SLG Newsletter: July 2020

Dear Friends and Clients,

In this newsletter I will once again write NOTHING about Covid. What you should/must do as a UAE or Thai resident, you can find below.

But I want to point out a problem that might be topical in these times, namely the difficulties with the local partner, which can become acute especially at general meetings in LLCs.

Despite the UAE foreign direct investment law 2018, there are not many Emirates that deviate from the 51:49 rule, or in the case of old companies, restructuring may take time anyway.

Usually, the “sponsor” or local partner, with a “gagging contract”, is obliged to do everything that the foreign 49% shareholders want. If this contract also mentions “trusteeship”, the shareholders and the managing director will already get into legal difficulties.

The law not only provides that a “commercial dissimulation ” (and this is the case if the local partner only holds the shares in trust for the foreigners) is null and void and can be dissolved by the court, but also that there are severe penalties (money and prison sentences) for anyone who supports the commercial dissimulation and makes false statements to the authorities.

The situation becomes particularly difficult if more than one foreigner is involved on the 49% side and the local partner is then supposed to hold his 51% for several shareholders. What is the situation in case of disagreement among the foreigners? Who should the local vote for?

The case law of the UAE Court of Cassation is not consistent what concerns the validity of these side agreements. In some cases – if the side agreement was well drafted legally – its validity was confirmed, in other cases it was declared void and the local was granted all shareholder rights under the MoA.

Therefore, I can only strongly recommend to have the agreement with the local partner (if it has not been drafted by a renowned law firm) reviewed in order to avoid unexpected difficulties if the worst comes to the worst. It has even been seen that there are foreigners who trust blindly and do not enter into any agreement with the local partner at all. But they should be punished for their carelessness anyway.

We are available at any time to review or revise the contract with the local partner.

With best wishes for the Eid holidays and the Al-Hijra New Year


Theodor Strohal

UAE traveling guidelines

Since June the UAE has allowed entry of foreigners holding a valid UAE residence visa to enter the country again. A residence entry permit should be obtained before entry. Eligible residents will receive an approval shortly after application.

Pre-flight Requirements for Residents

– Residence Entry Permit – applications can be done through the ICA or GDFRA website. Applications may get rejected due to precautionary measures and applicants may re-apply at a later time.

– Costs accrued for quarantine or any medical assistance whether at home or in another designated facility will be borne by the individual. In certain circumstances, the companies by which the returning individuals are employed shall bear all costs related to the medical examination and quarantine.

– All residents returning to the UAE will be required to download the Al Hosn App which will allow the authority to monitor them while on quarantine.

– All travellers to Dubai, including passengers with a connecting flight, must complete a health declaration form which is available during check-in and should be submitted to the check-in staff.

– Isolation will be required for positive results and DHA guidelines must be followed. COVID-19 DXB Smart App should be downloaded.

COVID-19 Updates for relevant authorities and airlines can be found here.

Please be aware that these requirements and/or measurements can change daily. If you need further assistance, please do not hesitate to contact us.

COVID-19 Visa update:

All expired UAE visas have to be renewed immediately:

The UAE Cabinet has announced that all individuals with expired UAE visas from 1 March 2020 who are inside the country must renew their visas with immediate effect. Individuals with expired UAE visas from 1 March 2020 who are currently outside the country for no more than 180 days, will have one month to renew their visas from the date of entry into the UAE.

All previously incurred penalties have been automatically waived. However, delays in renewing expired visas will result in accumulation of new fines as announced by the UAE Cabinet. In addition, the requirement of medical fitness exam for visa renewal has been reactivated.

Residents who have been out of the UAE for more than six months, will have a specific grace period determined by the ICA. Residents will be permitted to enter the UAE. Once flights resume between the country they are currently in and the UAE, they need to get ICA or GDRFA approval prior to their return. The understanding is the grace period will be 30 days on entry to the UAE.

For further updates, regarding the visa renewal, please do not hesitate to contact us.

RAKEZ: Special renewal boosters

RAKEZ has launched its special renewal boosters for SMEs valid until September 15 2020 subject to terms and conditions. It offers the following packages:

–  15% renewal package

– 15% 2021 renewal package

– Flexible installments

– Multiple year renewal packages – 2-year (20% off), 3-year (25% off), 4-year (30% off)

Dubai Airport: Smart Gates are now open

Smart Gates are now open and functional at Dubai International Airport’s Terminals 2 and 3. The upgrade and installation of 68 smart gates has been done on arrival and departure areas to ease entry and exit processes.

Saudi Arabia: COVID-19 relief – KSA allows businesses to delay loan payments for a year

Saudi Arabia has announced that it will put off private sector loan payments for a year to reduce the impact of COVID-19 on businesses. This applies to entities who have signed up for the Corporate Sustainability Programme. The loan deferment will extend to loans provided by the programme to the health and educational sectors as well. There are also tax related measures extended to the private sectors like extending deadlines for filing and payment of tax returns. The Central Bank also gave $13.3 billion into the banking sector to enhance liquidity and enable banks to continue providing credit facilities to the private sector.

Far East:

Thailand: Covid-19 update

Thailand has confirmed that medical tourists, investors and businessmen will be the first to be allowed entry in the country. There are around 700 investors who already requested for a permit to enter. For batch two, there are 22,000 highly-skilled workers and experts, and 2,000 foreigners waiting to return to their Thai families, and other expats, and 30,000 people seeking entry for medical services. Short-term businessmen and guests are placed in another batch for future consideration.

Thailand and New Zealand were honoured by the WHO for having best managed the Covid 19 pandemic. In fact, due to rigorous protection measures, Thailand only had a total of 3,300 cases, of which 3,100 were recovered and only 58 deaths. The restrictions continue, there is no entry for tourists, even residents, diplomats etc. have to spend 14 days in quarantine hotels, no matter where they come from. The further loss of international tourism is bringing Thailand an unemployment rate of well over 10% and a predicted slump of the economy of over 5%. It will not be easy for the government under General Prayut to overcome these hurdles, but in the end the military is behind the government and guarantees peace and stability. The prices for land, housing and luxury goods are falling into the ground, it is time to invest. Thailand is the second largest economy in the ASEAN region after Indonesia and is likely to remain so. With our new consulting company, we can advise in all investment ventures.

Laos: New regulation for currency exchanges

Central Bank of Laos has imposed a new regulation on currency exchanges. Individuals and entities who want to operate a currency exchange business must first obtain a license from the Central Bank. The only entities allowed to obtain the license are businesses connected with the hotel and tourism sectors. Approved and licensed businesses are expected to follow the rules of the Central Bank to avoid fines and penalties.

Vietnam: New immigration law to attract foreign investment

Vietnam has launched a new visa type for foreigners and aims to attract more foreign investment. Its validity is from 6 to 12 months for foreigners who enter to promote services and establish commercial presence in the country. The new visa rule which came into force this July is part of the international agreements that it has signed such as the EU-Vietnam Free Trade Agreement (EVFTA) and EU-Vietnam Investment Protection Agreement (EVIPA). The outdated immigration law regulated that all certified foreign investors in Vietnam could obtain a five-year-visa regardless of their investment capital. The new law issues a visa with a duration of at most 12 months and does not grant temporary residence cards to foreign investors that invest less than three billion dong. Foreign investors who contribute capital of 100 billion dong $4.3 million or more in Vietnam are granted an up-to-five-year visa and temporary residence cards for at most 10 years. The outdated law also required citizens from 13 countries entering Vietnam under the visa waiver scheme to wait for at least 30 days to return and the new law has removed this regulation, creating conditions for foreign visitors to return anytime. Countries from which citizens do not have to apply for visas to enter Vietnam include Belarus, Denmark, Japan, Norway, Italy, Finland, France, Russia, South Korea, Spain, Sweden, Germany and the UK.

Vietnam also announced the opening of their automated border gates for Vietnamese citizens and foreigners who hold temporary and permanent residence cards in Vietnam. Furthermore, foreigners who entered the country under visa waiver programmes, e-visas or tourism visas after March 1 will be automatically granted stay permit extensions until July 31 free of charge due to the COVID-19 pandemic.

Scroll to Top