1. Mr. Al Saadi, overall, how do you evaluate the effects of the financial crisis on the business environment in Dubai? Do you have an indication as to how it has affected the established businesses? And how has the number of company registrations in Dubai mainland in 2009/2010 developed?

 

For 2010 we anticipated stagnation or even a negative growth in the number of company registration in Dubai. However, surprisingly there was a significant positive growth and existing companies have responded well to the financial crisis. During the first quarter of 2010 we had 3584 new company registrations as compared to 2760 in the first quarter of 2009. During 2009 there was a relatively low turnout of 616 license cancellations. I believe that there are two main factors responsible for this result: Firstly, many businesses adopted themselves to the challenging market climate and changed or amended their licensed activities to tap into other market segments; secondly the DED offered an option to freeze a trade license, which can help a business to survive challenging times by minimizing costs. 

 

2. Please tell us more about the Freezing Option! And what consequence will a freezing have on the creditors of such a company? 

After payment of the freezing fee, the license can be kept inactive for as long as three years with no further renewal fees during that period. Of course DED allows a company to freeze its license only when no more employees are dependent on the company and all visas are cancelled as well as all governmental charges paid and there is no pending legal action against the company at the time. Creditors do not loose their rights to claim against the company. If a creditor initiates a court case against a company with a frozen license, DED will inform the owners and activate the licence immediately. This way DED assures that no creditors will lose their claims against the company as a result of the “frozen trade license”.   

 

3. What are the applicable costs for the freezing of a license? 

Fees pertaining to the freezing of a license amount to AED 2,000.00/- only. 

 

4. Please describe the cancellation process. What is required to cancel a company’s license? Is there a formal liquidation process and how does the DED make sufficiently sure that the formal process is fulfilled before a company becomes de-registered? 

The formal liquidation process is necessary and DED will require a notice from the liquidator as well as a publication of a “Notice of Liquidation” in two local newspapers. 

 

5. Is there any possibility for one of the partners of a company to apply for cancelation of the company license? 

Under special circumstances it is possible for the local partner to cancel the company license provided that a) the license has been expired for more than two years, b) the foreign partner has been out of the country for more than six month; and c) all employment agreements and visas under the license have been cancelled and cleared. The cancelation procedure will remain the same but the only difference is that here only one partner is involved in cancelation. 

 

Should a company license be cancelled via this route and the foreign partner returns to the country, the DED will still give him a chance to re-activate the company license provided that a) he introduces a different local partner; and b) he pays all the cancelation and re-activation costs of the license. 

 

6. What is the case if a company’s license has expired but the owner is neither applying for renewal nor for the cancellation of the license? 

The applicable fine for a non-renewed license is AED 2,500/- per year and if the license subsequently is not renewed for a period of five years, DED will proceed with an automatic cancellation of the license. Furthermore any partner of a company with an expired license will be blocked from renewing or registering any other new or existing licenses they might have under their name. 

 

7. The DED seems to have adopted a stricter policy with regards to name approvals and appears to be tougher on similarities in proposed company names to existing ones. Please tell us about the reason behind this? There has also been talk about a uniform company register including all free zones, which will enable to run a name check on a country wide basis before approving a company name. Is this in place, and if so what are your experiences with this system so far?

All procedures adopted aim at ensuring the protection of customer rights. These are applicable for regularity purposes to place the trade name in the right track. 

A uniform company register is a vital step not only for providing accurate statistical data about the registered companies’ status for all entities concerned with the issuing of licenses, but it will also help in managing the trade name search with regards to availability, similar existing names, etcetera. 

 

8. What is the most popular type of license that is being issued by the DED? 

The most popular licenses are commercial licenses related to trading and import and export activities. 

 

9. We have heard a lot about INTLAQ, a new scheme to promote start up businesses in Dubai. Can you tell us more about it? Is it available to all nationalities or only to local applicants? What are the available activities? We believe there is no office requirement, is this correct? 

 

INTLAQ licenses at the moment are only open to UAE nationals who are in need of a cost efficient setup to enable them to work on a home office basis. Hence, as such there is no office requirement. However, the beneficiary must either be owner of the villa where they intent to set up office or must provide a “No Objection Letter” from the landlord in this regard. An INTLAQ License can be issued for one Emirati individual setting up an establishment or for two or more Emirati individuals forming a partnership. The entire registration and licensing fee under the INTLAQ scheme is as low as AED 1,060/-. INTLAQ license holders are classified as self-employed and cannot hire employees. Furthermore, there is no employment visa available under such a license. 

 

10. Is it possible to set up a branch of a Free Zone Company in Dubai mainland? Are there any limitation on the activities of such branch offices? 

 

Yes, any company based in any UAE Free Zone is allowed to set up a branch office in Dubai mainland. The activities must be confirmed with the Ministry of Economy and the DED will require the Ministry’s prior approval to proceed with the branch set up. 

 

11. What in your eyes were the major achievements for the DED in 2009? What are its biggest challenges in 2010?

The launch of the DED website with a range of new services is one of the major achievements in 2009. Certainly it contributed to easing the process of issuing trade licenses.  We are now in the process of finalizing a further initiative to make services even more accessible by using professional firms such as yours as licensing agents. The provision of the network access, software and required training will be the main challenge for the remainder of 2010.

 

12. What kind of facilities have you implemented to enhance customer service?

The new trade name reservation service on the DED website is such a new facility. The cancelation of the minimum capital requirement for establishing a Limited Liability Company is another example. 

 

13. We have heard several times that the law will be amended to allow foreigners to enjoy larger shareholdings in mainland companies. Do you expect the local sponsorship requirement to be abolished fully or only to be relaxed to a minority local shareholding? Do you see these changes become effective this year? 

There is not much I can say about this. Only that this is currently being evaluated by the concerned authorities. 

 

Interviewer - Bahareh Alizadeh