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Abu Dhabi: The Federal National Council (FNC) on Tuesday accused the Ministry of Economy of negligence in enforcing the Combating Commercial Concealment Law, which was issued more than three years ago.
Sultan Bin Saeed Al Mansouri, the Minister of Economy, apologised for any shortcoming and said that investors should be granted a respite to adjust their legal status.
The ministry's appeal was accepted by the house and the enforcement of the law was deferred for another year.
Al Mansouri admitted that other problems include the penalties the law imposes on violators.
The law imposes criminal liability on both Emirati and foreign parties, with penalties including fines of hundreds of thousand dirhams, revocation of the trade licence of the company for up to two years and imprisonment and deportation of the foreign partner.
Al Mansouri said that the executive bylaws need at least three months to complete and businesses should be granted a grace period to adjust their legal status.
Dr Anwar Mohammad Gargash, Minister of State for Foreign Affairs, said 80 per cent of businesses engage in certain illegal arrangements between local sponsors and expatriate investors in the UAE.
The illegal practice gives some assurances to foreign investors that, in effect, they can manage and control the conduct of their company 100 per cent by drafting side agreements.
These agreements allow foreign investors to manage and control the company and its affairs without interference, and also assure the Emirati sponsor that he will not be responsible for the debts of the company if it fails. These side agreements are private arrangements between the parties; they are not notarised and are not recognised officially under the law.
The Combating of Commercial Concealment Law was drawn up to render this practice a criminal offence, labelling it as concealment or screening the true nature of the business structure from the authorities, and therefore illegal under the law.
FNC members said failure to enforce the law endangers the national economy and causes many social and security problems.
They said it allowed foreign investors to remit billions of dirhams, deprive the country of huge investments and increase the number of illegals in the country.
However, they eventually agreed to grant investors a grace period until March 31, 2009.
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