In the UAE, economic substance regulations have been introduced by the Cabinet of Ministers Resolution No. 31 of 2019 which came into effect on 30 April 2019.

Essentially all the jurisdictions that have passed “economic substance rules” into law have followed the same criteria in that they have defined which entities are affected, which economic sectors and/or economic activities are affected and have devised certain tests to establish if an entity complies with the criteria for “economic substance” within that jurisdiction. Although all the laws passed by these noons are not exactly the same, the general criteria imposed by the European Union Code of Conduct Group have been applied by all jurisdictions.

Affected Entities

In general, all legal entities that are resident for tax purposes in accordance with the laws of the particular noon must comply with the economic substance requirements, the only exception being if the entity is resident for tax in another jurisdiction from which a tax residency certificate must be obtained to this effect. A number of the noons have also provided particular provisions relating to the determination of tax residency in their economic substance laws.

Affected Sectors & Relevant Activities

Generally, the relevant jurisdictions have made the economic substance laws applicable to the following sectors and/or activities, namely banking, insurance, shipping, fund management, financing and leasing, headquarters, equity holding entities, head offices entities, intellectual property holding and distribution and service centers.

Economic Substance Tests

To show that sufficient economic substance exists within the noon, an entity must pass the following “substance tests”, namely that the entity must from within the noon be (i) effectively directed and managed, (ii) conduct core income generating activities, and (iii) show adequacy in respect of qualified employees, expenditure and physical presence.

Directed & Managed

For an entity to be directed and managed from within the noon it will have to show that regular board meetings are held, the required quorum of directors are present at such board meetings, that the directors have adequate experience and knowledge of such responsibilities, that the minutes of the board meetings are kept, all within the noon itself.

Core Income Generating Activities

The entity must show that core income generating activities (“CIGA’s”) are conducted within the noon with due consideration to the level of income being generated by the entity’s activities. The extent of the CIGA’s may also be dependent upon the economic sector within which the entity falls and/or the economic activity of the entity as certain entities may be an equity holding company and license intellectual property in which case it must pass the test for both activities. The important feature in complying with the CIGA’s is that the income subject to tax in the noon is “appropriate” to the CIGA’s conducted in that jurisdiction.

CIGA’s for the different economic sectors and economic activities will vary. A few examples are as follows: (i) “Equity Holding Entities” would require compliance with relevant corporate filing requirements, manage the shareholdings in the various subsidiaries with adequate personnel and an appropriate premises (ii) “Intellectual Property Holding Entities” would require research and development activities to be conducted in the noon, and (iii) in respect of intangible assets such as brands and trademarks, the CIGA’s would have to include the conduct of activities such as branding, marketing and distribution.

It is possible to outsource certain CIGA’s, even to outside the noon however this would be subject to certain conditions. In the event of outsourcing, the resources of the service provider will be taken into account when determining compliance with the required CIGA’s.

Adequacy

Relating to the two criteria mentioned above, the noon entity must have sufficient qualified employees, incur sufficient expenditure and have adequate assets within the noon in order to justify the income generated by the noon entity. The employees must be physically present in the noon, although they do not need to be directly employed by the noon entity and may be employed by another entity and may be also be employed either on a temporary or permanent basis. The determination of “adequacy” will depend entirely on the particularities of the noon entity and its economic activity.

Reporting Obligations

Each noon has its own reporting mechanisms however, reporting will mostly be by the submission of a bi-annual or annual “economic substance return” specifying how the substance rules are being complied by the entity. Failure to comply with the economic substance rules of the particular noon will result in the imposition of penalties or other ramifications as determined by these laws. As the implementation date of the various economic substance laws in some of the noons was 1 January 2019, the reporting obligations relating to compliance with the economic substance rules for entities incorporated prior to 1 January 2019 is as early as 1 July 2019 in some of these noons.

As part of the filing obligations to the relevant company registration offices, the noon entity will be required to submit the following details: (i) business/income types, (ii) amount and type of gross income, (iii) amount of operating expenditure, (iv) details of premises, (v) number of qualified employees, including experience levels, employment terms, qualifications and period of employment, (vi) details of CIGA’s (for each economic activity conducted), (vii) financial statements (viii) details of outsourced CIGA’s (if applicable), (ix) business plans, especially relating to reasons for holding intellectual property in the noon, and (x) evidence of quorate board meetings and resolutions passed.

Penalties for Non-Compliance

Should the economic substance requirements not be met for each financial reporting period, the noons will impose financial penalties on the noon entities and in cases of repeated violation, the noon entity may even be de-registered or placed into liquidation by the competent authorities. The amount of the penalties are determined by the economic substance laws of the noons and are not uniform. By way of example, in the BVI the Economic Substance (Companies and Limited Partnerships) Act of 2018 provides for a penalty up to USD 20,000 for the first year of non-compliance and for repeated years up to USD 400,00 per year. The impact on a local UAE entity by a holding entity is incorporated in a noon could be that unless outstanding penalties are paid, the company registration offices of the noon entity may not issue documents such as certificates of good standing and the like, that may be required for share or property transfers in the UAE, amongst other problems that may be experienced.

De-Registration & Liquidation

In the event of repeated non-compliance with the economic substance laws of a particular noon, the noon entity may be de-registered or placed into liquidation at the instance of the relevant noon’s company registration office. Should the noon entity be de-registered, this will severely impact upon the local UAE company in that, required documentation will not be obtainable from the company registration authorities in the noon as may be required from time to time in the UAE, the transfer of shares in the UAE entity will be refused, the transfer of property owned by the local UAE entity will be blocked through the lack of documents, bank accounts of the noon entity may be blocked or even closed, the agreements between the local UAE entity and the noon entity may be unenforceable or terminated, and intellectual property rights may be seriously affected.

Action To Be Taken

Where UAE entities are owned by noon entities, the economic substance laws of the particular noon must be complied with to avoid possibly serious implications on the operations of the UAE entity. As the reporting deadlines are close in a number of noons, the necessary action should be taken immediately to establish both the necessity and thereafter the requirements of the particular noon in order to comply with the economic substance rules. In the event that the economic substance laws of the noon applicable to your business require action, immediate corrective action should be implemented to avoid unnecessary penalties. If actions have been taken, it may also be worthwhile to undergo a “health check” to ensure complete compliance.

ZF opens Factory in Pančevo

A leader on the car industry market, the German company ZF opens its factory in Pančevo within the first phase of the EUR 160 million investment. The factory will start producing machines, generators for hybrid and electric drives, gearshift switches and microswitches in the first half of June.

The Karanovic & Partners team, led by Senior Partner Marjan Poljak and Senior Associates ⃰ Ana Stanković and Ana Luković, advised ZF Group in this greenfield investment on all local law aspects of this project. Our legal experts provided full support in a number of different areas, including corporate, real estate, employment etc.

The beginning of the factory’s operations, on 10.8 ha of the North business zone in Pančevo, which the city has given to the investor free of compensation, will mean 540 new jobs for the people of Pančevo.

The Serbian Government pronounced this project an investment of importance for the state’s development. For Pančevo, this is the first direct greenfield production-technological investment in the last 40 years. The factory will open 1,000 new jobs in total, as well as enable a significant transfer of state-of-the-art technology and an increase of public revenues – 67% of which will remain in the local self-government.

ZF will start the second phase of investments this year as well, instead of 2022, as initially planned. The second stage entails the expansion of the production to an additional 30,000 square metres of space, and the establishment of a research and development centre, for which the company has set another EUR 60 million.

ZF operates in 40 countries around the world and has a global workforce of over 146,000 employees. In 2017, it recorded sales of EUR 36.4 billion. The company invests more than six percent of its sales in research and development annually, in particular for the development of efficient and electric drivelines. ZF group is committed to its Vision Zero – zero accidents and zero emissions being the end goal of all the company’s activities.