<p><strong>The need to share business premises</strong><br /><br />Businesses often  need to share their premises with other companies and in the UAE they first need  to consider some practical and legal issues.&nbsp;&nbsp; If businesses do not consider  these issues they could be in breach of the terms of their leases and in  contravention of labour laws, unable to obtain or renew their commercial  licences or secure visas for their employees.<br /><br />Across the globe many  businesses need to share use of their business premises from time to time, for  example:</p>
<ul>
<li>Businesses may share the use of offices with others in order to work  together on joint projects;&nbsp;</li>
<li>It may be necessary or beneficial for connected companies to share premises  for logistical or cost reasons;&nbsp;</li>
<li>Retailers routinely grant concession agreements to enable unrelated  businesses to promote certain brands within their stores;</li>
<li>Employers may contract with third parties for the delivery of services to  their employees within their premises, perhaps for a staff cafeteria or an  onsite cr&egrave;che.&nbsp;</li>
</ul>
<p>These sorts of arrangements usually need to incorporate a degree of  flexibility so that they can be changed at short notice as commercial  circumstances require.<br /><br />In many jurisdictions businesses are able to grant  licences to occupy premises or concession agreements to enable third parties to  share their premises without the need to complete formal leases.&nbsp; Using these  documents it is often possible to conclude arrangements more quickly and at  lower cost than by completing formal leases.&nbsp; In many parts of the world  licences to occupy and concession agreements also allow businesses to retain  flexibility when sharing premises as they can usually be varied or terminated  with much more ease than leases.&nbsp;<br /><br />The concepts of granting licences to  occupy premises or concession agreements is not recognised by UAE law so  businesses in the UAE which need to share premises should consider putting in  place alternative arrangements.&nbsp; Failure to put in place these alternative  arrangements could expose businesses to both practical and legal  difficulties.&nbsp;<br /><br /><strong>Practical and legal  difficulties</strong><br /><br />Difficulties businesses can expect in the UAE if  they record the sharing of premises using licences to occupy or concession  agreements, rather than a suitable alternative arrangement, include:</p>
<ul>
<li><strong>Breach of lease terms</strong></li>
</ul>
<p>Article 787 of the UAE Civil Code provides that the prior consent of the  landlord is required for any subletting.&nbsp; If a business is the tenant of  premises and purports to grant a licence to occupy or concession agreement of  part of those premises to another company then, as the concept of these  documents is not recognised under UAE law, such action is likely to be regarded  as the grant of a sublease.&nbsp; A business may therefore find that it has acted in  breach of the terms of its lease by granting a sublease without the prior  consent of its landlord.&nbsp; In this situation a claim may be brought before the  Rent Committee in Dubai or Abu Dhabi to terminate the unauthorised sublease and  possibly also to terminate the head lease;</p>
<ul>
<li><strong>Labour law issues</strong></li>
</ul>
<p>UAE labour law requires that employees work at the registered premises of  their employer.&nbsp; If an employer has entered into a licence to occupy or  concession agreement, rather than a formal lease, then the employer&rsquo;s right to  use the premises as a place of employment may not be recognised.&nbsp; It is likely  that an employer that does not have a legally recognised right to use premises  will encounter difficulties when applying for visas for its employees.&nbsp;  Furthermore, if inspectors from the authorities carry out an inspection and find  employers from the holder of a licence or concession agreement working at the  premises, there could be serious repercussions for both the tenant and the  holder of the licence or concession agreement;</p>
<ul>
<li><strong>Licensing issues</strong></li>
</ul>
<p>All businesses must provide evidence to the authorities that they either own  or have a valid lease of premises when applying for new commercial licences and  on renewal of existing commercial licences.&nbsp; The business must show that it has  ownership or a valid lease of its own defined and recognisable premises.&nbsp; A  licence to occupy premises or a concession agreement is unlikely to be  sufficient for this purpose.<br /><br />Alternative arrangements<br /><br />Although in  the UAE it is not possible to have licences to occupy premises or concession  agreements in the forms known in many other jurisdictions, we have advised many  clients on suitable alternative arrangements.&nbsp;<br /><br />It is often possible to  agree with landlords during the negotiations for the grant or renewal of a lease  of business premises that these arrangements will take effect if the business  needs to share use of its premises.&nbsp; Alternatively, if the terms of the lease  have already been concluded then it is possible to introduce alternative  structures to accommodate the needs of the business.&nbsp; These structures can  either be temporary, to accommodate the requirements of a particular project or  short term need, or they can deal with long term sharing of  premises.&nbsp;<br /><br />There are also arrangements we can suggest that overcome the  labour law and licensing difficulties businesses may experience when sharing  premises.&nbsp; These arrangements ensure that the business does not breach the terms  of its lease or contravene the law whilst at the same time maintaining the  flexibility necessary to accommodate its commercial needs.</p>