Abu Dhabi introduces Dual Licences Onshore for all Abu Dhabi Free Zone Companies
The Abu Dhabi Department of Economic Development (DED) has launched the first phase of its Dual Licence Initiative (DLI) announcing that companies operating in an Abu Dhabi free zone will be permitted to operate in both the capital’s free zones as well as establishing an onshore branch. The introduction of a dual licence will expand where companies can conduct business and improve the emirate’s competitiveness.
Aiming to attract foreign investment and drive forward the economy, the dual licence is part of the Dhs 50bn stimulus package announced in June (more info here https://www.propartnergroup.com/2018/07/abu-dhabi-economic-growth-investments/) This new dual licence initiative was welcomed by many in the emirate, benefiting numerous industry sectors to include services, trading, FMCG and financial consultancies.
In the first instance, the dual licence will be open to those companies headquartered in Abu Dhabi and based in one of its free zones, which include media zone Twofour54, Abu Dhabi Global Markets (ADGM) and Khalifa Industrial Zone (KIZAD) and the Abu Dhabi Airport Freezone and MASDAR. Companies under the licence can operate in Abu Dhabi, Al Ain and Al Dhafra regions. A second phase will be introduced, allowing more businesses to be eligible for the dual licence.
The dual licence will allow free zone companies looking to operate onshore and obtain a full DED licence without leasing a separate office onshore (the Freezone office will count against the licence) and without engaging a new local partner or sponsor (the Freezone will in effect become the sponsor).
Dual licensing will be available to LLC companies that are registered in one of Abu Dhabi’s free zones, it will not apply to entities registered as a Foreign Branch in such free zones. Note that Special Purpose Companies (SPCs or SPVs) will not be able to branch onshore.
The dual licence branch will not be issued with its own Establishment card or Ministry of Labour file and it will be the responsibility of the parent company in the Freezone to sponsor dual licence branch employees. Therefore employees may not obtain a full onshore work permits and visa allocation will count against the office space visa quota allocation within the Freezone. It is unclear at the moment as to whether the dual licences will qualify for certain regulatory approvals onshore, such as Oil & Gas, Health Authority, Education, Training and other similar requirements.
The initiative is part of the Department of Economic Development’s efforts in improving the ease of doing business in Abu Dhabi. It was reported in 2017 that the United Arab Emirates was ranked at 21 (the index ranks economies from 1 to 181, with first place being best) according to the World Bank collection of development indicators. Further, by encouraging companies to expand their work outside of free zones, the dual licence will increase contribution to the economy.
According to Abu Dhabi DED, companies who are eligible for the licence will need to present a non-objection certificate from their free zone to state that they do not have any other branches outside of the free zone as well. It will be compulsory to appoint a manager of the dual licence branch. A power of attorney in favour of the manager will also be necessary to ensure the manager has sufficient authority to act on behalf of the dual licence branch. The name and activities of the onshore branch will need to match the Freezone company.
The approval process can take anywhere between 20 minutes and 2-3 days, if further approvals are required, dependent on the business activities. The cost of the dual licence is reported to be 80 per cent less than a standard licence.
The Dual Licence Initiative (DLI) aims to provide a more streamlined approach for free zone companies to operate onshore and to alleviate the costs and restrictions associated with onshore expansion. The DED has indicated that the second phase of DLI is underway and will aim to extend the eligibility for dual licences to a more diverse assortment of company types in the future.
Abigail Cuthbert is Operations Manager at PRO Partner Group in Abu Dhabi. PRO Partner Group provide Government Liaison and PRO Services, secure Local Sponsorship and advice on all Licencing and Corporate Matter to foreign companies and investors in Abu Dhabi, Dubai and the wider UAE.
For more information on the dual licence and application process or any other PRO or Licencing inquiry please contact Abigail at PRO Partner Group Abu Dhabi on +971 (0)2 448 5120 or firstname.lastname@example.org.