New regulations for associations (Civil-Societies) in Dubai

 

Whether sports clubs, music clubs, carnival clubs or other clubs – in Central Europe a large proportion of the population is a member of one or more clubs.

What many expats in the UAE do not know, however, is that association law, as we know it from Central Europe, hardly existed in the UAE up to now and that associations – in order to maintain their own legal personality – had to make use of various circumvention constructions, such as registration as a quasi-public corporation.

Only the UAE Federal Law No. (2) of 2008 Concerning Associations and Domestic Institutions of Public Interests provides for the right to establish institutions of public interest under certain conditions. Membership in such institutions, however, is tied to Emirate citizenship and is therefore not open to expatriates.

The new Dubai Law for Civil Societies

In order to promote the formation and establishment of “associations”, the Ruler of Dubai, His Highness Sheikh Mohammed bin Rashid Al Maktoum, recently issued the new Law No. (12) of 2017 Regulating Civil Societies and commissioned the Community Development Authority (CDA) to implement it. This law only applies in the Emirate of Dubai and has no effect on the existing Domestic Institutions of Public Interest mentioned above.

For the foundation of such a civil society, the following prerequisites must be fulfilled:

  • At least 10 founding members (natural or legal persons), of which at least two must be Emiratis members;
  • Permitted activities are social, health, educational, cultural, scientific, creative, artistic and humanitarian activities;
  • No profit orientation (non-profit);
  • The statutes must be drawn up in accordance with the new law and must contain, among other things, the name, the seat, the activity, the intended geographical area of activity, the purpose, the target group and the names, nationalities and professions of the members of the civil society.

The CDA decides on the admission of the civil society within 30 days from the application for admission and, under certain circumstances, issues conditions which must be fulfilled within half a year.

If all conditions are fulfilled, the civil society receives an admission (license) for one to three years and can be renewed within 30 days before expiration.

Since the new law also applies to already existing organizations, which exercise one of the permitted activities, they now have to register compellingly as civil-societies.

Rights and duties of the civil society

The civil society is entitled to open branches within the Emirate of Dubai, provided the CDA agrees.

It is headed by a board of trustees, which must have at least five members elected once for two years, of which at least two must be Emirati citizens.

The civil society has to open a bank account; on which it has to pay in its means needed for the activity. The bank account as well as any changes with it are to be announced to the authority in each case within 10 days. If the authority agrees, the civil society is entitled to invest any financial surpluses from its activity for the acquisition of a financial income, if this serves the association purpose.

The civil society has to adhere to all laws and possible editions and conditions of the CDA. Commercial activities are permitted only with the approval of the authority, any political activities as well as activities which could impair the state security are strictly forbidden. This prohibition also applies to cooperation with any organization outside the UAE.

Civil-societies are subject to strict control by the tax authorities, which in particular monitor the source of income and purpose of expenditure incurred. Calls for donations via print, radio or online media are only permitted with the express permission of the Islamic Affairs and Charitable Activities Department.

Possible consequences of non-compliance

Civil-societies or persons who violate this law can be punished with penalties from AED 500 to AED 100,000, in case of recurrence even up to AED 200,000. In addition, such civil-societies can also be threatened with suspension or even license revocation and dissolution.

According to Decree No. (9) of 2015, violations of the regulations on appeals for donors/collections can result in sentences of up to AED 100,000 and imprisonment for up to one year.

How the CDA and other authorities will apply the new law in practice cannot yet be predicted and will probably only become apparent in the coming months.

If you have any questions on this subject or need help with other legal issues, please contact us at office@slglaw.cc or tel: +971 7 236 4530.