Common law in RAK ICC

UNDERSTANDING THE COMMON LAW ASPECTS OF RAK ICC

Introduction

When considering offshore company formation in the UAE, businesses and investors often evaluate jurisdictions such as the Ras Al Khaimah International Corporate Centre (RAK ICC), the Abu Dhabi Global Market (ADGM), and the Dubai International Financial Centre (DIFC). While ADGM and DIFC are well-known as common law (also CL) jurisdictions, RAK ICC presents an interesting case—it operates under a hybrid framework influenced by CL principles while still being regulated by UAE federal laws. This article explores how RAK ICC incorporates elements of common law into its regulatory framework and what it means for businesses setting up in this jurisdiction.

What is RAK ICC?

RAK ICC is an international corporate registry based in Ras Al Khaimah, UAE. It provides a flexible and efficient platform for company formation, particularly for international businesses seeking a tax-efficient, low-cost jurisdiction with strong asset protection mechanisms. RAK ICC companies are primarily used for asset holding, wealth management, estate planning, and international business transactions. Unlike ADGM and DIFC, which function as financial free zones with their own regulatory and judicial frameworks, RAK ICC operates under Ras Al Khaimah law, which aligns with UAE federal legislation.

Common Law Influence in RAK ICC

Although RAK ICC is not a full-fledged common law jurisdiction like ADGM or DIFC, it adopts several elements of CL in its corporate governance and dispute resolution mechanisms. These influences provide international investors with a degree of legal certainty and familiarity, particularly for those coming from common law jurisdictions.

Common Law-Based Legislation

RAK ICC’s legal framework is largely influenced by international common law principles. This is evident in its corporate structuring, where company formation, governance, and compliance requirements mirror those found in CL offshore jurisdictions like the British Virgin Islands (BVI) or Cayman Islands. The flexibility in shareholding structures, directorship rules, and company administration make RAK ICC an attractive jurisdiction for international investors accustomed to common law practices.

Access to Common Law in RAK ICC

One of the most significant advantages for RAK ICC companies is their ability to opt for dispute resolution under common law jurisdictions within the UAE. RAK ICC companies can specify in their corporate documents (such as shareholder agreements, contracts, and bylaws) that disputes will be adjudicated in either the ADGM Courts or DIFC Courts, both of which operate under English common law.

This option is particularly beneficial for international businesses that seek legal certainty and prefer the predictability of common law over civil law. The DIFC and ADGM Courts have a well-established precedent system, offering a transparent and internationally recognized dispute resolution framework.

Corporate Structures Aligned with Common Law Practices

RAK ICC offers corporate structures that are commonly used in CL jurisdictions, including:

  • International Business Companies (IBC): These are widely used for asset protection, cross-border trade, and holding purposes, much like in BVI or Cayman Islands.
  • Foundations: RAK ICC allows the establishment of foundations, which function similarly to trusts in common law jurisdictions. These are used for wealth management, succession planning, and asset protection, providing a legal framework that aligns with structures found in CL countries.
  • Flexible Shareholding and Directorship Rules: RAK ICC companies do not require local shareholders or directors, mirroring offshore common law jurisdictions and allowing full foreign ownership.

Differences Between RAK ICC and ADGM/DIFC

While RAK ICC incorporates aspects of common law, it does not have a separate judiciary or independent regulatory authority like ADGM and DIFC. The key distinctions include:

  • Legal Jurisdiction: ADGM and DIFC have their own legal systems based on English common law, with independent courts and regulatory authorities. RAK ICC remains under the jurisdiction of Ras Al Khaimah and UAE federal law.
  • Regulatory Framework: ADGM and DIFC regulate financial and professional services with a full-fledged common law framework. RAK ICC, on the other hand, primarily serves as a corporate registry for offshore companies without a separate financial regulatory body.
  • Physical Presence Requirements: Unlike ADGM and DIFC, which require companies to have a physical presence within their jurisdictions, RAK ICC does not mandate a physical office in Ras Al Khaimah. Companies can use the address of their registered agent, similar to offshore jurisdictions like BVI or Seychelles.

Benefits of Choosing RAK ICC for Business Incorporation

RAK ICC is an appealing choice for businesses and investors who seek the advantages of an offshore jurisdiction with certain common law features. Some of the key benefits include:

  • Access to Common Law Courts: The ability to opt for ADGM or DIFC Courts for dispute resolution enhances legal certainty for international businesses.
  • Familiar Legal Framework: The corporate structuring aligns with international best practices, making it easier for global businesses to operate within RAK ICC.
  • Cost-Effective Setup: Compared to ADGM and DIFC, RAK ICC offers a more affordable company formation process with fewer regulatory burdens.
  • Full Foreign Ownership: Unlike mainland UAE companies, RAK ICC allows full foreign ownership without requiring a local sponsor.
  • Asset Protection and Wealth Planning: The availability of foundations and flexible IBC structures makes RAK ICC an attractive jurisdiction for asset protection and succession planning.

Conclusion to Common Law in RAK ICC

RAK ICC presents a unique hybrid model that blends elements of CL with the broader UAE legal framework. While it does not operate as a standalone common law jurisdiction like ADGM or DIFC, it offers businesses the option to incorporate common law principles in their corporate governance and dispute resolution strategies. By allowing access to ADGM and DIFC Courts, adopting internationally recognized corporate structures, and offering a flexible business environment, RAK ICC serves as a strategic alternative for investors seeking a cost-effective offshore jurisdiction with common law benefits.

For businesses looking for full-fledged common law jurisdictions in the UAE, ADGM or DIFC remain the preferred choices. However, for those seeking an offshore jurisdiction with access to common law frameworks, RAK ICC provides a compelling option. Understanding these distinctions helps investors make informed decisions when choosing the best jurisdiction for their business needs.

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We hope this post provides clarity when assessing set up options. Should you have any questions about this topic or related matters, please don’t hesitate to reach out.

For more insights, explore all our publications in English and watch informative videosfeaturing our Managing Partner, Maria Rubert.

Disclaimer: The content of this post is for informational purposes only and does not constitute legal advice.