7 May 2020
As your business moves in new directions, make sure you follow the right path
Modern technologies, including blockchain and artificial intelligence, have already profoundly changed the way many companies conduct business. However, the current pandemic is resulting in an unprecedented level of disruption. New ideas and quick adaptability are now crucial attributes for businesses to possess if they are to survive.
This article focuses on five key business requirements, relevant to all business sectors, that decision-makers should consider when adjusting their operations and objectives.
Certain matters require management, board and/or shareholder(s) approvals according to law or internal regulations. During times of crises, some decisions may need to be made quickly and employees and other representatives may feel pressured to get things done in haste. Nevertheless, not all decisions made now will turn out to be the right ones when looking back in a few weeks. This is true at any time, but even more so now considering the unprecedented circumstances.
That said, the risk of liability – and in some cases personal liability – can be mitigated by companies clearly documenting the relevant decision-making processes, and the facts and circumstances considered to justify such decisions. Written records should be kept at all times, so as to:
Discussing business over the phone can often be faster and more efficient, especially where parties are known long-standing business partners, who often operate based on trust. Unfortunately, any global economic downturn drives many businesses to the edge of collapse.
Unrecorded arrangements, or at least the precise details of such arrangements, may be 'forgotten' or challenged in the passage of time. It is therefore very important to document core elements of contractual terms. This will avoid any misunderstanding, and can also prevent disputes at a later stage.
For example, for a simple sale of goods or services, parties should at least confirm in writing the number of goods or services ordered, consideration amount and payment terms, delivery terms and time frames, and cancellation terms (where applicable), as well as the governing law and dispute resolution forum in a cross-border scenario.
It is crucial for a business to have proper and updated terms and conditions in place at all times, as well as to ensure that they have been validly included into contracts with third parties.
Equally, when parties discuss and agree contractual modifications, such as extended delivery terms, payment in instalments, temporary relief from exclusivity agreements, or reduced quantity of goods for instance, a summary email, at the very least, should follow the discussion that parties regularly have over the phone.
Existing written agreements may have a clause stating that any amendments to a contract are required to be made in writing and signed by the authorised representatives of the parties. But this can be managed relatively easily, even in the current scenario, without the need to convene in-person meetings, because the federal UAE law – as well as the laws of the two financial centre free zones in the UAE – include provisions that allow for electronic signatures for most commercial matters (subject to adhering to the technical standards stipulated therein).
Whether you are looking for new business partners to offer goods or services to your customers or you want to source goods or services from alternative suppliers in order to overcome delivery delays, there are three core aspects we recommend keeping in mind:
Again, the legal framework in the UAE allows for e-signatures and concluding agreements by way of electronic communication. For any documents that would need to be notarised, the UAE notary public has implemented electronic notarisation channels.
We understand this to be a dynamic area with more development to come in the near future, but all signs point to a permissive and flexible environment with respect to execution.
Any change made to your business model may result in deviating from the activities that your entity is permitted to undertake as per its license issued by the relevant UAE licensing authorities. This could be the case in situations where you identified a new business opportunity and want to offer new products or services (eg a gaming platform may now wish to offer support for home schooling), or you change your business model (eg from retail shop to online trading).
The UAE authorities have made available several options to enable applicants to obtain the required license(s) through online portals and allow them to conduct their new or modified business model. Often applicants may also benefit from some of the current fee waivers granted by UAE authorities.
For the avoidance of doubt, the fact that fees are being waived does not exempt legal entities from obtaining and renewing licenses, except where government authorities have explicitly announced that such approvals are temporarily unnecessary. Not complying with regulatory requirements is detrimental to any business and may result in fines and other penalties.
Also, there are a few authority approved initiatives designed to facilitate the connection between certain businesses – eg RTA taxis to assist with deliveries, or retailers in certain malls to partner with online shopping platforms.
Products and services are bought when the target customer group knows about them. As a result, marketing and advertising are often a key element to success. In this respect, it is worth noting that the UAE – both at the federal and Emirate specific levels – has several laws, rules and regulations that need to be observed when advertising any product or service.
The advertising guides published by the National Media Council contain useful initial guidance, outlining advertising standards, content requirements and conditions for legal advertising for traditional media as well as modern social media and electronic communication channels.
Rules around consumer protection and fair competition, prohibition of fraud and legal monopoly are some of the key elements that need to be taken into account when designing and implementing an advertising strategy.
For certain industries – including but not limited to healthcare, food, real estate, and education – the concerned authorities have to pre-approve advertisements. Furthermore, promotional campaigns and special offers of any nature normally require permits from the authorities in the concerned Emirate. In some instances, there are also mandatory language or design requirements that have to be met.
Any plan for an advertising campaign should be considered carefully, always be specific to the products or services offered and the type of media platform that should be used for the marketing initiative.
Necessity is the mother of invention. Challenges can provide an opportunity for improving current aspects of your business operations and preparing for the future. At Taylor Wessing, our team is ready to help you manoeuvre through these testing times and provide legal support to maintain and grow successful businesses.