DED set to launch ‘120 days hassle free license’ by end of year

Move, along with changes in company ownership laws, will dramatically improve ease of doing business in Dubai

The Department of Economic Development (DED) will implement the ‘120 days hassle free license’ initiative, aimed to give businesses in Dubai a head start and promote the emirate’s competitiveness, by the end of 2012. The initiative, being implemented under the directives of His Highness Sheikh Mohammed bin Rashid Al Maktoum, UAE Vice President and Prime Minister and Ruler of Dubai, will simplify procedures and facilitate business in Dubai.

“Dubai being a hub, various categories of businesses choose to set up in the emirate for faster growth and market access. The 120 days license is part of DED’s efforts to enable businesses to make full use of the advantages of Dubai and improve the emirate’s ranking in the Doing Business Report of the World Bank,” said Mohammed Shael, Chief Executive Officer of the Business Registration and Licensing (BRL) Division at DED.

The new initiative will allow investors to have their licenses issued immediately from DED depending on the risk factors of the intended business activity. Business activities in Dubai have been categorised as No-Risk, Low Risk and High-Risk for the sake of evaluating the risk component.

“The categorisation depends on four main risk factors, evaluated on the basis of whether the business activity is harmful to human beings, harmful to animal life, harmful to plants, or harmful to the environment. When a businessman approaches DED for a license, a 120 days license is issued immediately, on completion of the necessary procedures, if the specific business activity falls under the No-Risk or Low-Risk categories,” explained Shael.

The 120 days license allows the businessman to start his business immediately and complete the rest of the licensing requirements, such as approvals from other government authorities concerned, within the next 120 days. Government authorities are entitled to ensure full compliance of the license holder to the license criteria on day 121.

More than 90% of the businesses in the emirate are No-Risk or Low-Risk and therefore a vast majority of businesses stand to benefit from the 120 days license. For High-Risk business activities constituting the remaining 10% – e.g. restaurants and clinics – all standards set by the government authorities concerned have to be fully met before DED issues the license.

The Low-Risk category includes chemical plants and similar industrial operations that require pre-approvals from various authorities including Dubai Municipality and Civil Defence. “These facilities have stringent standards often embedded in their design and they go through years of preparation and inspections. Hence, there is no risk in issuing them a license. It will in fact allow them to complete procedures like testing and hiring before starting actual operations,” Shael said.

Referring to the 120 day hassle free license as a new philosophy of business registration and licensing, Shael said the initiative along with significant reforms like the Law No.13 of 2011 will dramatically enhance ease of doing business in Dubai.

The Law No. 13 issued by His Highness Sheikh Mohammed Bin Rashid Al Maktoum in 2011 acknowledges the contributions of the Free Zone companies to Dubai’s economy and allows such companies to open branches in Dubai while maintaining their presence in the Free Zone. A Free Zone company can operate a branch in Dubai as long as it is active within the Free Zone but any termination of Free Zone activity will reflect in the Dubai license as well.

The Law No. 13 also allows Free Zone companies that have no local partners to open branches in Dubai, provided such branch has a Local Service Agent on board. A Local Service Agent is a UAE national or UAE company who will sponsor employees for the Dubai branch of a Free Zone company at the Ministry of Labour. The Local Service agent will have no rights of voting or decision-making in the company.

Shael stated that non-UAE nationals are already allowed to hold 100% ownership in Dubai companies even without a Free Zone license. Professionals such as doctors, technicians, carpenters, cooks etc can have 100% ownership unless the entity is a Limited Liability Company (LLC). Expatriates can only have 49% ownership in LLCs with UAE nationals holding 51%.