<p>Law No. 13 of 2011 (&ldquo;The Law&rdquo;) which came into force on the 24th of August  2011:</p>
<ol>
<li>codifies existing practice for licensing of business activities in the  Emirate of Dubai;</li>
<li>sets new rules for licensing of certain business activities; and</li>
<li>identifies the role of the Department of Economic Development (&ldquo;DED&rdquo;) in the  licensing process.</li>
</ol>
<p><br />In this article, I will briefly outline:<br /><br />The objectives of the Law  as described above, the role of the DED in this regard and important matters  covered by this recent Law. In this article wherever the term &ldquo;Establishment&rdquo;  has been used, this refers to a limited liability company, a branch office or  other form of corporate entity recognized under the commercial companies&nbsp; law  No. 8 of 1984 and its amendments.<br /><br /><strong>A.&nbsp;OBJECTIVES OF THE LAW AND  COMPETENCES OF THE DEPARTMENT:</strong><br /><br />The aim of the Law No. 13 of 2011  is to:</p>
<ol>
<li>Organize the conduct of business activities, encourage investment in  different economic fields, spread economic and investment awareness and identify  investment opportunities in Dubai.</li>
<li>Create coordination among competent government authorities in the commercial  licensing process.</li>
<li>Ensure accuracy, transparency and availability of information to facilitate  public and private stakeholders.</li>
</ol>
<p><br />To achieve these objectives, the DED is entitled to:</p>
<ol>
<li>Set the rules required for the conduct of business activities in Dubai  subject to the oversight and conditions set out by the executive council of the  Emirate of Dubai.</li>
<li>Set rules for the validity of business licenses and the extension of such  licenses.</li>
<li>Issue business licenses and register Establishments in the commercial  register.</li>
<li>Develop and upgrade rules and regulations periodically according to the  business needs of Dubai.</li>
<li>Control and inspect intellectual property rights, fight commercial fraud and  put in place and manage the processes of consumer protection in Dubai.</li>
<li>Regulate and inspect Establishments licensed in Dubai to ensure their  compliance with the rules and conditions of their business licenses.</li>
</ol>
<p><br /><strong>B.&nbsp; A GENERAL OVERVIEW OF MATTERS COVERED BY THE  LAW:</strong><br /><br />Generally, Law no.13 codifies earlier practice of licensing  Establishments in Dubai.<br /><br />The licensing mechanism<br /><br />The licensing of  an Establishment starts by applying to the DED which shall examine the  application to confirm its compliance with applicable rules and regulations, and  to ensure that it satisfies the conditions prescribed for the legal form of the  Establishment.<br /><br />The term of the License of the Establishment may be for a  period of one to four years, to be renewed during the last month of its  expiration within a time frame of thirty days (grace period) from the date of  expiry. <br /><br />Amending license or legal form of the  Establishment<br /><br />Amendments in the legal form of an Establishment or in its  constitutional documents shall be published in at least one daily newspaper if  prior consent of the DED and concerned authorities is required.&nbsp; In the event of  any objection by third parties to such amendments, the objector must submit its  objections to the competent court. The proposed amendment will therefore become  subject to the order of the court.<br /><br />Permission for marketing business  activity<br /><br />Before an Establishment may conduct any marketing campaign of  its products or services, it must obtain prior permission from the DED.<br />Legal  Form of the Establishment<br /><br /><br />The Law reiterates existing practices to  conduct business activities in Dubai through the below legal  forms:<br /><br />(a)&nbsp;partnership. <br />(b)&nbsp;civil company. <br />(c)&nbsp;the limited  liability company, which includes the simple form limited liability company, a  private joint stock company and a public joint stock company.<br />(d)&nbsp;branch of  local or foreign company or branch of company incorporated in the free  zone.<br /><br />Grant of business activities discretionary with the DED<br /><br />The  DED is entitled to expand or reduce the business activities set out in a license  which can be granted to an Establishment in the Emirate of Dubai based on the  requirements of public interest and subject to approval, if any, of the  concerned authorities.<br /><br />The DED may suspend some economic, industrial,  agricultural and service and professional activities or any other activities for  a certain period or amend the conditions or restrictions imposed.<br /><br />The  role of the Local Service Agent<br /><br />The role of the local service agent  appointed for a branch or a representative office of a foreign company and his  responsibilities in this regard have not been changed. His role continues to be  that of a facilitator in matter connected to the government, without assuming  any civil or financial liabilities connected with the business of the  Establishment.<br /><br />Exemption from condition to lease office: <br /><br />The  general rule is for the Establishment to conduct business activities from a  suitable leased/owned office, but there can be an exception to the office  condition where the DED allows UAE nationals to set up an Establishment to  conduct certain business activities from their homes.<br /><br />Obligation of the  Establishments<br /><br />Under the law, Establishments shall:</p>
<ol>
<li>comply with applicable laws, regulations and decisions in the Emirate of  Dubai.</li>
<li>notify the DED of any change or amendment in any of its particulars and  provide the DED with any new information.</li>
<li>use its trade name as defined in the license issued to it in all its  transactions with third parties.</li>
<li>keep clear financial statements and a special register for the companies&rsquo;  shareholders and allow authorized employees of the DED - who will act as  judicial officers - to access the Establishment and review its data and  records.</li>
</ol>
<p><br />Penalties <br /><br />The Executive Council of the Emirate of Dubai shall  have the authority to determine acts which infringe the Law, and a fine between  AED100 to AED100,000 may be imposed in case of any violation to the  Law.<br /><br />Amicable settlement <br /><br />Any infringing Establishment, which has  not committed an infringement of the law within past 12 months of the commission  of an infringement, may request the DED amicable settlement, subject to payment  of minimum 50% of the due fine. Following the settlement, the Establishment  shall be bound by any conditions set by the DED as part of the  settlement.<br /><br />Grievance against DED decisions<br /><br />Any person aggrieved  by a decision of the DED may challenge the decision in writing to the general  manager of DED within 30 days from the date of his knowledge of such  decision.<br /><br />By a decision of the general manager, a committee shall be  formed to consider the grievances of the aggrieved party. The said committee  shall process these grievances within thirty days of the date referred the  grievance to it, and the decision made in this regard by the said committee  shall be final.<br />Representation of the general successor<br /><br />According to  the Law, if an owner or the shareholders of an Establishment decease, their  heirs or successors shall appoint from amongst them who shall represent them and  their interest in the Establishment. In the event that they do not agree on the  appointment of a representative, a representative appointed by the court shall  be accepted by the DED.<br /><br />Suspension of the business<br /><br />This practice  of temporarily suspending business licenses has been applicable by the DED since  last year, but it is now modified by article 13 of the Law no. 13 of 2011, which  allows the owner of an Establishment to approach the DED requesting to suspend  the validity of an expired existing business license for a limited period  ranging between one to three years during which the operation of the  Establishment should remain suspended for the period during which the license  remains suspended.<br /><br />New regulation and practice for the professional and  handicraft Activities<br /><br />In order to encourage further investments in  different economic fields, the Law allows both UAE nationals and others to be  engaged in certain professional activities such as handicrafts, which were  earlier reserved for UAE nationals. <br /><br />Those activities can be conducted  through registering a sole establishment or a limited liability company where a  corporate person may also be a partner provided the nature of his activity is  similar to the activity to be practiced.<br /><br />Licensing free zone  Establishments in Dubai<br /><br />The Law enables free zone companies to open their  branches in Dubai, subject to applicable laws and procedures. <br /><br />In  compliance with the controls and applicable conditions set by the Executive  Council of the Emirate of Dubai, the branch of a free zone company can be  registered in Dubai without appointing any&nbsp; local service agent if:<br /><br />a.  100% UAE or GCC nationals own the free zone company, or <br />b. 51% of the owners  are UAE nationals<br /><br />If the shareholders are all foreigners, or if citizens  of the UAE own less than 51% in the free zone company, a local service agent  must be appointed when setting up a branch of the same in Dubai. In the event of  appointing a local service agent, such&nbsp; branch must be registered with the  foreign companies registry at the Ministry of Economy.<br /><br />Closure of the  Establishment <br /><br />Pursuant to the Law, DED may close an Establishment or  cancel its license in the event of non-renewal of its license, or in case of  suspension of its business operation; such closure, is published in a local  newspaper and if no objection is received within two weeks of the date of  publication the closure will be confirmed.<br /><br />Reasons for cancellation of  the Establishment license by the DED are:<br /><br />(a) violation of the provisions  of the Law no.13 and the applicable legislations .<br /><br />(b) if such license  was issued based on false information or documents.<br /><br />The cancellation of  the license shall not prejudice the rights and liabilities of the Establishment  or holder of the license towards third parties.<br /><br /><strong>C. IMPLICATIONS  OF THE NEW LAW ON EXISTING LICENSES:</strong><br /><br />The Establishment licensed  before issuance of this Law shall have a grace period of no more than one year  after the date of its enforcement to comply, and the general manager of the DED  may extend this term for another similar term.<br /><br />Comments and  Conclusions:<br /><br />The Law no. 13 of 2011 has confirmed the primary role of the  DED in organizing the business activities in the Emirate of Dubai and has  modified many practices being followed in the past. <br /><br />The Law established  the DED as a one window service center for licensing Establishments by enabling  the DED to provide approvals from several concerned authorities before issuing  the license; this will ultimately facilitate the licensing procedures for  investors.</p>