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New Dubai RERA Law Issued

His Highness Sheikh Mohammed bin Rashid Al Maktoum, in his capacity as the Ruler of Dubai, earlier this week issued the Dubai law No. (4) of 2019 (“New Law”) pertaining to the Real Estate Regulatory Agency (“RERA”) initially established by law No. (16) of 2007 as predominantly the regulatory arm of the Dubai Land Department (“DLD”).

The New Law provides for a reorganization of RERA’s legal capabilities and capacities and defines a set of important objectives for RERA, including the contribution to the advancement of the real estate sector through an integrated system of regulatory and control measures which shall enhance its role in the overall economic development of Dubai, provide an assuring and supportive environment for the real estate development projects to safeguard the rights of both real estate developers and investors, keep pace with the steady growth of the real estate sector and all related activities, enhance the role of UAE nationals in this sector and implement programs that will enable them to participate in real estate activities, as well as to develop the codes of principles and ethics required for practicing real estate activities.

The New Law confirms that RERA will continue to exercise certain powers established under the previous law, including the organization and supervision of real estate development escrow accounts, approving qualified banking and financial institutions to manage these accounts, and the adoption of rules governing practitioners of the real estate development activity, the sale and rental of real estate, real estate brokers, real estate assessment and joint ownership of real estate property.

The New Law came with a number of key modifications and additions to RERA’s functions and specialties broadening thereby its scope of authority over real estate activities in the Emirate. The newly introduced powers include that RERA shall now be responsible for organizing and licensing real estate activities and supervising the practitioners of these activities in order to ensure their compliance with the laws and regulation governing the real estate sector. RERA will also be responsible for the supervision and inspection of the management, operation and maintenance of joint real estate properties, proposing the necessary legislations to regulate the work of real estate practitioners, and issuing the necessary regulations for the training and qualification of employees in the organizations licensed to practice real estate activities through the Dubai Real Estate Institute (“DREI”), in addition to the registration and issuance of identification cards to practitioners of real estate industry.

Launch of Joint Initiative to Streamline UAE’s Real Estate Sector

A memorandum of understanding (MoU) between DLD and BSA was signed to promote foreign and local investment opportunities in Dubai through an innovative framework that will boost transparency and streamline transaction processes for investors in the sector. As part of the REL initiative, DLD is introducing several investment products to lift restrictions in the current real estate laws that will allow for more vigorous real estate investment in Dubai. The new initiative will especially facilitate the purchase and sale of properties by corporate entities with ultimate foreign ownership, therefore opening up the market to more corporate investors.

Sultan Butti bin Mejren, director general of DLD, said: “At DLD, we are keen to support the directives of our wise leadership and the strategies to make Dubai the smartest and happiest city in the world. The MoU with BSA further supports our mission to consolidate and attract foreign and corporate real estate investments to Dubai. We are working to strengthen the real estate sector in the Emirate through such partnerships that ensure the ease and speed of regulatory and investment procedures.”

Dr Ahmad bin Hezeem, Senior Partner, BSA, said: “The overarching goal of this progressive initiative is to open up Dubai’s real estate market to more investors, increasing investment flows in the process. The REL initiative will provide a legal framework that streamlines and facilitates the process for investing capital in the city. This, in turn, will attract a wider range of investors and transactions. It’s a pleasure to once again be joining forces with DLD in support of the work we have been doing over the past 20 years reinforce our clients’ investment interests in Dubai’s real estate sector. In essence, the enhanced investment framework proposed by the REL will simplify the processes for clients.”

Majid Saqer Al Marri, CEO of the Registration and Real Estate Services Sector at DLD, said: “Our MoU with BSA is another step on our journey to ensuring the comfort and happiness of our customers through streamlining the processes of Dubai’s real estate sector. We will remain vigilant and progress upon our path of helping achieve objectives and keeping pace with developments in the field of registration and real estate services.”

The announcement comes after BSA’s previous collaboration with DLD to host ‘Legal Clinics,’ which provided the public with a six-hour window to access free advice from 25 expert lawyers, who specialise in areas as varied as real estate, construction, employment, compensation claims, criminal matters, debt recovery, tenancy disputes, inheritance, and family matters.

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UAE Insurance Authority Issues list of Administrative Fines

The UAE Insurance Authority (‘IA’) has now promulgated and issued the ‘Cabinet Resolution No 7 of 2019 Concerning the Administrative Fines Imposed by the Insurance Authority’ (‘the Resolution’), which was issued by His Highness Mohammed Bin Rashid Al Makhtoum, the Prime Minister of UAE on 6 January 2019, followed by its publication on the IA’s website earlier this month.

The Resolution applies to all licensed United Arab Emirates (‘UAE’) insurance companies and insurance related professionals such as TPAs and Loss Adjustors, defined in the Resolution as ‘Company’ and ‘Insurance-Related Professionals’ respectively. The Resolution provides an extensive list of violations and administrative fines for breach of the listed violations.

The penalties are far reaching in that UAE insurance providers could be exposed to fines of up to AED two (2) million.  Any fine issued by the Board of the IA can be appealed within 15 days of the publication and the Board shall provide a decision on the appeal within 60 days of filing the appeal.

Historically, the fines and penalties under Federal Law No 6 of 2007 were mostly restricted to licensed entities and left scope for evasion of the penalties. The violations and fines listed in the Resolution are likely to be strictly enforced by the IA. By way of illustration, any entity carrying out re-insurance in UAE without the necessary license from the Authority can now be fined AED 250,000.  Similarly, Representative Offices of foreign insurance companies carrying out their business in UAE without prior approval from the Authority will attract a fine of AED 250,000.

In addition, insurance mediation with a non-licensed UAE insurance company is not permitted and attracts a fine of AED 100,000. Reinsurance and insurance mediation violations within the Resolution provides an interesting interpretation in the context of current UAE reinsurance and insurance mediation operations in the UAE, which might expose insurance providers and their insurance counterparties inadvertently to penalties.

The Resolution comes into force from 6 April 2019 and is significant in terms of the 204 listed violations and the financial costs to the stakeholders of the UAE insurance industry should they not correct their regulatory position within 5-6 weeks.

Many UAE insurance providers will need to audit their regulatory position including meeting the UAE solvency obligations under the UAE Financial Regulations as well as their operational and distribution requirements in order to avoid risk of violating the provisions of the Resolution.

Insurance providers should carefully review the provisions of the Resolution and the attached Schedule to correct any violations or potential violations to avoid costly and unnecessary penalties.  No upper limit has been prescribed for the fines, nor are there any provisions for compounding of the fine, perhaps suggesting that the fines will be multiplied by the number of times the violation occurred.
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Hadef & Partners opens new Notary Public Service

Hadef & Partners is proud to be the first Private Notaries to be authorised by the Abu Dhabi Judiciary Department to provide Notary Public Services in the Emirate of Abu Dhabi.

Previously, notary services could only be provided by designated government officials within Abu Dhabi.

This expanded service is an initiative by the Government to privatise certain services for the added convenience of businesses and residents in the Emirate of Abu Dhabi.

Commenting on the appointment, Managing Partner Dr Faraj Ahnish said:

“We are extremely proud to have been granted authorisation by the Abu Dhabi Judiciary Department and delighted to have been appointed as the first Private Notary Public officials to provide these services in Abu Dhabi. We have been a key part in the fabric of the UAE business community for almost 40 years and our regional expertise and knowledge, combined with our ability to offer Notary Public services, will enable Hadef & Partners to meet the increasing needs and demands of businesses and individual clients in Abu Dhabi.”

The service offering of Hadef & Partners presently includes a range of notarial services, such as:

  • Powers of Attorney
  • Mortgage Transactions
  • Local Service Agent Transactions
  • Settlement and Compromise Transactions
  • Acknowledgements and Undertakings
  • Sale and purchase of shares or moveable assets

Our services also include advising clients on requirements to amend documents and/or prepare any additional documents needed to satisfy the requirements for notarisation.

For convenience, Hadef & Partners can also provide mobile notary services whereby one of our Notaries can arrange to come to an office or home location for the purpose of notarisation.

For further information, please contact Hadef & Partners. Telephone: +971 2 205 5300 or Email: [email protected].

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Getting The Deal Through – Distribution and Agency 2018

Global commerce depends, to a very great extent, on the relationships between manufacturers and suppliers on the one hand and their distributors and commercial agents around the world on the other. These relationships are the linchpin to moving goods and services to new markets around the world and they are governed, not only by the contracts negotiated between suppliers and their distribution partners, but by a wide range of laws and regulations, which vary widely from country to country. Developments in areas such as privacy and data protection and increasing concerns over cybersecurity affect distribution relationships as well, as a result of the normal sharing of customer information and other data between distribution partners.

This Distribution & Agency book covers the main points of law and regulation governing relationships between suppliers and manufacturers, and distributors and commercial agents, worldwide. Written by local experts in key jurisdictions, topics covered include: regulations governing direct distribution; potential restrictions, financial and tax considerations on foreign businesses’ operations; distribution structures available to suppliers; regulation of relationships between suppliers and distributors; restrictions on the distribution of competing products; relevant consumer protection laws; restrictions on contractual choice of law, courts or arbitration tribunals; and dispute resolution, mediation and arbitration procedures and processes.

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New Insurance Authority regulation to impact insurance consultants

Published on May 20th, 2018, Decision No. (12) of 2018 issued by the United Arab Emirates (“UAE”) Insurance Authority regulates the licensing and registration of insurance consultants and organizes their operations.

The strict requirements introduced will allow the UAE Insurance Authority to ensure a high quality of insurance consultancy services provided to clients throughout the UAE.

All consultants currently registered are granted a period of six months to rectify their situation and submit all documents required by the Insurance Authority to maintain their registration. Failure to do so will result in cancellation of their registration and would prevent them from legally providing insurance consultancy services to their clients until they are fully compliant with the Decision No. (12) of 2018.

The new law implements strict requirements which aim to better organize the practice of insurance consultancy in the UAE:

– It prohibits all insurance consultants from combining their profession (as insurance consultants), with any other profession associated with insurance. For example, an insurance consultant may not also act as an insurance broker.
– Educational requirements and practical experience requirements have been specified for individual insurance consultants and an assessment to pass prior to registration has been introduced.
– Stricter conditions issued for foreign companies wishing to practice insurance consultancy in the UAE as these companies will need to be licensed as insurance consultants in their country of origin.
– Decision No (12) of 2018 has also introduced a professional indemnity and an insurance policy as follows:
– Corporate insurance consultants will need to submit to the Insurance Authority a professional indemnity and an insurance policy with a sum insured of 3 million dirhams, with a maximum deductible amount of thirty thousand dirhams (AED 30,000). Employees of corporate insurance consultants are not subject to this requirement.
– Individual insurance consultants will need to submit to the Insurance Authority a professional indemnity and an insurance policy with a sum insured of 5 million dirhams, with a maximum deductible amount of thirty thousand dirhams (AED 30,000).
– Penalties for infringement have been introduced. Any violation of the Decision No. 12 will put insurance consultants at risk for penalties, including but not limited to license suspension and/or cancellation.
– This decision will undoubtedly result in a significant decrease in the number of insurance consultants currently registered at the Insurance Authority as many won’t be able to satisfy the new prerequisites.