Question

Course name: Legal Aspect of Business in UAE

Please make a good report of 800 words

Required

Imagine that you are expat investor and you want to establish an Insurance company in UAE.

Which type of companies you will choose? and explain why?

Please do another i need another

Answer 1

Investment in a foreign country is having risks related to political regime being unfavorable, additional costs related to compliance with legal regulations, customer preferences changing and also other risks related to currency and interest rate volatility. To circumvent these risks, it is preferable to have partnerships with local parties or form joint ventures to hedge these risks. Additionally, it is also recommended to start small and commence business in the foreign country through the mode of exports or franchise to begin with and then based on experience, scale up to launch a fully owned subsidiary.

The subsidiary would be structured as a limited liability company in a tax free zone to reduce personal liability for the directors and also take advantage of the tax concessions offered by that country.

After the launch of the subsidiary also, it is preferable to have customers who have robust business models and have strong reputation in the market. To start with, it may be recommended to start the business with customers who are also the foreign subsidiaries of firms having their parent entity in the same country as our company’s country of origin. This would allow the company to build on past relationship that both parent companies may have in the home country and take these relationship forward in the new foreign nation.

After business has reasonably been established and post regular cash flows, the next phase of expansion can be undertaken with taking on local firms with high reputation as customers. It should always be the endeavor to form long term strategic contracts between the firms rather than have a transactional approach to these relationship.
To conclude, it would be prudent to say that the firm should maintain a portfolio of customers with each customers having a different risk profile and the overall risk should be controlled within allowable limits while ensuring returns from the overall portfolio is adequate. To protect the returns in the home currency terms, adequate forex hedging techniques should be applied to prevent erosion of value from currency volatility.