DED offers option to 'freeze' trade licences

A total of 237 companies have used the option to freeze their trade licences in Dubai with 31 more transactions under process, a Department for Economic Development in Dubai (DED) official told Emirates 24|7.

Companies can use the option to keep their trade licences inactive for as long as three years by paying of a “freezinig” fee of Dh2,000 per year, Mohammed Shael Al Saadi, CEO Business Registration and Licensing of the DED said.

The option, however, cannot be extended after three years.

In an interview published in the latest newsletter of Fichte & Co Legal Consutancy, Al Saadi said: “After payment of the freezing fee, the licences can be kept inactive for as long as three years with no further renewal fees during that period.”

However, the DED allows a company to freeze its licence 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, he added.

Creditors do not lose their rights to claim against the company and if a creditor initiates a court case against a company with a frozen licences DED will inform the owners and activate the licence immediately.

“This way we assure that no creditors will lose their claims against the company as a result of the ‘frozen trade licences.”

Al Saadi said DED had anticipated stagnation or even a negative growth in the number of company registration in Dubai in 2010.

“However, surprisingly there was a significant positive growth and existing companies have responded well to the financial crisis.”

During the first quarter of 2010, DED had 3,584 new company registrations as compared to 2,760 in the first quarter of 2009.

During 2009 there was a relatively low turnout of 616 licence cancellations.

The applicable fine for a non-renewed licence is Dh2,500 per year, Al Saadi said, adding if the licence subsequently is not renewed for a period of five years, DED will proceed with an automatic cancellation of the licence.

“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.”

Asked if it was possible to set up a branch of a free zone company in Dubai mainland, Al Saadi said: “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.”

Follow Emirates 24|7 on Google News.