Fines on late ID card renewal effective November 1-Emirates Identity Authority

Residents who fail to renew ID cards within one month after expiry will be fined Dh20 per day, according to Emirates Identity Authority (Eida).

Arabic daily 'Emarat Al Youm' reported that residents with expired cards beyond 30 days will be fined a maximum of Dh1,000. All residents, expect children under 15 years of age, must renew cards within a month.The fine will not be calculated on the remaining years of residence visa, the authority clarified. Applicants have complained that some typing offices have been charging fees proportionate to the remaining years of residence visas.

Beginning November 1, residents who delay renewing their ID cards will be fined, according to Emirates Identity Authority (Eida).According to a report in 'Al Khaleej' the fines will be imposed as per the  Executive Council of Ministers’ Decree No. 25 of 2011.

The authority had earlier announced that residents who fail to renew ID cards one month after expiry will be fined Dh20 per day to a maximum of Dh1,000.

Residents who possess receipts of registration will be exempt from paying fines provided they complete the application process within the valid period, Eida added.

The authority confirmed that children under 15 years of age will be reprieved from paying fines for another year. They will be fined only beginning October 1, 2012.Meanwhile, an Eida team will begin coordinating with Ministry of Health and relevant health registration bodies to record newborns and help categorise age group registrations.

Two-year residence visa rule in UAE applies ONLY to private sector workers

The recently introduced two-year residence visa rule only affects private sector workers, a senior official from the Ministry of Interior clarified.

The term of the labour card, which is issued to private sector employees, has recently been reduced from three to two years — which also means the term of the residence visa for those who work in the private sector has been reduced.

Major General Nasser Al Awadi Al Menhali, Acting Assistant Undersecretary at the Ministry of Interior for Naturalisation, Residency and Borders, Gulf News report says that only those who work for private companies and who need to be issued with a labour card from the Ministry of Labour will have a two-year visa.

Same period

"All other expatriates who work in the country, including those who work for government, semi-government companies, NGOs such as charitable organisations, investors, and all those who have their labour permits and residency issued only from the residency department have a three-year visa," said Major General Al Menhali.

He said family members, including spouses and children, will have the same visa period as their sponsor.

"If the sponsor's visa is for two years the family members' visa including wife/husband and children will have their visa for two years and if the sponsor's visa is for three years they will have their visa for three years," said Major General Al Menhali. He explained the residency department has not reduced the length of the visa and it is still three years for everyone. "When we get an application for a residence visa we look at the validity of the labour card issued by the Ministry of Labour; if it is for two years then we will issue a two-year residence visa," he explained.

He said the ministry is studying significant amendments to the current law which deals with residency and foreigners' affairs

No fines on private sector during Eid

Private sector firms which default on extending labour cards and other papers will be exempted from penalties during Eid al Fitr but they should finish all papers just after the end of the holiday, the Ministry of Labour has said.

The exemption covers all private sector transactions at the labour ministry, mainly labour cards which require employers to pay fines in case they do not renew them 60 days after they expire. Under the labour law, employers must pay Dh1,000 for each delay month.

“The ministry will not impose fines against companies which default in their transactions during Eid holiday,” the semi official Arabic language daily 'Al Ittihad' said, quoting an unnamed ministry official.

“All companies are required to immediately come to the ministry and finish those transactions just after the end of the holiday.”

Government departments will remain closed from Sunday (Aug 28) until Saturday (Sept 3). They reopen on Sunday (Sept 4).

Doing a Business in UAE

Legal Structures for Business in UAE

Earlier, each emirate followed its own procedures governing the operations of foreign business interests. In practice, however, Dubai and the other emirates followed the same general system, whereby foreign companies operated in one of three ways: with a local sponsor, through a partnership with a UAE national or company, or through a private limited company or public shareholding company incorporated by Ruler's decree. 

Since 1984, steps have been taken to introduce a codified company’s law applicable throughout the UAE. Federal Law No. 8 of 1984, as amended by Federal Law No. 13 of 1988 - the "Commercial Companies Law" - and its by-laws have been issued. In broad terms the provisions of the Law are as follows:

The Federal Law stipulates a total local equity of not less than 51% in any commercial company and defines seven categories of business organisation which can be established in the UAE. It sets out the requirements in terms of shareholders, directors, minimum capital levels and incorporation procedures. It further lays down provisions governing conversion, merger and dissolution of companies.

Ownership Requirements

51 % participation by UAE nationals is the general requirement for all UAE established companies except:

1.       Where the law requires 100% local ownership

2.       In the Jebel Ali Free Zone

3.       In activities open to 100% AGCC ownership.

4.       Where wholly owned AGCC companies enter into partnership with UAE nationals.

5.       In respect of foreign companies registering branches or a representative office in Dubai.

6.       In professional or artisan companies where 100% foreign ownership is permitted.

The basic requirement for all business activity in Dubai is one of the following three categories of licences: 

·         Commercial licences covering all kinds of trading activity.

·         Professional licences covering professions, services, craftsmen and artisans.

·         Industrial licences for establishing industrial or manufacturing activity.  

These licences are all issued by the Dubai Economic Department. However, licences for some categories of business require approval from certain ministries and other authorities: for example, banks and financial institutions from the Central Bank of the UAE; insurance companies and related agencies from the Ministry of Economy and Commerce; manufacturing from the Ministry of Finance and Industry; and pharmaceutical and medical products from the Ministry of Health.

More detailed procedures apply to businesses engaged in oil or gas production and related industries.

Practising some trade activities (e.g. jewellery and insurance) requires the submission of a financial guarantee issued by a bank operating in Dubai. In general, all commercial and industrial businesses in Dubai should be registered with the Dubai Chamber of Commerce and Industry.

Company Formation UAE may take one of seven forms: 

1) Public Shareholding Companies

2) Private Shareholding Companies

3) Limited Liability Companies

4) General Partnerships

5) Limited Partnerships

6) Partnerships Limited by Shares

7) Shareholding Companies

Each entity must be registered and licensed with the UAE Federal Ministry of Economy and Commerce and with the appropriate authority in the Emirate in which its office will be located.

Public share holding company 

Public shareholding company formation uae is a company with a capital divided into equal negotiable shares. In such companies a shareholder’s liability is limited by the number of shares held by him.

Minimum capital required to form a public share holding company in uae is AED 10 million with a nominal face value of AED 1-100. Shares are registered in a share register and cannot be issued lower than the nominal value. All shares must have equal rights.

The Board of Directors must have a minimum of three and not more than twelve directors. The chairman, as well as a majority of the board, must be UAE nationals for public share holding company formation uae.

Private Shareholding Company

Another company formation uae is private share holding company. A private shareholding company must have a minimum of three shareholders. The minimum share capital to form a private share holding company is AED 2 million.

Shares may not be offered to the public. The Chairman and majority of the Directors in a private shareholding company must be uae nationals.

Limited Liability Company

This type of company formation uae is widely accepted way to business. Under the Commercial Companies Law or CCL (Federal Law No. 8 of 1984 Concerning Commercial Companies as amended by Federal Law No 1 of 1984 and Federal Law No 13 of 1988, Federal Law No. 15 of 1998), foreign investors are permitted to hold up to 49 per cent equity ownership in UAE companies, 51 per cent of the equity must be held at all times by one or more UAE nationals

This type of company formation uae can be formed by a minimum of two and a maximum of fifty persons. Shareholder liability is limited to the value of shares held in the company’s capital.Non UAE nationals may own up to 49 percent of an LLC. The Companies Law provides that an LLC may engage in any lawful activity except insurance, banking and investment of money for others. 

The following steps are required in establishing a limited liability company in Dubai. 

·         Select a commercial name for the company and have it approved by the Licensing Department of the Economic Department;

·         Draw up the company's Memorandum of Association and have it notarised by a Notary Public in the Dubai Courts;

·         Seek approval from the Economic Department and apply for entry in the Commercial Register;

·         Once approval is granted, the company will be entered in the Commercial Register and have its Memorandum of Association published in the Ministry of Economy and Commerce's Bulletin. The licence will then be issued by the Economic Department;

·         The company should then be registered with the Dubai Chamber of Commerce and Industry

General Partners

General Partnership company formation uae is a type of company where all the shareholders are jointly liable for the company liabilities to the extent of their assets. All the partners should be UAE nationals.  General partnerships are formed by two or more UAE nationals who are jointly and severally liable for its debts. Interests of a partner can be transferred as stipulated in the partnership agreement or with the approval of all partners. 

Limited Partnership

 A limited partnership is another type of company formation uae which composed of one or more general partners who are jointly and severally liable for all of its debts, and one or more limited partners who are liable for the limited partnerships debts only to the extent of his capital contribution.

A partnership limited by shares has both general partners with unlimited liability and partners whose liability is limited by their shares in the capital. The capital must be at least DH 500,000 and has to be divided into negotiable shares of equal value.

Joint Ventures

Another company formation uae is Joint Participation is a form of company consists of two or more partners for carrying out a single or multiple businesses by one of the partners in his own personal name.

This is a contractual agreement between a foreign party and a local party licensed to engage in the desired activity. The local equity participation in the joint venture must be at least 51%, but the profit and loss distribution can be prescribed.

There is no need to license the joint venture or publish the agreement. The foreign partner deals with third parties under the name of the local partner who – unless the agreement is publicized – bears all liability.

A joint venture is a type of company formation uae where contract may be written or oral and not required to be notarized. Third parties can recourse only to the partners with whom they deal. 

How to overcome the six-month labour ban in UAE

Employees who have been slapped with a six-month labour ban for breaking their contracts before the expiry of two years can work for a new company, provided they hold at least a high school diploma and have been offered a good position and salary by the new company, employers were told by the Ministry of Labour .

To lift the ban, an employee should have been offered a minimum salary of Dh5,000 for high school graduates, Dh7,000 for diploma holders and Dh12,000 for bachelor's degree holders.The salary must be mentioned in the labour contract.

No fee will be imposed for lifting the ban when these conditions are met, Ali Al Shehi, Senior Administrator at the ministry, said in a seminar held to inform employers about their rights and duties as well as recent ministerial decisions.

"We are still imposing the six-month labour ban on employees who quit their jobs before completing two years of service, but the ban can be lifted if the new employer offers the candidate a good position and an appropriate salary," he said.

The new employer needs to submit the employee's educational certificate, which does not need to be attested at this stage. It will be scanned and entered into the Tas'heel system, and a new labour permit will be issued accordingly.

Al Shehi told employers that as of January 2012, company categories will have a different scale when it comes to labour permit applications.

"When a new company is registered, it will be charged Dh1,500 for each of the first four work permits to be issued to the company, which corresponds with category B2," he said.

Afterwards, the company can move up or down categories B1, B2 or B3, or C depending on its activity, the number of employees it hires, their qualifications and diversification in the nationalities of workers.

Companies in B1 category pay Dh600 per work permit, while B2 companies pay Dh1,500 and B3 companies pay Dh2,000 for each permit.

Diversification

"This step aims to encourage diversification and hiring employees from various nationalities, so companies who hire workers from one nationality will not be upgraded, while those that hire from more nationalities will move up to categories B3, B2 and so on," Al Shehi said, adding that companies will also upgrade their categories by hiring skilled workers.

He advised people who want to start new companies to check their sponsor's record at the Department of Economic Development to ensure that their record is clear and they have no other companies facing problems, which will hinder their application.

"The sponsor of a company has to clear any outstanding dues or labour issues before he can sponsor another one, so we advise those who want to open a new business to look for a sponsor who has no other companies registered under his name," Al Shehi said.