Hannah Gutang, Author at LexisNexis Middle East

Sharjah: Issues a Decree Establishing the Judicial Council

08/11/202408/11/2024
by Hannah Gutang

Sharjah has issued a decree establishing the Judicial Council in the Emirate, to be chaired by the Deputy Ruler.

The decree states the establishment of a judicial council called the “Judicial Council”, which shall have legal personality and the necessary legal capacity to achieve its objectives and exercise its competencies.

It shall have financial and administrative independence and shall be the highest authority for the judicial system in the Emirate, aiming to assist the Ruler in managing and organising the judicial authority.

The Judicial Council shall be formed under the chairmanship of the Deputy Ruler, and the membership of the Head of the Judicial Department, the Head of the Legal Department of the Government, the Head of the Court of Cassation, the Head of the Judicial Inspection Department, and two members of the judicial authority chosen by the Judicial Council.

A law shall be issued to organise the Judicial Council in the Emirate, in accordance with the legislative procedures followed.

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News developments

Saudi Arabia: Real Estate Transactions Tax

08/11/202408/11/2024
by Hannah Gutang

Al Watan, 3 November 2024: A workshop titled “Real Estate Transactions Tax” organised by the Real Estate Committee at the Ahsa Chamber of Commerce, in cooperation with the Zakat, Tax and Customs Authority, has determined that it would take 5 minutes on average to register a property on the electronic Real Estate Transactions Tax platform.

The platform aims to facilitate the process for users, enabling them to register their properties for taxation, pay the applicable tax on non-exempt cases, and complete this essential step before finalising the property transfer or contract documentation.

The platform’s services include tracking application status, viewing invoices, and modifying or canceling applications.

The workshop has emphasised the importance of considering the fair market value, which is the amount due for the property (in exchange for similar and concurrent goods or services provided flexibly between unrelated parties).

The Real Estate Transactions Tax is an indirect tax on all transactions that result in a legal effect, involving the transfer of property ownership or possession for the purpose of ownership or usufruct from one person to another.

The transaction may be contingent on a subsequent action by the parties involved, such as a sale, or based on the unilateral will of the transferor, such as a bequest.

It includes gifts, exchanges, barters, financial leases, Islamic leases ending in ownership transfer, transfer of shares in real estate companies, and long-term usufruct contracts exceeding 50 years.

The tax applies only once in cases where the parties, property, and value remain the same.

The Real Estate Transactions Tax exempts certain transactions, such as those involving inheritance division, transfers without consideration to family members or charitable associations, and forced transfers due to expropriation for public benefit.

Other exempted transactions include documented gifts to spouses or third-degree relatives (under specific conditions), transfers based on a legal will, temporary transfers as security for financing or credit (unless permanently transferred), transactions before the regulations’ effective date related to lease-to-own or financial leases, temporary transfers between a fund and a custodian, and contributions of property as in-kind shares in a company established in the Kingdom.

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News developments

Qatar: The Official Gazette Outlines Three Controls for Remote Referendum

08/11/202408/11/2024
by Hannah Gutang

Al Arab, 3 November 2024: The Justice Ministry has published issue No. 16 of the Official Gazette for the year 2024, which included a number of decrees and decisions related to the referendum on constitutional amendments.

The most prominent items in the Official Gazette were Qatar Decree No. 87/2024 calling on citizens to vote in the referendum, the draft constitutional amendments for 2024 to the Permanent Constitution of Qatar, and Qatar Decision No. 1/2024 of the Chairman of the General Committee for the Referendum on naming the Chairman and members of the General Committee for the Referendum on the draft constitutional amendments for 2024 to the Permanent Constitution of Qatar.

The Official Gazette included three major decisions issued by the Chairman of the General Committee for the Referendum.

Qatar Decision No. 2/2024 has established the Executive Committee responsible for preparing for the referendum on Qatar’s 2024 draft constitutional amendments, as well as its sub-committees and their respective tasks.

Qatar Decision No. 2/2024 has addressed the formation of referendum committees for the draft amendments, specifying their tasks, procedures, and headquarters.

Lastly, Qatar Decision No. 4/2024 has set out the regulations and procedures for conducting the referendum remotely.

Article 1 of Qatar Decision No. 4/2024 issued by the Chairman of the General Committee for the Referendum, outlines the regulations and procedures for conducting the (remote) referendum on the draft constitutional amendments to the Permanent Constitution of the State of Qatar.

It specifies that the referendum process will proceed as follows:

First, regarding the procedures and controls for the (remote) voting process, an electronic remote voting system will be implemented via the (Metarash 2) application.

This system allows all Qatari citizens, both inside and outside Qatar, who are at least eighteen years old on the day of the referendum, to participate.

They will cast their votes on the draft constitutional amendments through a general referendum scheduled for Tuesday, 3/5/1446 AH, corresponding to 05/11/2024 AD.

The (remote) voting service on (Metarash 2) will open at 7:00 a.m. and close at 7:00 p.m.

To cast a vote, the individual must access the (Metarash 2) application, select the “Vote” icon, and accept the terms and conditions.

Once identity verification is completed, they can choose between “Yes” or “No” to express their opinion on the draft amendments. The vote is finalised by selecting the “Confirm” icon.

Second, for the (remote) vote counting process, the Executive Committee will oversee the counting procedure after the voting period ends.

Votes cast through the (remote) application will be electronically sorted into “Yes” and “No” groups.

The Chairman of the Technical Committee will then compile and verify the results from both (remote) voting and electronic voting, document them in an official record, and submit them to the Chairman of the Executive Committee.

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News developments

Oman: Approval of the Final Draft of the Law on Special Economic Zones and Free Zones

08/11/202408/11/2024
by Hannah Gutang

Al Watan, 30 October 2024: The Legislative and Legal Committee and the Economic and Financial Committee of the Shura Council have approved the final draft of the law on Special Economic Zones and Free Zones in Oman, referred by the government.

This is in preparation for presenting and discussing it during the upcoming regular sessions of the Council, in accordance with Article 72 of Oman Sultani Decree No. 6/2021 On the Issuance of the Constitution of the State, states that Draft laws prepared by the government shall be referred to the Council of Oman for approval or amendment, and then submitted directly to the Sultan for ratification and issuance.

During the meeting, the articles and provisions of the draft law were reviewed, in terms of legal drafting, as well as the opinion of the Economic and Financial Committee, which focused on studying its economic feasibility and its contribution to enhancing investment and providing facilities and incentives for investors in those zones.

Some amendments were made to a number of provisions of the law after the consensus of the honourable members of the two committees.

It is worth noting that the draft law on Special Economic Zones and Free Zones aims to unify the system of guarantees, advantages, incentives, exemptions, and facilities granted to economic activities.

It also helps develop policies for granting income tax exemptions to attract strategic projects in Oman.

Previously, the Economic and Financial Committee had hosted a group of experts and stakeholders from several government institutions to seek their views and benefit from their expertise in order to develop a perspective on the law.

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News developments

Kuwait: Capital Markets Authority Imposes Disciplinary Action

08/11/202408/11/2024
by Hannah Gutang

Mubasher, 3 November 2024: The Kuwaiti Capital Markets Authority has announced the issuance of Kuwait Ministerial Kuwait Capital Markets Authority Decision No. 29/2024 imposing a financial penalty against ASICO Industries Company and its board members, and Kuwait Finance Center Company.

According to the Authority’s statement, the number of board members is three members, a former board member, the former chairman of the company’s board of directors, Al-Bazai and Partners Office, and the company’s auditor; for violating the listing rules, market conduct, corporate governance, market ethics, securities activities, and registered persons.

The Authority has clarified that it was conclusively proven that the transactions carried out by ASICO Industries during 2018 and 2019, specifically the sale of a substantial stake in a (subsidiary) company, which resulted in profits of around 40 million Kuwaiti dinars, within the financial statements ending in 2018, were fictitious and not real.

It became clear that the purpose was to revalue the (subsidiary) company to improve and enhance the financial position of ASICO Industries.

Additionally, the transaction carried out by the company was essentially a financing transaction and not a sale transaction, as the final outcome of this transaction became clear during 2019 after ASICO Industries exercised the right to repurchase the sold stake without complying with the application of International Accounting Standards.

The three board members were proven to have violated Article 3-7(5) of Book Fifteen (Corporate Governance) of the Executive Bylaws of Kuwait Law No. 7/2010 and its amendments, for failing to fulfil their role in complying with International Accounting Standards following the transactions carried out by ASICO Industries during 2018 and 2019, specifically the sale of a substantial stake on 8 July 2018, of 30.23 million shares of its ownership in a (subsidiary) company to (the Buyer).

This resulted in profits of around 40 million Kuwaiti dinars within the financial statements ending in 2018, which was proven to be a fictitious and not a real transaction aimed at revaluing the (subsidiary) company to improve and enhance the financial position of ASICO Industries.

Additionally, the transaction carried out by the company was essentially a financing transaction and not a sale transaction, as the final outcome of this transaction became clear during 2019 after ASICO Industries exercised the right to repurchase the sold stake in the (subsidiary) company’s shares, without complying with the application of International Accounting Standards.

Regarding Kuwait Finance Center Company, it was proven to have violated Article 3-2(4) of Book Eight (Work Ethics) of the Executive Bylaws of Kuwait Law No. 7/2010 and its amendments, as the company arranged a transaction for its client ASICO Industries (the Seller), and the other party in that transaction was a subsidiary of Kuwait Finance Center Company.

It also violated Article 8-2(2) of Book Eight (Work Ethics) of the Executive Bylaws of Kuwait Law No. 7/2010 and its amendments.

As it was conclusively proven that Kuwait Finance Centre Company, in its capacity as an investment advisor to ASICO Industries, arranged the sale of a stake in a (subsidiary) company to (the Buyer), with one of the conditions for its execution being the opening of a portfolio with Kuwait Finance Centre Company and the collection of a management fee of 50,000 Kuwaiti dinars annually.

Obtaining a fee is considered obtaining a benefit by the licensed person from arranging the transaction through which profits and benefits are achieved other than the basic advisory fees.

Al-Bazai and Partners Office was found to have violated Article 3-4-5 of Book Five (Securities Activities and Registered Persons) of the Executive Bylaws of Kuwait Law No. 7/2010 and its amendments.

The violation occurred due to the firm’s failure, as the auditor of ASICO Industries, to report any observations in its review of the company’s financial statements for the years ending in 2018 and 2019.

Specifically, the auditor did not address the improper recording of the financial impact of a transaction in which a stake in a subsidiary was sold on July 8, 2018, to a buyer. Despite the sale, ASICO Industries continued to control the sold stake after the transaction was completed, given the company’s retained right to repurchase the stake as specified in Article Four of the contract dated July 8, 2018.

The decision included imposing a financial penalty on ASICO Industries of 50,000 Kuwaiti dinars for the first violation, and 5,000 Kuwaiti dinars for each of the four board members and the former chairman of the board for the violation attributed to them.

A financial penalty of 50,000 Kuwaiti dinars was imposed on Kuwait Finance Center Company for the first and second related violations, and Al-Bazai and Partners Office, as the auditor of ASICO Industries, was fined 20,000 Kuwaiti dinars for the violation attributed to it.

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News developments

Dubai: DFSA Fines Company for Unauthorised, Misleading Financial Promotions

08/11/202408/11/2024
by Hannah Gutang

The Dubai Financial Services Authority (DFSA) has published a Decision Notice against Vedas International Marketing Management (Vedas Marketing) for unauthorised and deceptive Financial Promotions related to the Multibank Group.

The DFSA has stated that it had imposed a financial penalty of US$100,000 (AED367,000) on Vedas Marketing for conducting unauthorised financial promotions about the Multibank Group to individuals located in the DIFC.

Also, for engaging in misleading and deceptive conduct by representing that certain entities in the Multibank Group were regulated by the DFSA, when in fact, none of the promoted entities were.

The Multibank Group offers trading platforms, and the DFSA has made no allegations of wrongdoing against the Multibank Group itself in the Decision Notice.

On 2 June 2024, Vedas Marketing challenged the conclusions in the DFSA’s Decision Notice by referring it to the Financial Markets Tribunal (FMT).

However, the FMT directed on 22 July 2024 that the reference should be struck out due to Vedas Marketing’s failure to pay the required filing fee for the referral.

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News developments

Bahrain: Proposal To Lower Business Dispute Threshold Set For Parliament Review

08/11/202408/11/2024
by Hannah Gutang

The Daily Tribune, 1 November 2024: Parliament is scheduled to discuss a bill that proposes lowering the minimum claim value managed by the Bahrain Chamber for Dispute Resolution (BCDR) from 500,000 to 100,000 dinars.

This adjustment would modify the Chamber’s monetary jurisdiction, potentially giving companies a faster way to settle commercial disputes.

Supporters of the bill believe this change could reduce court pressures and enhance Bahrain’s reputation as a business-friendly hub by offering businesses quicker and more accessible resolutions.

The proposal seeks to remove barriers that currently limit access to the Chamber, opening its services to a wider range of commercial claims.

By revising the jurisdictional threshold, the bill is intended to create a more accessible route for firms to resolve financial and business conflicts, thus adding another layer to Bahrain’s appeal as a place for investment.

The BCDR, however, has voiced reservations.

They argue that the bill’s goal of speeding up case resolutions may already be met through current procedures.

The BCDR operates on similar timelines to the courts, with both allowing for an initial two-month period to manage cases, which can be extended by two months as required.

The Chamber also stresses the need to balance its financial health against the costs of its services.

Fees generated from cases above 500,000 dinars form a critical part of its revenue.

Lowering the threshold could cut these earnings by 20 to 80 per cent per case, depending on the claim value, and reduce the funds available for maintaining services.

This income is essential for covering the costs of both mandatory and optional services, such as mediation and arbitration, and for allowing the Chamber to invest in future projects.

As more cases are likely to fall under the Chamber’s remit if the bill passes, the institution foresees a risk of overstretching its resources, which may strain its ability to sustain service quality at current levels.

Financial strain could hinder the BCDR’s ambitions to fund new initiatives and to preserve its standing on the regional and international stage.

Despite these concerns, the Legislative and Legal Affairs Committee has recommended the proposal, urging its approval in the upcoming session.

The committee sees this as a practical move towards making dispute resolution faster and easier for Bahrain’s business sector.

This proposal aligns with Bahrain’s ambition to refine its legal and economic systems in ways that encourage investment and development.

Should it pass, the bill will alter the process for managing economic disputes, aiming to reduce time in legal proceedings and improve judicial services within the Kingdom.

By expanding the Chamber’s jurisdiction to cover claims over 100,000 dinars, the legislation has the potential to make Bahrain an even more attractive location for businesses, while the Chamber faces the challenge of sustaining financial stability under the new arrangement.

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News developments

Abu Dhabi: Occupational Safety and Health Awareness

08/11/202408/11/2024
by Hannah Gutang

Al Etihad, 1 November 2024: The Municipality of Abu Dhabi City has stressed to consulting offices and high-risk contracting companies the importance of fully complying with occupational health and safety requirements at construction sites.

It has emphasised the need to meet all standards set by the Abu Dhabi Occupational Safety and Health System.

This came during the awareness workshop organised by the Environment, Health and Safety Department in the Municipal Council hall in the Abu Dhabi City Municipality building, which aimed to enhance the awareness and commitment of consulting offices and contracting companies to preventive measures that would create an ideal, positive, and healthy work environment free of accidents.

The workshop’s topics included explaining the requirements of the Abu Dhabi Occupational Safety and Health System, and the mechanism for monitoring the implementation of these requirements in terms of submitting periodic reports, activity reports, auditing, and others.

The workshop was keen to raise the level of knowledge of newly registered construction and contracting entities about the requirements of the Abu Dhabi Occupational Safety and Health System.

Through these awareness workshops, the Municipality of Abu Dhabi City emphasises the necessity of maintaining the safety of workers in the construction sector and preserving their general health, as it is a top priority, as this sector is one of the most sensitive activities compared to all other sectors and businesses.

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News developments

UAE: Regulator Sets Requirements for End-of-Service Gratuity Investment Funds

31/10/202431/10/2024
by Hannah Gutang

Mubasher, 28 October 2024: The UAE Securities and Commodities Authority (SCA) has established eight key requirements for companies licensed to manage end-of-service gratuity savings funds within the country.

These requirements are part of the optional alternative system for end-of-service benefits, known as the “savings scheme.”

Financial institutions that have obtained licenses from the SCA have highlighted that the most crucial requirements include determining the contribution rate, ensuring a safe investment of funds to address concerns about potential losses, and specifying the timing for receiving entitlements upon termination of employment.

The requirements also cover the possibility of employees increasing their contributions to maximise benefits, as well as the option to continue investing their entitled funds in the fund after termination of employment.

Additionally, the benefits for participating employees and employers who contribute to these funds have been outlined.

The SCA has granted the first-of-its-kind licences to “National Bonds Corporation” and “Daman Investments” to manage end-of-service gratuity savings funds within the UAE.

This move aims to facilitate the safe and reliable investment of employee gratuities, ensuring the protection of their rights and increasing the value of their entitlements while enhancing the UAE’s position as an attractive destination for work and investment in the region.

According to the National Bonds Corporation, the basic employer contribution rate for their capital-protected investment fund is 5.83% of the employee’s basic monthly salary for full-time employees with less than five years of service, and 8.33% for those with more than five years of service.

Employees can also voluntarily contribute a percentage of their salary or a fixed monthly amount, subject to a maximum of 25% of their annual salary.

Participating employees are entitled to receive all basic contributions made by their employer to the alternative end-of-service gratuity system, along with any accrued returns during the contribution period, within 14 days of termination of employment.

Beneficiaries have the option to continue investing their entitled funds in the fund, and employees can withdraw part or all of their voluntary contributions or investment returns at any time during their employment, subject to conditions set by the fund manager.

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News developments

Saudi Arabia: SAMA Seeks Public Input on Updated Debt Collection Rules for Individuals

31/10/202431/10/2024
by Hannah Gutang

Argaam, 27 October 2024: The Saudi Central Bank (SAMA) is seeking public feedback on the draft of Debt Collection Regulations and Procedures for Individual Customers through the public consultation platform “Istitlaa”.

SAMA has stated that this project seeks to enhance and standardise debt collection practices, ensuring clear communication and safeguarding the rights of all parties.

The project sets minimum standards for financing institutions to follow in debt collection, including initial contact with clients, instalment deductions, managing clients at risk of default, and handling existing defaults.

It also emphasises due diligence in collecting overdue debts and addresses debt relief provisions in cases of death or total disability.

Feedback and comments on the Debt Collection Regulations and Procedures for Individual Customers must be submitted within 15 days of this announcement to assess their relevance in finalising the draft.

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