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Crowdfunding in the UAE: a guide to the key legal challenges

Overview

Crowdfunding is the new kid on the block in the alternative finance market. With access to traditional modes of finance reaching the bottleneck coupled with the sweeping reach of the internet, crowdfunding is globally emerging as a leading resort for financing to not just startups, innovative companies and small and medium enterprises (SMEs) but also to individuals with an exciting project and to non-profits aiming to ramp up their fundraising efforts.


In the UAE, the idea of crowdfunding is attracting considerable interest particularly in view of the important role of SMEs in this region - SMEs are said to account for over 90% of the business and workforce in the country, and according to the UAE's Ministry of Economy, SMEs account for almost 60% of UAE's GDP. The law is slowly catching up to this concept and with crowdfunding involving raising funds from the public at large, it is bound to frequently appear before the regulator's radar going forward.


This article provides a general overview of crowdfunding, examines the legal challenges surrounding crowdfunding in the UAE and outlines the way forward.

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