There are legal, financial, and administrative hurdles that entrepreneurs and business owners must go through when setting up a business or managing operations in the UAE. Among the most potent tools available to make these processes easy is the Power of Attorney (POA).
Power of attorney refers to the power of an individual (Principal) to authorize another individual agent to perform acts on his behalf regarding legal, financial, and other matters. In UAE, a POA is essentially not just a formal document but a crucial instrument that brings business continuity, efficiency-in-doing business, and compliance.
In this blog, let’s see what POA means, how it functions in the UAE, and why it’s essential for a firm to hold this instrument as it expands in the Emirates.
What is the Power of Attorney (POA)?
In particular, the UAE research relates to a Power of Attorney by the UAE Civil Transactions Law Federal Law of 1985 and amended by Federal Decree-Law. Under the Civil Code, a POA gives the principal the power to delegate most functions to an Agent who will act in their name in a complete range of matters, where the POA is executed by a formal written document with the necessary stipulations regarding the extent of authority.
In short, the POA might allow the agent to make financial decisions or contracts, manage property transactions, or conduct any legal proceedings that the principal cannot perform personally. The scope of the powers provided may be general or specific depending upon the agreement for purposes of different business needs.
The Types of POA in the UAE
The civil code of the United Arab Emirates recognizes two major categories of power of attorney: general power of attorney and special power of attorney.
- General power of attorney
General POA grants wide-ranging authority to the agent and gives him the power to decide on areas relating to management of finances, real estate transactions, legal matters, and any other business activities. POA is generally used when a business owner or entrepreneur mandates someone else to carry out a wide range of roles on their behalf, such as operating or managing a business, day-to-day operations, or executor of contracts.
- General power of attorney
- Special power of attorney
However, Special powers of attorney are more restricted and limit the authority granted to one party for the completion of a task. For example, the principal may give an agent authority over a specific real estate transaction or representation in a single litigation, as well as set specific financial transactions. This is best suited for individuals or businesses when a specific instruction must be delegated but not delegated to the wider scope of its functions.
- Special power of attorney
Both forms of POA are generally available in the UAE and distinction is essential for the needs of business owners working toward realizing their operational goals.
Why Power of Attorney is Crucial for Business Setup in the UAE
For entrepreneurs and businesses entering the UAE market, a Power of Attorney becomes an essential tool in ensuring smooth business setup and operations. Below, we’ll explore the various reasons why a POA is critical for business owners:
- Commonly seen in UAE Company Registration and Licensing
With the many processes involved such as company formation in the UAE, obtaining of trade license, and registration with the concerned government authorities, setting up a business in Dubai has numerous steps involved. In very few situations has either an employee or a consultant been retained by them to arrange or execute documents in their stead and liaise with government agencies. They use a General POA in that sense, as it allows the agent to sign contracts, apply, and complete all legal formalities on behalf of the new business.
- Commonly seen in UAE Company Registration and Licensing
- Facilitates Property and Real Estate Transactions
Real estate is a huge part of the economy in the UAE. Many firms require POA for dealing with property transactions. If, for example, a property needs to be bought, sold, rented, or managed, a POA could delegate such authority concerning property matters to a representative whom he/she surely trusts. This would see smooth property transactions take place, even when the principal is not personally available to undertake the process.
- Facilitates Property and Real Estate Transactions
- Overcoming Geographical Barriers
For many international business owners, geographical factors pose barriers to setting up operations in the UAE. Whether they are located overseas or elsewhere in the region, having that POA at hand empowers such entrepreneurs to appoint a local agent/representative to act on their behalf. This would restore peace of mind as their business interests are being administered through a trusted individual in the UAE. Everything from signing contracts to labor relations would henceforth bring fast and easy solutions without the principal having to stay present physically.
- Overcoming Geographical Barriers
- Resolving Financial and Legal Issues
In addition to property and business-related activities, a POA is instrumental in managing financial matters, such as opening business bank accounts, applying for loans, and handling tax and regulatory compliance. A Special POA can be issued to authorize an individual to handle specific financial transactions, reducing the workload of the business owner and ensuring timely action.
- Resolving Financial and Legal Issues
How BLZ Helps with Power of Attorney in Business Setup
As businesses seek to expand and operate in the UAE, they often need expert guidance to navigate legal complexities such as POA arrangements. BLZ has been a trusted partner for entrepreneurs and companies looking to establish their presence in the UAE. Here’s how BLZ can assist with Power of Attorney needs:
- Consultation and Advice: BLZ offers comprehensive consultations to help businesses understand when and why a POA is necessary for their operations.
- Customized POA Setup: Based on the specific needs of your business, BLZ helps draft General or Special POAs that align with your objectives.
- Legal Compliance: BLZ ensures that all POA documents are notarized, attested, and registered with the relevant authorities to guarantee their validity and authenticity.
- Ongoing Support: As your business evolves, BLZ can help modify or revoke POAs as needed, ensuring that all your legal and business processes remain compliant with UAE laws
Conclusion
A Power of Attorney is a powerful tool that simplifies legal, financial, and operational matters in the UAE. Whether you’re an entrepreneur starting a business, an investor looking to manage property, or a company that needs to delegate authority for day-to-day tasks, POA enables you to manage your business efficiently and effectively.
At BLZ, we understand the intricacies of setting up a business in the UAE, and we’re here to help you navigate the POA process. From drafting tailored POA documents to ensuring compliance with local laws, BLZ is your trusted partner for business success in the UAE.
If you’re ready to start your business journey in the UAE or need assistance with Power of Attorney arrangements, get in touch with BLZ today. We’re here to make your vision a reality!