In the current financial climate with business budgetary
constraints, an increasing number of companies licensed in Dubai
declared their willingness to suspend their businesses and refrain
from renewing their licenses.
The Department of Economic Development in Dubai (DED), being the
official licensing authority, was keen to assist companies whose
licenses have expired and whereby such companies are not able to
run their businesses and maintain their welfare.
The DED came up with a temporary solution allowing such companies
the opportunity to suspend their licenses to avoid any liquidation
and prevent losses.
Such assistance has been provided by giving companies the
possibility to suspend their expired licenses for a limited period
ranging from one to three years, during which time the companies
licenses will be freezed, and therefore be unable to operate their
businesses.
Freezing a license means to stop the activity of the expired
license and stop the accumulation of fines during the suspension
period. Fines are imposed by the DED on monthly basis in case of
license expiration without renewal.
The license freeze can only be deactivated once throughout the
duration of the freeze period.
The steps, documents and fees required for such deactivation are as
follows:
- Submission of an application proving expiration of the license and inactivity of the company, and justifying such request; the application should be signed by one of the shareholders or by the authorized representative or manager of the company.
- A letter from the Labour Department proving that there are no labour restrictions imposed on the license.
- The request for suspension of license shall be submitted to any of the DED branches in Dubai or online (through DED e-services - note some e-services are yet to be activated by the DED), or to one of the certified offices approved by the DED which can serve the customers and provide them with the DED services.
- The fees for freezing expired licenses are as follows:
- 2000 AED per each year of suspension, to be added to the
outstanding fines of 210 AED per month. The fines are enforced from
the date of license expiration until the date of payment for the
suspension.
Frequently asked questions
Which companies can apply for suspension and how many times
can they suspend their licenses?Almost all companies licensed by the DED in Dubai: Limited
liability companies, sole establishments, foreign branches, local
branches, private joint stock companies can apply for freezing
their licenses. Public joint stock companies may also apply to
freeze their licenses provided they obtain the approval from the
Securities and Commodities Authority. Note that suspension can be
applied only one time throughout the lifetime of the company.
Is it possible to block the license for less than three
years?
Sole establishment licenses cannot be suspended for more than one
year. Other types of companies and branches can suspend their
licenses for a period ranging from one to three years.
Can you stop the deactivation of the license before the
expiry date of the suspension period?
It is possible to stop the deactivation of the license at any time
after the date of suspension and before the end of the suspension
period, bearing in mind that no refunded fees shall be
applicable.
Can a company with a suspended license practice the
activity during the suspension period?
It is illegal for a company with a suspended license to practice
any of its activities during the suspension period and fines will
be imposed as per the regulations applicable on infringing
licenses.
It is important to mention that the owner of the license or
shareholder is allowed, during the suspension period of his expired
license, to apply under his name, for a new license and is able to
set up new companies and businesses in Dubai.
To restart the operations of a deactivated company, a request
signed by one of the shareholders or the manager of the company
shall be submitted to any of the DED branches in Dubai or to one of
the certified offices approved by the DED, or through DED e-
services, calling for renewal of the deactivated license by
submitting:
- An application for renewal before the expiry date of suspension. The due date is counted from the date of paying the fees of suspension, that is, the date displayed on the suspension receipt.
- A valid lease contract
The DED shall quote the fees, and upon payment, an updated
license shall be issued by the DED and the company can begin to
operate its business.
The advantage of deactivating a license is to help non –
active companies with expired licenses to freeze their businesses
for a limited period, and therefore to avoid paying unnecessary
renewal fees and fines. This temporary solution gives such
companies the opportunity to avoid liquidation, and the chance to
renew operations and restart their businesses in due time without
the burden of going through the new set up procedures or paying new
set up costs.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.