The UAE attaches great importance to providing all necessary enablers to promote the growth of the country's private sector by establishing the right foundations for a conducive environment for their success and prosperity. These measures are also contributing to consolidating global investor confidence in the UAE's business climate, in line with an ambitious vision to transition towards a more flexible, competitive, and sustainable economic model.

The development of a robust legislative infrastructure is key to achieving these national ambitions. Based on this conviction, the UAE government remains committed to continuously updating the legislative system and ensuring the attractiveness of domestic business environment. The Federal Decree Law No. 50 of 2022 on Commercial Transactions is therefore seen as a qualitative shift in legislation, complementing the set of recently-issued federal laws to drive forward economic transformation in the country. The law further aligns with the Principles of the 50, the determinants of the UAE Centennial 2071, the UAE Digital Government Strategy 2025, National Policy for Quality of Digital Life, and the UAE strategy for the Fourth Industrial Revolution.

Within this context, the Ministry of Economy, in collaboration with its partners, drafted the new law on Commercial Transactions to facilitate the operations of businesses in the country, facilitate commercial transactions and contracts, enhance their efficiency, reduce the cost of doing business, and enhance commercial stability. Besides, it establishes a dynamic business environment that encourages domestic and foreign investment flows, increasing the number of companies, business establishments, traders, investors and entrepreneurs in the country's markets, and consolidates the UAE's position on the global business landscape.

The new law addresses commercial transactions from all aspects, including online commercial transactions, keeping pace with the rapid developments in international trade and the growing interest in virtual transactions. The law further addresses the banking system, including Islamic banking and financial markets.

With regard to the part related to commercial transactions, the law defines the general axes of commercial business, and allows new age groups to practice business as it reduces the age of legal capacity from 21 to 18 (Gregorian years) to practice business. This will encourage youth participation in the business sector. Furthermore, the law mainly targets traders, investors, owners of foreign companies, owners of commercial projects and companies, banks and financial institutions, and dealers in commercial papers within the UAE, and contractors who take up commercial contracts.

The new law is further seen as proactive step in legislation as it develops laws that are the first of their kind on virtual commercial activities and transactions in the Arab world. It further legalizes virtual and physical commercial documents, as well as services and businesses related to virtual assets, to which applies the same provisions for physical assets.

The decree-law also introduces a legal reference for commercial transactions of banking institutions. It includes a package of provisions designed to stimulate business growth and competitiveness, including reducing the maximum interest rate on a commercial loan when not stipulated in the contract to 9 percent instead of 12 percent; prohibiting compound interest; obliging banks to obtain adequate insurances or guarantees in return for the loans they offer, in contrast to the previous decree, which allowed obtaining appropriate guarantees in exchange for loans. This provision aims to reduce the premiums that burden individuals and institutions as a result of the inappropriateness of the premiums to their income, which causes them financial distress.

The decree-law recognizes the unified customs of documentary credits issued by the International Chamber of Commerce, and considers them part of the special system of documentary credits in the country. Besides, it supports Islamic banking to enhance its role as an important contributor to growth in the country by creating a section for commercial transactions of Islamic financial institutions to regulate the contractual relations between the parties to their transactions. The decree-law considers commercial transactions to be subject to the provisions of Islamic Sharia, as is the case for any transaction stipulated by any applicable legislation to be subject to the provisions of Islamic Sharia, as long as it is conducted through an Islamic financial institution. The decree-law introduces special provisions for types of contracts and obligations to which Islamic financial institutions are a party, such as contractual promise, Murabaha, and Manufacturing Finance (Istisna).

In addition, the   decree-law covers the activities of markets and securities, and amends the provisions related to organizing and establishing financial markets by obligating them to obtain the necessary licenses in accordance with the legislation in force to regulate securities in the country. It further authenticates virtual assets as business, in addition to emphasizing the provisions governing the operations of the stock market and the operations of investment companies, credit funds, financial institutions and all other financial intermediation operations, brokerage in the securities and commodities markets, lending with the guarantee of securities, and the deposit of securities with the bank.

The new Commercial Transactions Law adds significant value to the UAE's legislative ecosystem by facilitating the seamless conduct of economic activities, stimulating entrepreneurship, and strengthening the country's status as a leading destination for investment and an incubator for the growth and expansion of companies and businesses. This reflects the proactive approach adopted by the UAE government, and the ambitious visions and strategies to consolidate the position of the national economy as one of the most developed, prosperous and competitive global economies in the era of the fourth industrial revolution.