Issues affecting mergers and acquisitions in Arabian Gulf

The Gulf Cooperation Council (GCC) countries continue to offer favourable environments for foreign investments despite the slide in oil prices over the past year. The member countries of the GCC are Saudi Arabia, the United Arab Emirates (UAE), Kuwait, Qatar, Bahrain and Oman.

Despite political divisions and conflicts in neighbouring countries, the GCC remains attractive to investors, offering a wealth of opportunities in a favourable business environment. The rapidly growing GCC economies are stimulated by population growth. Native and expatriate populations experience high levels of employment, investment in social services and infrastructure and zero or low tax. These factors, coupled with business-friendly regulations allowing free recruitment and movement of labour, contribute to making GCC countries attractive to foreign investment.

Foreign investors must take a number of items into consideration when transacting in the GCC. The region’s practices have been influenced by Western ways of doing business and carrying out transactions. However, the fundamentals of the legal frameworks of most Middle Eastern countries remain deeply rooted in civil law principles, namely the French civil code as adopted and developed in Egypt. M&A activity is expected to continue increasing in the GCC, but new entrants are advised to familiarize themselves with the primary legal concepts and the practice of the same.

Gary Watts is a partner and regional head of corporate commercial and Sarah Hasnani is an associate in the corporate commercial department of Al Tamimi & Company