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Why is Well Designed Governance Structure Critical for Successful Family Offices in UAE
  • Newsletter, U.A.E

Why is Well Designed Governance Structure Critical for Successful Family Offices in UAE?

Overview

Universally recognised as overly complicated, Family Offices are run for many generations and greatly influenced by family dynamics and numerous business ventures, local and global investments, International business structures, trusts, foundations, real estate and other assets giving rise to a great number of complexities.

With time, family offices expand due to increasing numbers of beneficiaries through inheritances and the new and younger entrants bring in a plethora of conflicts of interests. Unless effective corporate governance is put in place, future decision making processes and maintaining harmony within the family becomes extremely difficult for a long and successful family business.

Corporate structures for family offices are often tailor-made as there is no single fit for the purpose that can control and manage these entities, ensure family unity in diversity and comply with all Family office regulations in UAE.

What is Corporate Governance?

Corporate governance is defined as a set of rules, regulations, policies and procedures that controls, directs and guides a business entity for balancing the interests of all the stakeholders including the community and the government as a whole. In the context of family offices, it governs every aspect of managing family affairs be it an investment, charity, business diversification, personal maintenance etc.

Though informal governance is sometimes practised for smaller family offices such as board meetings convened out of board rooms, well documented governing arrangements must be implemented for bigger family offices to effectively address the complex decision-making processes. As a family business grows, well-documented policies and procedures become inevitable to ward off family conflicts and navigate through unprecedented emergencies.

Why is good governance indispensable for UAE family offices?

Lack of transparent, ethical and well-accepted decisions can have serious consequences on a family business with growing conflicts and distrusts amongst family members and many lost business opportunities. A robust governing mechanism headed by a professionally credible board of directors can only make such decisions and steer clear of all family conflicts during major and bold moves in acquisitions, investments and other strategic issues.

A well established 4 P governing system encompassing people, process, performance and purpose can aid in achieving the following

Effective Conflict Resolution

Conflicts and disputes in family office environments emerge due to many reasons including differences in values, poor communications and interactions, poor performance, opposing interests, scarcity of resources, and personality differences and requires the management to timely and rapidly intervene before the conflicts can jeopardize the mission and objectives of UAE company incorporation.

A consensus-oriented responsive corporate governance with dispute resolution mechanisms and procedures can help the management eliminate conflicts to a great extent through improved communication, interaction and exchange of ideas and perspectives. The success of family offices is most often determined by the effectiveness of corporate governance and conflict management systems establishing a balance of interests of various stakeholders.

Smooth Succession Planning

For the preservation of family wealth, smooth and effective succession planning is crucial. However, it poses several challenges to family offices and is time-consuming considering the long time taken to strategize and formulate handing over the decision-making responsibility from a founder to the next generation. Most of the founders believe in short term fixes and prefer to keep the decision making process with themselves and are reluctant to transfer the power.

Good governance can instill business culture and promote values amongst the family members that help them understand the long term business goals and the necessity for the participation of the younger generation as early as possible facilitating smooth succession planning.

Reduced Risks of Fraudulent and Unethical Practices

As good governance creates an environment of values and cultures, employees develop the right behaviour and attitude to discriminate the right from the wrong. It helps the family offices to ensure that business is carried out openly and transparently and as documented in the ethics manuals and procedures with appropriate controls against fraudulent and unethical practices.

Improved Financial Performance

Good governance promotes the financial performance of family offices as it encourages systematic and strategic investment plans depending on the need and preferences and avoids adhocism. Fundraising also becomes easier for a business set up in Dubai when well-governed and in compliance with every law and regulation of the Emirates.

Business Continuity

With governance policies solidly implemented, family businesses can ensure continued operation even when business responsibilities are not directly assigned to any family members. It also helps to attract employees and retain them for long.
What are the attributes of well-governed family offices in the UAE?

Following are some attributes of well-governed family offices

  • A shared vision, mission and goal are most important for family offices for implementing major decisions eliminating conflicts and randomly taken decisions by the founder.
  • A tailor-made governing framework must be designed, developed and implemented as every family office is unique with varying objectives and scope.
  • An environment of open and transparent communications comes first even when the best governance system is implemented as disputes and conflicts can not be ruled out completely. An accommodative and participative policy fosters easy and effective communication and helps avoid pent up ill feelings and personality clashes.
  • A review mechanism must be in place to evaluate continuing suitability of the governance system for meeting the shared vision, mission and goal of family offices.
  • A resilient and flexible governance structure can help family offices in times of unforeseen circumstances without any serious adverse effects on business performance and sustainability.
  • A technology-driven governance structure can facilitate risk management, easy and interrupted communication amongst family members and fast decision making backed by information and data.
Takeaway
The success of family offices is determined by the quality of decision making backed by authentic data that can satisfy all family members and help protect the private family wealth for future generations. However, all family offices must understand and assess their core purposes before implementing a governance system and documenting the policies and practices.

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The UAE Cabinet Approves Registration of Marks under the Madrid Protocol
  • Newsletter, U.A.E

The UAE Cabinet Approves Registration of Marks under the Madrid Protocol

The long-anticipated approval of the UAE cabinet for joining the Madrid Protocol for trademark registration systems has been accorded recently and is likely to come in force by this year-end or early 2022.

To strengthen and promote Intellectual Property Rights, the authorities planned for using the International Madrid Protocol Administrative System that allows filing, registering and maintaining Trademarks in over 120 different member countries. Amongst the GCC nations, only Bahrain and Oman are presently a part of the Madrid Protocol.

The UAE Trademark Office (TMO) will only certify international applications and forward those to the World Intellectual Property Organisation (WIPO) electronically once the Madrid Protocol is enforced in the country.

The WIPO will then carry out the subsequent processes involved including conducting examination, goods or services classification, trademark registration, publishing the trademark in the International Gazette and notification to the designated countries.  There is usually a strict deadline given by WIPO within which the member countries of the Madrid Protocol must decide if the international trademark in their territories can be granted.

The International Trademark Registration normally takes around 18 months from the date of notification of the registration subject to no objection from individual designated members. The trademark will then be registered within the territory of that member in the same way as it gets registered directly with the local IP office.

Once the UAE joins the Madrid Protocol, UAE applicants will be allowed to obtain and protect their trademarks around the world through cost-effective and user-friendly procedures for trademark applications and registrations in many countries in a centralized manner.

What is the Madrid Protocol? 

The Madrid Protocol is a system of international registration of trademarks that permits the brand owners to apply and maintain protection in 124 countries through one single procedure. The levels of protection, however, can differ in different territories.

The Madrid System for the international registration of trademark rights in multiple jurisdictions is administered by the WIPO headquartered in Geneva.

The registration of Marks under the Madrid Protocol is cost-effective and the application can be done in one language. A cost savings of 30% to 40% may be realized compared to national filings.

What are the Benefits of Madrid Protocols? 

The use of the Madrid System for companies with a global presence provides several benefits including

  • Cost Savings potential
  • The simple and easy filing process
  • Streamlined management with centralized filing, registration and maintenance
  • Use of one language as per applicant’s choice
  • No need for local representatives in individual designated countries
  • Easy and less cumbersome documentation with minimum formalities e.g no requirement of POA
  • Provision for extension of geographical protection of an international mark as and when necessary for commercial interests, any new jurisdiction can be easily added
  • The examination period is fixed and finite either 12 months or 18 months
  • The application receives automatic protection whenever there is no objection raised
  • Country specific local representatives are not warranted if no objection is raised by national trademark authority or by third parties
  • Easy renewal of Trademark
  • Easy incorporation of Mark holder’s details

What are the Disadvantages of using the Madrid Protocol?

Though the Madrid Registration system offers multiple benefits, it also comes with its share of anomalies, complications and vulnerabilities, both in terms of the process and the protection offered.

  • Can only be extended to the member countries
  • As the registration is based on home filing for the initial five years, any cancellation or abandonment of the home filing renders the international registration automatically stands cancelled
  • Even if a mark is accepted in the home jurisdiction, it doesn’t necessarily mean that it would be accepted in every designated country in the Madrid registration application due to the non-circumvention of WIPO in local trademark laws
  • Response deadlines can be very short posing difficulties in timely action and appointment of local representatives for responding to actions
  • The wide variance in application processing time
  • Enforcement problems in countries where national trademark laws have not been revised to recognise the international registration system e.g. African continent
  • Also, some anomalies exist in certain key territories

What is the Process of Registration of Trademarks under the Madrid Protocol?

The following three important steps are involved in registering a trademark through the Madrid System.

Step 1: Application through Office of origin

An international application needs to be filed,  Form MM2 through the “home” IP or Trademark office  known as Office of origin, certifying your international application and forward it to WIPO online

Step 2: Examination by WIPO

WIPO carries out a formal examination of the international application and does not refuse or grant trademark protection. WIPO only checks the information provided in international applications. Once the application complies with the requirements of WIPO, the Mark is recorded in the International Register and subsequently published in the WIPO Gazette of International Marks making the applicant the holder of an International Registration.

WIPO then sends a certificate of registration with a notification to the IP Offices in all the territories where the applicant wishes to have the trademark protected and as given in the international application.

Step 3: Substantive examination by national/regional IP offices

Once notification is received from WIPO, the IP offices of the territories where protection is sought conduct a substantive examination of the trademark as per the prevailing trademark laws in those territories. Every individual territory through its IP office decides if the trademark can be protected in that territory or not. It usually takes around 12 to 18 months.

WIPO then sends an intimation informing the decision of the individual territories. In case trademark protection is refused by any territory either totally or partially, this will not affect the decisions of other IP offices.

If trademark protection is accepted by an IP office, it states a grant of protection. The international registration of trademarks bears a validity of 10 years in each designated territory making the registration renewal through the Madrid System compulsory every 10 years.

Specialized online tools and resources are made available by the Madrid system to facilitate the filing and management processes of an international trademark registration providing complete control to the trademark holder at every stage of the lifecycle of the trademark.

How does a company decide on the Madrid System?

All companies with global operations usually eye for access to foreign markets with huge business potential such as India, China, the US and Japan and the Madrid Protocol can play a pivotal role in realizing this ambition by enabling these companies to cost-effectively register trademark rights in these member countries. 

The following considerations however must be made before the start of the application process for determining the cost benefits and effectiveness of brand protection.

  • If a company is aiming for registration in only one or two countries, national filings may be cheaper compared to this all-inclusive international protocol.
  • The requirements of this protocol are stricter in some countries and may cost the companies more.
  • In some countries, the IP rights obtained through this protocol may be more vulnerable compared to national registration.
The Fine print

Despite some challenges, anomalies and inconsistencies present in the registration process, the Madrid Protocol is a mature, effective and widely accepted system for getting IP rights in many international jurisdictions simultaneously. It follows a year-long developed solid trademark registration strategy enabling brand owners protection of rights in many territories affordably.

The UAE trademark owners will certainly derive lots of opportunities to build and expand their brands in the international market. It is believed that the recent approval of the Madrid Protocol will stand Dubai and the UAE in good stead in IP protection and international recognition.

At IMC, we are closely monitoring all the developments in the UAE IP system and will be more than happy in providing our professional and expert services to our clients in this regard.

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UAE FTA Announces Amendments in Administrative Penalties on Violations of Tax Laws
  • Newsletter, U.A.E

UAE FTA Announces Amendments in Administrative Penalties on Violations of Tax Laws

VAT was introduced in the UAE with effect from 1st October 2017 and 1st January 2018, respectively. The common tax procedures documenting the rights and obligations of the Federal Tax Authority (FTA) and the taxpayers have then been developed and specified in Federal tax procedures legislation, the Federal Law No. 7 of 2017 on Tax Procedures called “FTP Law” and applicable to all Federal taxes under the jurisdiction of the tax authority.

The number of violations subject to administrative penalties has been specified in Article 25 recommending that each of such penalties must be more than 500 AED but not exceeding three times the amount of tax on which the penalty is imposed.

The UAE Cabinet has announced Decision No. 49 of 2021 on 28th April 2021, making amendments in some of the administrative penalties applicable on the violations for assisting businesses in the country. The amendments included reduced tax and increased clarity on the redetermination of penalty levied as per the old penalty regime of 2017.

A summary of Amendments made on Violations and Administrative Penalties related to the Implementation of Federal Law No. 7 of 2017 on Tax Procedures made the following two areas.

  1. Reduction in Tax
  2. New Mechanism for Tax determination

Reduction in Tax

Reduction in Tax has been made on Violations and Administrative Penalties in relation to the

  1. Implementation of Federal Law No. 7 of 2017 on Tax Procedures
  2. Implementation of Federal Decree-Law No. 7 of 2017 on Excise Tax, and
  3. Implementation of Federal Decree-Law No. 8 of 2017 on Value Added Tax

The amendments made in reducing taxes are summarized below

1. The failure of the person conducting business to keep the required records and other information mandated in the tax procedures Law and the tax law. 10,000 AED for the first time and 20,000 AED if repeated

2. The failure of the taxable person to issue a tax Invoice or the alternative document when making any supply 2,500 AED for each detected case.

3. The failure of the taxable person to issue a Tax Credit Note or alternative document 2500 AED for every case detected

4. The failure of the taxable person in meeting the conditions and procedures in relation to the issuance of a tax invoice and a tax credit note electronically 2500 AED for each case detected

5. The failure of the taxable person in displaying prices inclusive of tax 5000 AED

6. The failure of the Taxable Person to provide the Authority with the price lists of the Excise Good that it produces, imports or sells 5,000 AED for the first time and then AED 10,000 in case of repetition.

7. The failure of the Legal Representative of the Taxable Person to inform the Authority of its appointment as Legal Representative within the specified time frame (the Penalties will be due from the Legal Representative’s funds) 10000 AED

8. The failure of the Registrant to inform the Authority of any circumstance that requires the amendment of the information about its Tax record kept by Authority 5,000 AED for the first time and then 10,000 AED for every repetition

9. The failure of the Taxable Person to submit a registration application within the timeframe specified in the Tax Law 10,000 AED

New Mechanisms

New Mechanisms have been announced on Violations and Administrative Penalties related to the Implementation of Federal Law No. 7 of 2017 on Tax Procedures and are as under

1. The failure of the Registrant to submit a deregistration application within the timeframe specified in the Tax Law.  

1,000 AED in case of delay, and on the same date afterwards every month, up to a maximum of 10,000.

2. The failure of the Taxable Person to settle the Payable Tax stated in the submitted Tax Return or Voluntary Disclosure or the Tax Assessment he was notified of by the Authority, within the specified timeframe

The Taxable Person shall be obliged to pay the penalty applicable to late payment of Payable Tax up to a maximum of 300% as mentioned below 2% of the unpaid tax shall be due on the next day of the due date 

A 4% monthly penalty is due after one month from the due date of payment on the Tax amount unsettled at that point in time

The due date of penalty payment for Voluntary Disclosure and Tax Assessment shall be

For voluntary disclosure, 20 business days from the date of submission

For Tax assessment, 20 business days from the date of receipt

3. The submittal of an incorrect Tax Return by the Registrant

Fixed penalty as mentioned below shall be applied:

1,000 for the first time

2,000 if repeated

If the incorrect Tax Return amounts to Tax difference less than the fixed penalty, a penalty equal to the Tax difference of at least 500 AED shall be levied

Anyone correcting their Tax Return before the due date of payment shall be excluded from the penalty imposed

4. The submittal of a Voluntary Disclosure by the Person/Taxpayer on errors in the Tax Return, Tax Assessment or refund application will attract penalty as below

a percentage-based penalty on the difference between the inaccurately calculated Tax and the correct tax which should have been and as per the following

5% on the difference if submitted within one year from the due date of submission

10% on the difference if submitted in the second year

20% on the difference if submitted beyond the third year

30% on the difference if submitted in the fourth year

40% of the difference if submitted beyond the fourth year

5. The failure of the Taxable person to voluntarily disclose an error in the Tax Return, Tax Assessment, or refund application will attract penalty as below

A penalty of 50% on the amount of error

A penalty of 4% for every month or part of the month, of the following:

The unpaid Tax to the Authority, from the date the payment is due for the relevant Tax Period until the date of receipt of the Tax Assessment.

The Tax that was not returned to the Authority due to ineligible refund, from the date of Tax refund until the date of receipt of the Tax Assessment.

6. The Registrant if fails to calculate Tax on behalf of another person where the Registrant Taxable Person is obliged to do so under the Tax Law is imposed with penalty as under

The Registrant is responsible for paying the penalty applicable to the late settlement of Payable Tax up to a maximum of 300%, according to the following:

2% of the unpaid tax is due on the day following the due date of payment, where the settlement of Payable Tax is late.

A monthly penalty of 4% is due after one month from the due date of payment on the unsettled Tax amount as on that date.

The due date of payment for this penalty in the case of Voluntary Disclosure and Tax Assessment shall be as under

20 business days from the date of submission, in the case of a Voluntary Disclosure.

20 business days from the date of receipt, in case of a Tax Assessment.

We, at IMC can assist you with our expertise in UAE Tax Laws and provide professional advice on the impact of the public clarification on your business and suggest ways that are best in ensuring compliance with the requirements of FTA.

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Both the EU and the Indian Government are Enthusiastic to Resume FTA Talks
  • India, Newsletter

Both the EU and the Indian Government are Enthusiastic to Resume FTA Talks

Both India and the EU are seen as enthusiastic to resume long-awaited talks on a bilateral free trade agreement that was on hold for almost eight years. Fresh negotiations are expected to focus on key issues including access to each other’s markets for goods and services, investment protection and geographical indications. The commerce minister announced the Indian government’s plan to revive talks in September 2020 and was further confirmed during the India-EU leaders’ Meet in May 2021.

The introductory talks on broad-based trade and investment agreement (BTIA) are likely to begin in September after being suspended in 2013 due to non-agreement between the two parties over issues including reduction of import duties on automobiles and alcohol; greater access to the financial services market by Indian companies and; higher mobility for Indian professionals in the European countries by liberalizing the visa regime.

The BTIA will be based on initial recommendations from industry groups. As per the Trade Policy Council of India, the trade deal will be beneficial for the country.

For the EU, this will be the first such FTA with an emerging economy.

The Indian government has been eager to restart the trade negotiations as it wants to establish trade pacts with countries that are not under Chinese influence. The ” Make in India” and “Atma Nirbhar” campaigns to put India as a regional leader and global manufacturing hub are also one of the reasons for initiating talks on trade agreements. Economically, a well-negotiated FTA will promote trade and investment flows and would attract European businesses for company formation in India.

On the other hand, the EU is willing to re-establish strong economic and trade ties with India through the BTIA especially after Brexit and wants to strengthen its role in governing global trade. For Europe, the FTA would provide access for EU businesses to the huge Indian market of more than 1.3 billion people including vast skilled resources and cost-competitive professional services e.g. accounting and payroll services in India.

According to the European Commission, the EU is the third-largest trading partner of India, accounting for 62.8 billion euro worth of trade in goods in 2020 which comes as 11.1% of total Indian trade, after China, 12 % and the US, 11.7 %. The UK was the largest trading partner among all the European nations and accounted for bilateral trade worth 12.29 billion dollars with India in 2020-21. Trade-in services between the EU and India touched 39.78 billion dollars in 2020.

Export promotion councils in India have been advised by the Commerce Ministry to identify sensitive areas and product & service types requiring protection including those needing greater access to the EU market. Besides the Export Promotion Councils, several industry bodies including CII, Ficci and the FIEO have also been asked to offer recommendations.

Arpita Mukherjee, a trade economist of the Indian Council for Research on International Economic Relations (ICRIER) spoke favourably for a mutually beneficial trade agreement however commenting “I do not think that the negotiations are less complex now and we need to be prepared for the negotiations. There are new areas of negotiations like e-commerce or public sector enterprises or carbon tax. India needs to have industry consultations and conduct research to develop a position that is beneficial for the country.”

“There are some sectors where both India and the EU had reached a consensus when they decided to put the negotiations on hold in 2014. These include reduction in tariffs in many products, for example, zero for zero in case of apparels,” she remarked.

Mukherjee also highlighted saying “It may be easier to move forward if such sectors are not opened up again for tariff discussions. Some issues that India had raised earlier like intra-EU labour mobility-related issues have been addressed by an EU Directive.  This can be resolved easily.”

“India has discontinued its bilateral investment treaties with the EU member states and hence the focus of the EU is to have a clear and transparent investment agreement. The EU may look at EU-China as a model investment agreement to be replicated with India and the Indian side needs to see whether we are ready to discuss issues like public sector enterprises, and subsidies,” she added.

More than 15 rounds of talks had happened on the BTIA over 6 years from 2007 and 2013 however couldn’t be concluded as India chose to discontinue the then-existing bilateral investment treaties (BITs) in 2016 with 23 EU nations. The EU though asked India to let individual agreements remain enforced until a new deal is struck.

The Indian government has made it clear that all future negotiations on trade and investment need to be negotiated under the model BIT framework issued in 2015 that would refer to individual deal agreements with other countries.

The FTA should be a win-win for both India and the EU and help promote the benefits of globalization which have been adversely impacted due to geopolitics over the last two decades.

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BRICS Roundtable Meeting for MSMEs to Boost Trade and Economy
  • Newsletter

BRICS Roundtable Meeting for MSMEs to Boost Trade and Economy

Brazil, Russia, India, China, and South Africa together represent BRICS, the acronym associated with the top five emerging economic blocs in the world. Economists believe that due to the low operating and labour cost prevailing in these countries, they will become the major suppliers of raw materials, goods and services by 2050 primarily led by the micro, small and medium enterprises (MSMEs).

A virtual BRICS MSME Roundtable meeting was held on 22nd July 2021 by the Ministry of MSME, Government of India. Shri BB Swain, the Secretary of MSME chaired the meeting.

The vision of BRICS nations on the Post-Covid Roadmap for the growth accelerating sector was the main focus of the meeting.

The Government and private sector of all BRICS nations participated in the roundtable conference which was also attended by more than 200 people from industry associations, and MSME tool rooms.

Secretary MSME while addressing the roundtable highlighted the need for an immediate future roadmap to sustain and accelerate the growth of the MSME sector post-Covid pandemic. He also emphasized the preparation of a guide for creating a conducive business climate for benefitting the MSMEs.

The SME Joint-Secretary stressed upon assessing the degree of damage caused by covid 19 on MSMEs as well as the covid response policies and programs of the government for protecting MSMEs.

Co-Chair CII, National MSME Council made presentations on ‘way forward in mitigating losses from COVID-19’ and ‘post covid strategies for MSMEs development’.

Deputy Managing Director of Export-Import Bank of India, and President of India SME Forum discussed ‘Integration of MSMEs in Global and local value chains’ and ‘Role of digitalization for MSMEs in post covid 19 scenario’. They also threw light on appropriate government measures for digital transformation and ways to leverage the BRICS forum for enhancing the development and growth of MSMEs.

Series of presentations were made by both the Government and private sector of BRICS Nations during sessions scheduled separately by the concerned senior officials from the Government and private sector.

Brazilian delegates spoke on policy implementation for mitigating the adverse economic impact of the pandemic. They also talked about various programs launched for productivity improvement and increased competitiveness of Brazilian MSMEs.

Senior functionaries from Russia were also present during the virtual conference and highlighted the intermediate results of the National SME support measures of the nation. They also discussed support measures specifically meant for the digitalization of MSMEs and their integration into the global value chains.

Chinese delegates highlighted the country’s supportive policy measures implemented by the government to alleviate the disastrous economic effects of pandemic on the MSMEs.

South African representatives made a comprehensive presentation encompassing all the important aspects of this Roundtable conference along with the actionable strategies for promoting the MSME sector during post-Covid-19. The promotion of global value chains and digital transformation of MSMEs was also talked about by the delegates.

India’s planned strategies and timely actions were seen as most relevant in the existing situation and were appreciated by other BRICS nations who also deliberated their support for working together towards the economic upliftment of the MSMEs.

The BRICS nations also agreed for a trade fair to be held from 16th to 18th and decided on the remaining workshop on August 13 2021. “To deepen and strengthen the trade and economy, the events proposed by India were agreed by the BRICS Members,” added the Commerce Ministry spokesperson.

The Contact Group on Economic and Trade Issues (CGETI), of different groups of BRICS, was given the responsibility for economic and trade matters. India made certain proposals on the MSME sector and these were deliberated by the members during the meeting of CGETI held between 12th to 14th July.

The proposals made by India included BRICS cooperation on the multilateral trading system, BRICS framework for ensuring consumer protection in e-commerce, non-tariff measures resolution mechanism, cooperation framework for the protection of genetic resources, traditional knowledge, and traditional cultural expressions.

“BRICS members agreed to take forward India’s proposals to finalise them before the BRICS Trade Ministers meeting to be held on 3 September 2021, to be chaired by Piyush Goyal, the Commerce and Industry Minister,” the Ministry spokesperson highlighted. India is charing BRICS in 2021.

The Indian MSME sector typically contributes about 30% to the country’s GDP and 48% to exports. It also generates the largest employer in the country only being second to the agriculture sector. However, the two pandemic years, 2020 and 2021 have been exceptional and faced many economic challenges.

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Covid 19 Impacts on the Future Trends and Roadmaps of MSMEs and Startups
  • Newsletter

Covid 19 Impacts on the Future Trends and Roadmaps of MSMEs and Startups

Covid 19 pandemic has descended upon the world as a double-edged sword taking a heavy toll on lives and livelihoods. The global economy was tossed upside down as the pandemic rapidly evolved from a human health emergency to a global economic crisis bringing a huge negative impact on all businesses especially the MSMEs and Startups with limited access to resources.

The immediate issues faced by the MSMEs are fluctuating supplies and demands due to pandemic restrictions as well as disruptions in imports & exports, the disintegration of global and local value chains, declining business activity and revenue stream, increased insecurities, and disruptions in financial systems and instability in financial sectors.

The Future Trends Shaping the MSMEs and Startups

The MSMEs and Startups are the main pillar of the economy for most of the countries around the World and are witnessing drastic shifts in business trends due to complex challenges posed by the pandemic. The seven emerging trends sweeping these two business communities are

1) Digitization

Accelerated digitization and increased acceptance and adoption of digital services and products by the consumers are becoming the most predominant trends which would help in promoting huge employment generation in the foreseeable future.

2) Rise of online learning and employee recruitment

With schools, colleges and other educational institutions closed down, the traditional teaching, learning and training systems have completely broken down witnessing a rapid rise of homeschooling and online classes & training sessions. Social distancing and lockdowns are preventing employers from conducting physical interviews and opting for online recruitment.

3) Remote working

Social distancing and pandemic related restrictions e.g. lockdowns to curb the spread of the virus have forced most of the businesses to opt for the remote working of their employees. Despite the start of variation, most of the working classes are nervous to go to their place of work.

4)  Cross-Sectoral Collaboration

As we have learnt that the virus can not be handled by the administration alone, the Governments, start-ups, universities and healthcare & civil societies have started collaborating more and more to address the pandemic related challenges. The distribution of vaccines is one such area where technology has enabled greater collaboration across public and private sectors for cold chain logistics and last-mile deliveries. Cross-sectoral collaboration is offering multiple advantages in our fight against covid.

5) HR Policy Revision for Human Centric Culture

With the need for remote working and flexible working options of part-time and contract-based working, a new set of HR policies and rules are being introduced by the organisations.

The global economies and businesses are disrupted and HR has been at the core of this discussion. As organisations have started recovering, the role of HR has become even more crucial for effectively implementing measures for employee health and safety, remote working and employee engagement & communication.

6) Employee Wellbeing and Mental Health Support

As growing insecurities, fear of virus infection and reduced social interactions continue to make havoc on the mental health of employees adversely affecting manpower productivity, employee wellbeing and mental health support are becoming an important trend for MSMEs and Startups.

7) Indigenization

As indigenization helps in ensuring more reliable supply chains including increased job creation and reduced carbon footprint due to less transportation, many governments are announcing support initiatives to promote local MSMEs and Startups. In India, the government has initiated a ‘Self Reliant India’ scheme to facilitate the localization of certain industries and businesses.

The Future Roadmap for Survival and Success of MSMEs

The pandemic is continuing disruptions for many MSMEs and Startups is changing the ways they conduct businesses. There are also continuous changes in regulatory requirements forcing businesses to change business models. However, newly created and improved business models can address these issues for improved performance of organizations.

  • Deployment of policies and programs for promoting inclusive growth for addressing the ways of MSME development in coordination with various stakeholders in the MSME ecosystem, including government, industry, business and trade associations.
  • Knowledge and skill development in digital and smart technologies enabling business entities to innovate, upscale, and expand their businesses.
  • Implementing strategies for advancing the marginalized businesses of women, youth, local peoples including rural business entities
  • Understanding customers’ needs and expectations from a changing consumer perspective
  • Implementing cost management and control measures across all areas of businesses
  • Managing working capital and ensuring cash flows to prepare for the future
  • Reorganizing supply chain to evaluate supply landscape and forecasting future needs
  • Revisiting organizational structure and employee welfare needs after assessing the impact of the pandemic on the capacity, capability, and affordability of workforce
  • Enabling businesses digitally making use of digital tools and assets to increase business growth
  • Redefining and managing physical and virtual workplaces for effectively addressing the future risks

Every Cloud has a Silver Lining

New monetary policy measures implemented across many countries can help speed up the recovery of MSMEs through mitigating short-term challenges, providing short-term liquidity support, availability of funding, providing the right conditions and incentives and boosting capabilities of MSMEs and Startups.

The new measures will provide better guidance to help start-ups adapt to the COVID crisis through centralized information and support programs and reduce barriers to new businesses. As regulations and procedures are being simplified, the administrative cost of startups and MSMEs will also come down. Increased collaborations and network developments shall also aid businesses to flourish in the medium to long term.

The newly evolving trends will lead to flexible working hours and increased job satisfaction increasing employee productivity and reducing employee turnover.

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SMEs are the Main Pillar of Saudi Arabia’s Non-Oil Economy
  • Newsletter, Saudi Arabia

SMEs are the Main Pillar of Saudi Arabia’s Non-Oil Economy

SMEs in both developed and emerging economies play the most crucial role in promoting economic growth and development through effective utilization of resources and promoting entrepreneurial talents and job opportunities. Saudi Arabia is no exception and since the Saudi Vision 2030 was launched in 2016, the contribution of the small and medium-sized enterprises (SMEs) to Saudi Arabia’s gross domestic product (GDP) has grown by 45% against the original plan for increasing SME contribution to GDP from 20% to 35%.

A new Government agency was also established in 2016 as SME Authority (SMEA or Monshhat) for supporting, nurturing and developing small businesses and startups that have launched a set of initiatives for the ease of doing business in Saudi Arabia and include reimbursing government taxes paid during the first three years of operation, covering business risks of SMEs for financial institutions, providing money to the investing companies for low-cost SME funding and venture capital funding.

Over the last five years, the number of SMEs under the Vision rose from 447,000 to 614,000 in 2020. The SMEs’ share of bank loans also got closer to the target of 11% by 2025 effectively rising from 2% to 8% and acting as evidence of much new company formation in Saudi Arabia.

In a recent survey of the SME confidence index in the MENA region, Mastercard revealed Saudi Arabia to have the highest percentage (57%) of optimistic SMEs with a 50% SME population projecting business and revenue growth over the next twelve months after experiencing unprecedented economic upheaval caused by the covid pandemic. 83% of Saudi SMEs were found to be projecting that the revenue would either grow or hold steady shortly. Access to data, digitalization and skills have been cited as the key drivers for growth by the leading global payments and technology companies.

With the loosening of a tight set of restrictions imposed by circuit breakers to reverse the tide of the covid pandemic, economic normalcy has started being restored in many parts of world geographies including Saudi Arabia and helped raise hopes for a brighter economic future amongst the SMEs.

“Small and medium-sized businesses are vital to the Saudi economy as it diversifies and grows. Through the most difficult days of the pandemic, SMEs continued to press ahead, and it is encouraging to see the renewed optimism and confidence in this sector today.

While 62% of the respondents reported Private sector partnerships as the main reason for future business growth, 55% of SMEs cited government-led initiatives as the major growth driver.

In Saudi Arabia, 99% of Private sector companies fall under the ‘SME’ category employing less than 249 employees and earning less than SAR 200 million as revenue. Though the economic output of SMEs doesn’t match that of big corporations like Saudi Aramco, they employ the largest Saudi population and keep the economy running. Most of the SMEs in the KSA maintained steady growth over the years and promoted employment opportunities in the country. Institute of National Entrepreneurship Initiative (NEI) described SMEs as the backbone of Saudi’s economy.

King Salman bin Abdulaziz and Crown Prince Mohammad Bin Salman, with their visionary leadership, led the country’s economic growth and prosperity through Saudi Vision 2030 with continuous government support and initiatives to the SME sector through a variety of reform programmes. Economic diversification and reduced dependence on oil are at the core of the country’s 2030 vision with a primary focus on enhancing local SMEs’ capability.

Significant resources have been allocated by the Saudi government for enhancing the role of SMEs in the economy in recent years. In 2020 itself, an economic package worth 13 billion USD was announced for SMEs 2020 to mitigate the covid virus-induced financial crisis caused by reduced cash flows. The Kingdom has set a target of a 25% increase in GDP contribution for the private sectors.  

The government has also made a considerable investment to promote SME funding through Sovereign Wealth Fund PIF with several initiatives like Jada investment for providing funds to SMEs through investment in private equity and venture capital funds and contribute 2.29 billion USD to the country’s GDP by 2027.

The SME sector in Saudi Arabia is considered as the pulse of the Kingdom’s economy and enhancing overall economic prosperity through employment generation, local capabilities boost up, ensuring business competitiveness and economic diversification.

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Sohar Port & Economic Free Zone offers Multiple Benefits and Abundant Opportunities to Indian Investors
  • Newsletter, Oman

Sohar Port & Economic Free Zone offers Multiple Benefits and Abundant Opportunities to Indian Investors

SOHAR Port and Freezone in Oman is a deep-sea Port and Freezone administered by SOHAR Industrial Port Company, the SIPC. The port is located in the middle of Dubai and Muscat and was inaugurated in 2004 with the first vessel. The Freezone was added later, during 2010 and 2018. The port is capable of handling more than one million metric tons of sea cargo every week. It is one of the fastest-growing ports and free zones in the world today and lies at the centre of global trade routes between Asia and Europe.

Initially built as three industrial clusters for metals, petrochemicals, and logistics, it has recently added a new food zone cluster for manufacturing, packaging, and logistics of food products. Foreign investments above USD 27 billion poured in this port and free zone that witnessed an increase of exports by 3.8% despite the economic crisis caused by the covid pandemic. Many foreign investors made a choice for company formation in Oman and selected Sohar as their preferred business destination. The port also achieved an almost 1% increase in the number of containers as well as a doubling of Ship-to-Ship cargos due to the port’s unmatched turnaround time and quick service.

In a recently released 2021 first-quarter result, the port and free zone reported cargo handling growth in all categories compared to the same quarter the previous year. Both the throughput and dry bulk volume witnessed sizable growth over last year registering a 21% & 23.6% increase respectively. Breakbulk and liquid bulk handling also grew significantly. 

“Since the start of the pandemic in the first quarter of 2020, one of the key challenges faced by businesses around the globe has been securing supply chains and ensuring their business continuity. At SOHAR Port, we put in place precautionary measures and identified solutions to best serve our clients and the various markets.  A testament to our proactive approach, we were able to continue contributing to the Sultanate’s GDP, supporting the objectives of the Government of Oman in its diversification plans,” told the CEO of Sohar Port Mark Geilenkirchen.

Sohar Port and Freezone in an attempt to explore the Indian market has entered into a collaboration with the Federation of Indian Chambers of Commerce & Industry (FICCI) and launched a five-part online webinar series titled ” Accessing Industrial and Logistics Solution to Maximize your Market Reach”. The webinars will also highlight opportunities on how Indian businesses can capitalise on the strategic location and world-class infrastructure of this port and free zone to gain enhanced access to the GCC, the US and African markets.

The first webinar held on July 13 mainly highlighted the opportunities available at SOHAR Port and Freezone with presentations and success stories from Omar Al Mahrizi, CEO-SOHAR Freezone; Emmee Haun, FTA Advisor; Sameer Gupta, Head of Production Planning, Shipping & Logistics, Jindal Shadeed Iron & Steel LLC; Malvika Pankaj Khimji, Director- Khimji Ramdas. The first webinar session was attended by 70 Indian business houses.

The first session provided knowledge and insights on multiple benefits offered by the port and free zone including value addition through cost-competitive utility prices, unhindered supply of raw materials and lucrative incentives. The Free Trade Agreement reached with the US also allowed duty-free access to qualifying products.

The next four webinars will be conducted over the coming months which will focus on key industries such as food, automotive, plastics and metals and the agenda will be released before each session.

Omar Al Mahrizi emphasized saying, “Oman and India have enjoyed decades of bilateral trading, linked by history, culture and warm and cordial relations. As a well-connected integrated hub with established clusters, our close geographical location, coupled with prime waterfront access, leasable land options and excellent infrastructure are all key ingredients to provide Indian investors with unique business opportunities. This webinar series provides the ideal platform for us to highlight these prospects to FICCI’s vast network, paving the way for future business development and closer relations.”

The webinar series also focuses on the huge opportunity for promoting mutually beneficial business partnerships between India and Oman in the Sohar Port and Freezone which has already attracted investments from Indian top business entities including Jindal, Larsen and Toubro (L&T), and Moon Iron and Steel Company (MISCO). Many new infrastructure projects and investments are also underway providing considerable growth prospects.

The Sohar Port and Free Zone have also made huge investments in innovative sustainability projects such as renewable energy, a rapidly growing sector in India. Indian companies aspiring for doing business in Oman can also benefit from several incentives announced by Sohar port and free zone. The company incorporation process is also easy and simple and can offer global market access to Africa, Asia and the Middle East.

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How Does a Foreigner File for a Trademark Registration in UAE
  • Newsletter, U.A.E

How Does a Foreigner File for a Trademark Registration in UAE?

The UAE is known as the leading financial hub in the Middle East and North Africa Region and many foreign companies look for setting up businesses in the country. It is, however, necessary that they prioritise the need to protect the company’s trademark with full consideration whether the trademark infringes the rights of others before registering the new corporation.

The Government of the UAE has put bold steps forward for implementing sound trademark legislation in line with international trademark registration classifying goods and services for the Registration of Marks under the Nice Agreement. The federal law for trademarks focuses on protecting trademarks and the procedures for the protection of intellectual property rights. Trademarks are effectively protected by Federal Trademark Law No. 37 of 1992 subsequently amended by Federal Law No. 8 of 2002 called the ‘Trademark Law’ with the requirements for trademark registration in Dubai UAE and the penalties for violating the same.

Rights of trademarks are permitted to both the UAE nationals and foreigners performing commercial, industrial, services and other business-related activities.

What is Trademark and its Benefits?

UAE Federal Law No.37 of 1992 defines a trademark as “a trademark is any distinguished form of names, words, signatures, letters, figures, graphics, logos, titles, hallmarks, seals, pictures, patterns, announcements, packs or any other marks or group of marks, if they were used or intended to be used either to distinguish goods, products or services from whatever sources, or to indicate that certain services, goods or products belong to the owner of the trademark, because of their provision, manufacturing, selection of trading. The voice accompanying a trademark is considered a part of it.” In a nutshell, it is the ‘Brand Name ‘ in legal terms.

Though Trademark registration is not mandatory in UAE, it can benefit foreign businesses by providing exclusive rights to beneficially operate under the registered trademark. It also protects the company name and brand from any infringement and allows legal actions whenever such a case arises. Besides, a trademark also helps in promoting business through

  • Unique Image creation
  • Easy Manpower deployment with minimum attrition
  • Creating an intangible asset
  • Product quality recognition
  • Enhancement of goodwill and trust

What is the Trademark Authority in the UAE?

The Ministry of Economy is the controlling authority for Trademark in UAE with a Trademark office located in the Ministry.

How does a Foreign Company register for a Trademark?

Trademark registration can be done by submitting an online application with registration documents including Trademark logo, Commercial licence, Power of Attorney, Priority document, Passport and others, as relevant.

What Is the Scope of Trademark Registration in the UAE?

As per Article 2 of UAE Trademark Law, any character with a distinctive form that helps to distinguish a brand from others can be trademarked such as titles, characters, seals, posters, engravings, paintings, names, signatures, titles, paintings, and any kind of label.

Article 3 of Federal Law No. 37 of 1992, prohibits certain marks from trademark registration on absolute or relative grounds and a few of them are listed below.

  • Marks with no distinctive character
  • Descriptive marks, ordinary drawings and pictures of products
  • Marks breaching public morals or interest
  • Public emblems, flags and other logos
  • Trademarks that are identical or similar to symbols having a purely religious character
  • Geographical names that may create confusion regarding the origin of products or services
  • Particulars of honorary degrees
  • Trademarks owned by prohibited natural persons or legal entities
  • Trademarks composed of national and foreign medals, coins and banknotes
  • Red Cross and Red Crescent symbols
  • Third-party names and titles
  • Other well-known trademarks translated directly
Additional restrictions in trademark if any needs to be consulted with the local trademark registration attorney.

What is the process of Trademark Registration in the UAE?

Trademark Registration Process in the UAE is simple with the below-mentioned steps

  • Filing Application
  • Examining on formal, absolute and relative grounds
  • Publishing for opposition purposes in national newspapers
  • Approval for Trademark Registration
  • Payment of fees, rolling penalty fees for late payment
  • Final Registration of Trademark
  • Issuance of electronic registration certificate, no hard copy certificate is issued

What is the validity of a Trademark in the UAE?

The trademark’s validity lasts ten years from the filing date and can be extended for another ten years.

What is the Trademark Registration Fee in the UAE?

The trademark registration fee in the UAE as of 2021 is USD 1366.
How is Trademark Renewed in the UAE?
Trademark renewals are done by submitting an application through the Service platform of the Ministry of Economy along with a copy of the registration certificate for the mark and a power of attorney if done through a professional farm or agent. The renewal fee is USD 1366 and includes publication fees. Late fees apply for late renewals.
What are Trademark Infringements and what are the penalties?

Trademark infringement can be a major problem in the UAE as in other countries with serious business implications. A business must have a good title to its trademark to ward off any possible risk of infringement.

Various legal actions can be initiated against the infringers and may even lead to criminal proceedings. The trademark holder may even commence civil proceedings for infringing the use of the trademark. The best way to prevent a third party from infringing business rights is trademark registration with the UAE government enabling the enforcement authority to assess trademark rights for most effective countermeasures.

Besides criminal proceedings and imprisonment for infringement of trademarks, hefty fines are also imposed by the authorities. Dubai Customs can also facilitate avoiding infringement with its authority to stop infringing products before entering the UAE soil and can make trademark protection more robust and secure.

Takeaway

There may be an additional cost to hire local PRO services as an attorney for trademark registration, however, partnering with an experienced attorney allows new business owners to focus on other value-added tasks including business development, marketing strategies, advertising etc. instead of getting involved in intricacies of trademark law and submitting applications. A reputed firm ensures that the registration process is successful without getting rejected with complete search and intricate legal analysis.

It is highly recommended that businesses invest in a trademark lawyer and draw up and implement a plan for operating in the UAE, particularly about how trademark rights are handled for a sustainable business with trust and goodwill. A reputed firm also keeps a constant watch and strenuously protects against any infringement of registered trademarks in the UAE.

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UAE SMEs are Optimistic about Post-Covid Economic Recovery
  • Newsletter, U.A.E

UAE SMEs are Optimistic about Post-Covid Economic Recovery

MasterCard, a leading global payments and technology company in its recent research reported that the confidence and optimism amongst the UAE Small and Medium Enterprises (SMEs) are now coming back after the severe economic upheaval caused by covid 19 induced pandemic.

While 88% of SMEs were seen upbeat on the next 12 months; two-thirds of them forecasted the revenue flow to be better or remain stable over that period, the inaugural Mastercard Middle East and Africa (MEA) SME confidence index revealed. Increased and easy access to funding, skill enhancement and digitalization have been identified as key growth drivers in the future.

With a remission in the number of active covid cases and gradual easing of lockdowns and social restrictions, many emirates are coming back to normal economic activities enabling the UAE SMEs easier access to funding for a business, suggested by 40% of the SME population. Digital payments and online transactions have been cited as one of the other reasons by 34% of the respondents. Skill enhancement and training of staff have also been identified as major growth drivers by 34% of SMEs surveyed.

The reasons for future growth opportunities thus factored both external influencers e.g. industry policies, regulations, industry trends etc. and internal transformation and capability enhancement of SMEs through experience, training and upskilling.

Increased focus on core business activities, streamlining operations and cost reductions have also been recognized by Dubai SMEs for internal strengthening and outsourcing PRO services in Dubai should be an ideal proposition in that direction. Engaging external accounting services in Dubai will also come as a great help in reducing overheads and fixed costs of SMEs and enhancing business competitiveness.

More than 400,000 SMEs run their operations within the UAE employing over 86% of the UAE workforce in the non-oil sector and to support this sector, the UAE government has already announced 8.2 billion USD financial support for these SMEs and startups in April. Vision 2021 of the UAE government also stressing on SME participation in the non-oil economy touching 70% this year.

“Starting a business is one of the most ambitious and rewarding things one can do, and it’s great to see that confidence is returning to the UAE’s SME sector after a challenging period. The study highlights the potential of several key drivers of growth that small and medium businesses in the UAE rely on as they look towards an optimistic future. At Mastercard, we connect SMEs to the technologies, the network and the expertise they need to sustainably grow their businesses, collaborating to build prosperous and more inclusive economies,” added Girish Nanda, Country Manager, UAE and Pakistan, Mastercard.

Though the UAE SMEs sounded more upbeat compared to other middle eastern counterparts, they voiced their concerns over the high cost of running a business in the country. Public-Private partnerships, however, are cited as a positive growth engine. During the survey, 60% of UAE SMEs said that the maintenance and growth of their business was the biggest challenge they were facing.

61% of SMEs surveyed highlighted the increasing cost of doing business as the major hurdle over the next one year while 38% of them pointed to the immediate requirement of even more easy access to capital and funding.

Private sector partnerships were seen as positive for business growth by 57% of SMEs and 53% spoke in favour of government-led initiatives as one of the most potent factors for favourably impacting SMEs and the greater UAE market and economy.

Girish Nanda emphasized saying, “Access, whether it is to growth, stability and financial support, stands out as the top concern that SMEs in the UAE face today. The fundamental benefit of a digital economy is that it eases access across these barriers. Whether it is the ability to sell online, acquire a larger customer base through eCommerce, or enable instant access to apply for or extend credit lines through digital banking, the digital economy works for everyone. At Mastercard, we work every day with the diverse players in this financial ecosystem to transform this infrastructure and build a smart economy that enables access for businesses of all sizes.”

As new consumer trends are rapidly evolving after the covid pandemic across the globe, businesses must acclimate themselves to these new trends for sustainable growth and development. It is believed that a more than 20% increase in e-commerce retail spending would be a permanent thing in the future. 73% of consumers in the UAE are seen doing more shopping online than they used to during pre-covid time and 97% of UAE businesses would prefer and adapt to digital payment over the coming years.

The Dubai government announced four economic stimulus packages in 2020 to mitigate the impact of economic restrictions during the pandemic. The latest package announced this year amounted to AED 315 million for the revival of Dubai startups and SMEs.

An independent agency of the Government of Abu Dhabi, the Khalifa Fund for Enterprise Development (KFED) has recently launched a new media platform called Abu Dhabi SME Hub fully dedicated to supporting small and medium enterprises (SMEs) in the UAE and will extend support to all SMEs during every stage of business and equip them with the appropriate tools needed to comfortably cope up with the local UAE ecosystem to as well as to grow and innovate in terms of best industry practices and newly evolving technologies.

The UAE government has handled the covid pandemic with utmost determination and unwavering commitment that has been very much appreciated and recognized internationally. UAE as a whole and especially Dubai has retained its status as one of the most coveted places for business, logistics, travel and holiday and increased migration of companies for business set up in Dubai is a glaring testimony of that.

The government has also done a stupendous job and kept international travel restrictions limited during the pandemic and stayed away from unnecessary and unpredictable lockdowns to encourage the international business community and promote FDI.

There has been an all round endeavour in keeping the UAE startup and SME ecosystem vibrant by connecting foreign business entities to different local stakeholders including regulatory bodies and investors.

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