Loans in the UAE: Legal Aspects and Regulation

When it comes to financial operations in such a dynamically developing economic center as the United Arab Emirates, understanding and complying with local lending legislation becomes critically important. The complexity and variety of financial products available in the UAE require careful consideration and the right approach for both individual borrowers and corporate entities. In this article, we will examine the main aspects of lending in the UAE, covering rules and regulations that companies aiming for successful business operations in the region must consider.

Loans to Individuals

The legislation of the UAE strictly regulates the lending sphere, especially when it comes to personal loans. According to Article 458 of the UAE Penal Code, loans to individuals can only be provided by licensed financial institutions. The law strictly prohibits individuals or unlicensed organizations from issuing loans to other private individuals with the expectation of receiving interest payments. Such action is considered illegal and carries serious legal consequences, including criminal prosecution. Violators who provide loans to other individuals with the intent of earning interest risk being sentenced to imprisonment for a term of not less than one year and are obliged to pay a fine of not less than 50,000 UAE Dirhams.

Loans Between Companies

Article 710 of the UAE Civil Code defines credit as the transfer of monetary funds or replaceable things with the obligation of return. Local laws do not contain direct prohibitions on loans between two companies. Thus, corporate lending, especially on a one-time basis, is not prohibited and is not subject to special regulation. An analysis of case law, including decisions of the High Court of England and Wales, also confirms that corporate loans are not subject to the restrictions applicable to personal guarantees under UAE legislation. This reflects a broader approach to corporate lending, distinct from the regulation of personal loans and guarantees.

Loans from Joint Stock Companies

However, there are restrictions in corporate loans. For example, the UAE Companies Law introduces a prohibition on providing financial assistance (loans or guarantees) by public joint-stock companies or their subsidiaries for the acquisition of company shares.

The law also limits the provision of loans to directors of joint-stock companies, their spouses, children, and other close relatives. The exception is banks and credit companies, which, being licensed, can provide such loans.


Although there is no strict state regulation of loans between companies in the UAE, we recommend drafting such a contract with a professional lawyer. Deficiencies in the contract can lead to the following problems:

  • Violation of Legislation: The lack of legal expertise in drafting a loan agreement can lead to unintentional violation of local laws and regulations. This is especially important in the UAE, where specific laws, such as the Pledge Law, which regulates the registration of pledges on movable and immovable property, are in force.
  • Loss of Right to Collect: An improperly drafted contract can make the debt collection process more difficult or even impossible. This may be related to unclear wording of terms or the omission of important legal elements.
  • Lawsuits and Fines: Non-compliance with legislative requirements can lead to legal proceedings and fines, negatively affecting the financial position of the company.
  • Reputation Loss: Legal disputes or the inability to properly manage credit relationships can damage the business reputation of the company, affecting its future commercial opportunities.

An analysis of the regulation of loans in the UAE shows that corporate lending has more flexible frameworks than private ones, but corporate lending can also have negative consequences. Understanding these rules is critically important for companies conducting business in the UAE to avoid legal risks and effectively use the financial opportunities of the region. Consulting qualified lawyers in this context becomes not just a recommendation, but a necessity. For over 8 years, the team of Antwort Law firm has been providing comprehensive legal services to entrepreneurs from around the world, helping them successfully develop and manage their business in the UAE, including professional support in arranging corporate loans.

Diana Gulevskaya

Antwort Law






Can I give a loan to a private person in the UAE at interest?
In the UAE, it is strictly prohibited for individuals or unlicensed organizations to provide loans to other individuals at interest. According to Article 458 of the UAE Penal Code, such actions are considered illegal and may carry serious legal consequences, including criminal prosecution and fines.
Can one company give a loan to another company in the UAE?
Yes, companies in the UAE can provide loans to each other. The UAE legislation does not contain direct prohibitions on the provision of loans between companies. However, despite the lack of strict regulation in this area, it is recommended to engage a professional lawyer to draw up a loan agreement to avoid legal risks.
Who can give loans to individuals in the UAE?
In the UAE, loans to individuals can only be provided by licensed financial institutions. Legislation strictly regulates the scope of lending to individuals, and only authorized organizations have the right to issue such loans.
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