Posted: September 9th, 2022

Business Structures and Processes – 2

Business Structures and Processes – 2
Abu Dhabi is a strategic position to establish businesses due to the existing enabling environment as well as the economic growth and development; however, there is need to consider the legal and regulatory environment and the Abu Dhabi Economic Vision 2030 in setting different forms of businesses to ensure that they are successful and are aligned to the regions legal, social and economic requirements. There are different forms of businesses that one can start in Abu Dhabi based on their advantages and disadvantages. The different forms of businesses have different advantages and disadvantages that are a vital point of consideration since they immensely contribute to the success of the businesses. The advantages of the businesses need to ensure that business goals are achieved through effective operations and efficient coexistence with the set laws, regulations, and policies in the economic and legal environment. Equally important, the Abu Dhabi Economic Vision 2030 is a vital point of reference in starting a business as well as making a choice on the ideal form of businesses to conduct in UAE. The Abu Dhabi Vision 2030 entails deliberate policies for the growth and development of Emirate in different spheres and sectors. The visions 2030 gives in inclined towards developing a long-term economic vision for Dubai. In this regard, the vision 2030 for Dubai has created an elaborate long-term roadmap for economic progress through the creation of common frameworks that enhances the alignment of policies and plans and fully engages the private sector in their interpretation. This approach ensures that both the private and public sectors are involved in the economic, social, and financial growth and development in Dubai. The fact that the private sector is incorporated in the vision 2030 will guide entrepreneurs on the forms of businesses to form as well as the business and legal practices to engage in. Additionally, the legal and regulatory requirements need to be considered to guide the formation of different businesses. The legal and regulatory framework determines the formation of different forms of businesses, their operations, and structures. The establishment of businesses in Abu Dhabi calls for the consideration of different factors such as legal and regulatory requirements, and economic vision 2030 to increase the chances of business success through compliance and alignment with the enabling factors.
Literature review
Different researchers and writers have evaluated the different forms of businesses in relation to different factors determining their success, such as the internal and external environments, legal factors, and economic factors. According to (Philip 2010), there are different factors that affect business operations and success, such as environment, legal, technological, social, economic, and political factors. In this case, the legal and regulatory factors determine the business operations, structure, and relations with relevant parties such as the government or other businesses. The legal factors are external to the businesses, and the business has an obligation to abide by them to avoid conflict with the law and other government and private entities. In this regard, there are different laws that govern the operations of businesses such as consumer law, import and export laws, discrimination law, fraud laws, copyrights laws employment laws, and health and safety laws. The different laws dictate the business operations and other vital factors that determine the success of the business, and thus starting a business need to consider and incorporate the different legal factors.
The business legal environment is vital in the determination of business success across the globe (Gunningham and Kagan, 2005). The legal environment determines the government taxes imposed on the businesses as well as regulatory measures imposed in the interest of advancing economic growth and protecting consumers from exploitation from other parties. In this regard, parties starting new businesses need to consider and understand the role of regional tax measures, regulatory measures, and factors affecting businesses to determine the effects they will have on the businesses. Additionally, legal issues in the environment need to be considered to enhance regional economic analysis. Different laws come into play, such as organizational law, securities law, contract law, consumer protection laws, employees’ protection laws, and immigration laws, government procurement laws. The legal environment determines the analysis of businesses to determine their success in different environments.
Durnev and Kim (2005), legal factors have a significant impact on businesses since the law and regulatory determinants have both positive and negative results on the management decisions and market actions for organizations in different countries. In this regard, investors tend to establish their businesses in countries with a legal environment that work for them and their businesses. International companies need to analyze and identify the legal environment for every state, as this aspect forms a strategic analysis method for businesses. Additionally, the legal environment keeps changing due to changes in the international and political climate, and thus legal factors are vital factors in businesses.
According to Low (2012), Abu Dhabi’s vision 2030 is an ongoing journey of economic development that will determine the success and progress of businesses. The vision 2030 is inclined towards ensuring that Abu Dhabi and other regions of UAE experience economic development in general. This fact will encourage the establishment of businesses through the establishment of global businesses and foreign direct investments since the environment favors businesses. The business policies and regulations aimed at empowering and improving business operations, and thus the Vision 2030 framework ensures that both the region/country and business experience growth and development concurrently.
Analysis
Different types of companies and businesses
There are different forms of businesses offshore, free zone, and mainland formation, and all a guided by relevant laws and regulations. Law UAE laws tasked with the power of corporation businesses, as well as regulating finances and governance, is the UAE corporate law. The law establishes different legal forms of business. First, there is the sole proprietorship that is defined as a business entity that is owned and run by a single person, and there is no legal distinction between the business and its owner, the owner of the business has unlimited responsibility for the accrued debts and losses and enjoys all the profit and income generated from their businesses (Alajoutsijarvi, Juusola, Lamberg, 2014). The businesses in Abu Dhabi have easy to run and establish, and one can hire independent consultants in different aspects. Consequently, UAE law has the provision of civil companies that entails a business establishment for professional in partnerships such as accountants, engineers, lawyers, and doctors. The law states that civil companies are fully owned by the partners apart from engineering in civil organizations where UAE National Local Service Agent is incorporated in the establishment of the business. The law further requires that foreign organizations can only partner with civil companies in the UAE when they are in the same field. Furthermore, the UAE law provides the formation of limited liability companies that are composed of sole proprietorship or partnerships with limited liability. The UAE law does not permit 100% foreign ownership of limited liability companies. The UAE Commercial Companies Law (CCL) dictates that foreign investors should never hold more than 49% of the equity ownership. In this regard, 51% of a company’s equity should be held by the nationals of the UAE. Moreover, the UAE law enhances the operations of a branch or the representative office that has a similar legal identity as a parent company and operates with the name of a parent company (Davidson, 2007). The branch engages in activities that are similar to those of the parent company as it is the representative of the parent company. The law requires the representative office to have local representation through agents and further obtain extra licenses to show compliance from the ministry of economy in UAE.
Procedures for establishing SMEs in the UAE
The UAE Commercial Companies Law no. 2 of 2015 dictates and directs the procedures and processes involved in the establishment of SMEs in UAE. SMEs are vital in the growth of the economy, and in Dubai, they form part of the Dubai Department of Economic Development (Nuseir, 2018). The government of Dubai has made efforts to promote and nurture SMEs through marketing and the provision of incentives for such enterprises. Therefore the UAE law recognized all the SMEs in the service sector, manufacturing, and trading.
The setting up of SMEs in Dubai attracts different perks and benefits that are aimed at attracting entrepreneurs and business owners. This means that one will go through a rigorous documentation process to access the relevant licenses to form the business. First, the establishment of businesses in UAE begins with the selection of licenses of the businesses based on their different types and requirements such as commercial, industrial and professional sectors (Nuseir, 2018). In this case, the businesses to be established are an SME that will have different procedures and requirements of documents. For instance, one could be required to have a local partner in the formation of the business. Consequently, the SME is registered, and its location ascertained. If one wants to fully own the business, then they are required to set it in a free zone while if they set in in a local area, then they will have a 49% stake. Moreover, the investor moves to address the legal formalities based on the form of a business entity as well as the location (mainland, free zone, and on-shore) of the business. This approach enables the investor to complete the set up for the SME. The investor proceeds to establish their businesses with the aim of benefiting owing to the fact that economic and political stability in the region.
Additionally, there are different laws tasked with governance and regulation of business operations. For instance, there is competition law to regulate business operations by enhancing fairness and appropriate relationship between different SMEs in the economy (Schiliro, 2015). On the other hand, there is the Federal insolvency law to ensure that SMEs can effectively obtain third party funding as the debtors are guaranteed that loans will be serviced. The different processes, laws, and regulations in the establishment of SMEs are anchored by the vision 2030 that enables the provision of an enabling environment for the businesses.
Partnership with foreign investors
There are different methods that can be adopted in forming partnerships with foreign investors. First, partnerships can be attained through business associates that are achieved through effective partnering and networking (Dulkami et al., 2010). The links between business people make it possible to develop links, initiate cooperative activities, securing business information obtaining technology and resource of capital. Consequently, partnerships with foreign investors can be achieved through the method of business associations that include industry association, boards of trade, bilateral business council, and chambers of commerce. This ensures that partners join and supplement each other’s efforts in doing business. Furthermore, a partnership is attained through business advisors to improve the existing business operations. In this regard, business partners with professionals, specialists, and consultants such as accountants or lawyers to improve business operations. Additionally, a partnership is attained through partnering with financial institutions such as trading organizations, export credit agencies, individual traders, and banks. The financial institution provides invaluable services such as funding, potential partners, and information that are vital to navigating in the market. The partnership is a vital aspect in line with vision 2030 as they provide a framework for the achievement of financial and economic growth and development.
Conclusion
An Emirati investor needs to take advantage of the enabling business environment that is characterized by an effective legal environment and vision 2030 framework that encourages the formation of a business to establish their different enterprises. In this regard, the establishment of a business in the form of a partnership will be the most appropriate has it will supplement the business operations with the relevant information, funds, and other professional help directed towards the economic progress and growth of the business. The different kinds of literature indicate that the legal environment and regulations are established to enhance the protection of business and locals, improve business efficiency and as well as govern and regulate operations. Additionally, the formation of businesses such as SMEs is done through processes and procedures which are made very flexible for the locals and foreign investors in Abu Dhabi. The legal environment and regulation, as well as the vision2030 framework, need to be complied with to ensure that businesses are successful.
References
Alajoutsijärvi, K., Juusola, K., & Lamberg, J. A. (2014). Institutional logic of business bubbles: Lessons from the Dubai business school mania. Academy of Management Learning & Education, 13(1), 5-25.
Davidson, C. (2007). The emirates of Abu Dhabi and Dubai: Contrasting roles in the international system. Asian Affairs, 38(1), 33-48.
Dulaimi, M. F., Alhashemi, M., Ling, F. Y. Y., & Kumaraswamy, M. (2010). The execution of public–private partnership projects in the UAE. Construction management and economics, 28(4), 393-402.
Durnev, A., & Kim, E. H. (2005). To steal or not to steal: Firm attributes, legal environment, and valuation. The Journal of Finance, 60(3), 1461-1493.
Gunningham, N., & Kagan, R. A. (2005). Regulation and business behavior. Law & Pol’y, 27, 213.
Low, L. (2012). Abu Dhabi’s vision 2030: an ongoing journey of economic development. World Scientific.
Nuseir, M. T. (2018). Digital media impact on SMEs performance in the UAE. Academy of Entrepreneurship Journal, 24(2), 1-13.
Philip, M. (2010). Factors affecting business success of small & medium enterprises (SMEs). Asia Pacific Journal of Research in Business Management, 1(2), 1-15.
Schilirò, D. (2015). Innovation in small and medium enterprises in the United Arab Emirates. Int’l J. Soc. Sci. Stud., 3, 148.

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