UAE introduces stricter fines for commercial agency rules violations

The new penalties, detailed in Cabinet Decision No. 89/2023, are intended to deter breaches of Federal Law No. 3/2022 – the protective legislation aimed at supporting commercial agencies in the UAE. Updated violations will apply to situations such as when:

• a commercial agency is owned by individuals who are not UAE nationals;
• the ownership by UAE nationals in a public joint stock company falls below the mandated threshold of 51%: and
• commercial agency activities are conducted without obtaining the necessary approvals.

The cabinet decision comes after a significant overhaul of the UAE’s commercial agencies law earlier this year.

Key provisions of the cabinet decision

Fines for non-compliance

One of the main provisions of the cabinet decision include fines for non-compliance, which are designed to be commensurate with the nature and severity of the violation.

They range from relatively minor penalties for first-time infractions, starting at AED 5,000 (approx. £1,120), to substantial fines for fourth-time violations – up to AED 400,000. In cases of serious violations, the ministry may impose the severest administrative penalty even for a first-time offense.

Suspension of commercial agency licenses

Where violations are repeated or particularly severe, the ministry has the authority to suspend the license of a commercial agency for a specified period.

Revocation of licenses

For the most egregious violations or instances of repeated offenses, the ministry retains the right to completely revoke the commercial agency's license.

Appeals process

Commercial agencies facing penalties will have the opportunity to appeal these decisions through a designated process. The ministry is obligated to inform the relevant parties of the penalty within 15 days from the date of issuance.

Any party with the legal capacity and a vested interest has the right to challenge this administrative penalty by submitting an appeal to the minister. The appeal must be submitted within 30 days from the date of notification of the original decision and should include a well-reasoned argument supported by all relevant documents.

The ministry is mandated to make a decision on the appeal within 30 days from its submission, following established procedures. If this specified timeframe passes without a decision, the appeal is automatically considered rejected. Importantly, the decision resulting from the appeal is considered final.