Distribution arrangements are typically used as a low risk means of expanding business into new markets or territories like the Middle East where the laws governing foreign ownership of companies are complex. One popular option is to appoint a distributor for the region who understands the local market, can exploit contacts and navigate the bureaucratic challenges of doing business in the region. In GCC countries distribution agreements fall under the commercial agency laws of the individual states. These laws define a commercial agency as any arrangement whereby a foreign company is represented by an agent to ‘distribute, sell, offer, or provide goods or services within the jurisdiction for a commission or profit'.

The term ‘agent' extends beyond the traditional western understanding of a commercial agent contracting with third parties. There is no distinction drawn between agency, distribution agreements, franchises and other forms of sales representative relationships.

REQUIREMENTS

Commercial agents must be nationals of the relevant GCC country or must be companies incorporated in the jurisdiction and owned entirely by nationals of that GCC country.