Corporate governance and legal environment - Myassignmenthelp.Com

Question: Discuss about the Corporate governance and legal environment. Answer: Introduction: For the purpose of determining suitable business structure in Abu Dhabi in order to create small a business in Abu Dhabi a least expensive and simple legal form of company has to be selected. In order to conduct this assignment a Sole Proprietor Company has been selected which is the best legal form of company that can be created in Abu Dhabi. An establishment of sole proprietorship takes place only when an entity is owned by one individual with a trade license issued in the name of such individual (Aljifri et al. 2014). In case of a Sole Proprietor Company the owner assumes that allthe financial responsibilities incurred in the course of business of the entity including the financial liabilities lies with such owner (Desislava and Keith 2016). Therefore in the present question in which it was asked to create a small business which is involved in selling of phone accessories in a shopping mall. In order to provide the required answer to this question a Sole Proprietor Company is cons idered to be the best option because in such cases in order to incur losses in business the owner is liable to take personal loan for the sake of the business. In this regard it can be stated that every Cell phone brand has adopted a technique of its own in order to establish Kiosk business in UAE in order to step into areas where stores cannot be developed. In recent development of technology the retailers of mobile phone accessories are integrating new ideas by deploying kiosks at areas of high customer demands. Discussion: Sole Proprietor Company better than the other prevailing options: In UAE other types of business entities exists for instance sole proprietorship business, limited partnership business, non-profit corporation and general partnership business (French 2014). The companies that have been mentioned above the owners debts of the company and also in case of losses incurred by such company. In case of a sole proprietor company the owner is personally liable for the debts incurred in the course of business and also in case of any other financial obligations occurring during the tenure of business operations (Gomtsian 2016). In this regard it is noteworthy to mention that a Sole establishmentis a business which can be owned by an individual and not by a company. In order to practice a business as a natural person to promote economic activities in the emirate of Dubai, inseparable of the personality of its owner and financial standing, being fully responsible for all financial liabilities incurred against others in the course of business a Sole Proprietor Co mpany is considered to be the better choice than any other companies (Hassan and Naser 2013). In this regard mention can be made of the other kinds of businesses that exist in the UAE. In UAE there are other kinds of business entities for instance limited partnership business, non-profit corporation and general partnership business (French 2014). In most of the cases the business of a limited liability company is with a local partner where the local partner holds a considerable fee every year under a side agreement stating that, in consideration of the fee, the local partner will be legally beneficial in holding 51% of the share of the company (Hassan and Naser 2013). In UAE the free zones have been successful in fascinating a large number of foreign companies and paving the way for foreign direct investment in the country (Majdalany and Henderson 2013). In UAE with the presence of civil companies, offshore companies and Free Zone Companies the sole proprietor company is considered to be the best in order to enhance sales within the region. Other forms of company creation would not be permissible to legal entities: In recent trends with the increase in market competition he Sole Proprietorship Company is considered to be far better than any other legal entities at present. The main law which governs the formation of companies in UAE is the Commercial Companies Law 2015 (Molk 2016). Article 22 of the Act states that the local majority ownership of at least 51% of the shares and share capital however some business activities requires a percentage ownership which is even higher (Majdalany and Henderson 2013). The benefits enjoyed the owner of a Sole Proprietorship Company can be explained in this regard. Thesole traderis a common business in UAE which is mostly suited for small scale businesses that are run by a single person (Kerr et al. 2013). In the given question however it was emphasized that in order to create a small business of selling phone accessories in a shopping mall an ownership in the form of sole proprietorship develops. It is noteworthy to mention here that this kind of business h as many advantages however such kind of business is different from other types of companies present in Dubaiin terms of ownership liability. In many companies there exist separate legal entities and the shareholders that are legally separate from the owners. Due to the existence of lack of separate legal entity the owners are personally liable towards the business because in case the company gets dissolved the creditors are personally liable (Khan and Kenneth 2017). In case of a sole proprietor company separate legal entities are not permissible as the owner is personally liable for the profits and losses incurred in the business. Legal and government procedures along with DED in opening a business in UAE: The Islamic Sharia Law is the main source of law that governs the activities of the UAE jurisdiction which has been depicted in Article 7 of the UAE Constitution (Gomtsian 2016). From the very beginning the rules and regulations of Islamic laws rely upon the construction as well as the evaluation of the provisions of the Civil Code (Khan and Kenneth 2017). The government and legal procedures along with the operation of Department of Economic Development (DED) can be explained in order to start a small least and least expensive business in Abu Dhabi (Shayah and Qifeng 2014). In order to create a small business by a single individual which comprises of selling phone accessories at a small kiosk it is required to select a trade name before staring the company because a trade name helps to distinguish one business from another (Molk 2016). It also helps in reflecting the nature and the form of the business in which the owner is engaged. It is noteworthy to mention here that since time immemorial the law permits the establishment of a sole proprietorship for both the U.A.E. nationals as well as the nationals of the Gulf Co-operation Council (Shayah and Qifeng 2014). However the procedure differs from place to place. In case if the investor is a national of UAE then in such cases the individual if he wishes to practice a business in UAE may apply to the Department of Economic Development (DED in order to obtain the license for the practice of business activity and therefore attach all the required documents and complete the procedure according to the DED (Nad al 2013). However as stated in Article 8 of the United Economic Agreement all nationals of the Gulf Cooperation Council nations are treated as nationals of any part state where separation is not made in exercising business in the fields of industry, domesticated animals, farming, fisheries (Naser et al. 2013). However the recipient after getting the approval of such license in the UAE, the recipient must comply with the arrangements of article (10) of the official directions of the Federal Law No. (2) of 1979 (Molk 2016). In this regard in order to start a small business it is required that the applicants must determine a site in order to conduct their business activities. The location must be selected so that it complies with the requirements as depicted in the Department of Economic Development (Majdalany and Henderson 2013). The owner of the business shall take into account a lease of an office by publishing the Contract of Establishment in the Companies Gazette issued by the Ministry of Ec onomy (Hassan and Naser 2013). After the completion of the above steps a Commercial License must be obtained by the owner of the business of a Limited Liability Company from the DED (Shayah and Qifeng 2014). In the last stage after issuing the Commercial License by the DED it is required that the owner of such Sole Proprietor Company should register with the local Chamber of Commerce depending upon the location in of the office. Conclusion: In the conclusion it can be stated that in order to develop a small business involving the selling of phone accessories at a small kiosk in a shopping mall by taking personal loan the sole proprietorship business is considered to be the best option. However in this regard the owner of such business is personally liable for the debts incurred in the course of business. The sole proprietor is also entitled to take personal loan in order to increase his operations in business. Lastly, it can be stated that in the additional steps for such kind of small business the owner should comply with the requirements of the law and the government procedures. References: Aljifri, K., Alzarouni, A., Ng, C. and Tahir, M.I., 2014. The association between firm characteristics and corporate financial disclosures: evidence from UAE companies. Desislava D. 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