UAE Company Formation / Licensing LawFederal Law No. (2) of 2014 on Small and Medium Enterprises (SMEs)

Article (1) Definitions In the application of the provisions of this Law, the following words and expressions shall have the meanings shown opposite each of them respectively unless the context requires otherwise: The UAE : The United Arab Emirates The Ministry : The Ministry of Economy The Minister : The Minister of Economy The Concerned Authorities : The local authority or entity in charge of application of the provisions of this Law Enterprises and Establishments : Any sole company or establishment exercising an economic activity whether that company or establishment is small, including micro companies and establishments, or medium The Council : The Small and Medium Enterprises and Establishments (SMEs) Council The Programme : The National Programme of the Small and Medium Enterprises and Establishments

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Federal Law of 2014 on Small and Medium Enterprises (SMEs) 4

Article (2) Law Objectives This Law aim at achieving the following: 1. Development of small and medium enterprises and establishments so that they can be a fundamental support of the economic development in the UAE. 2. Dissemination and encouragement of the culture of research, creativity, innovation and entrepreneurship of businesses, which achieves the economic aspirations of the UAE. 3. Coordination of the efforts of the Concerned Authorities for the purpose of development of enterprises and establishments. 4. Promotion of the competitiveness of small and medium enterprises and establishments for the purpose of providing employment opportunities in favour of the national economy. 5. Development of the programmes and initiatives targeting the development of enterprises and establishments. 6. Motivation and support of citizens to penetrate the labour market in the field of enterprises and establishments and contributing to the UAE's gross domestic product (GDP). 7. Promoting and fostering the UAE's position as a hub for entrepreneurship and construction and creation of enterprises and establishments.

Article (6) Competences of the Council The SMEs Council shall undertake the following mandates: 1. Creation and development of the policies and strategic plans towards the development of

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Federal Law of 2014 on Small and Medium Enterprises (SMEs) 6 enterprises and establishments. 2. Developing the rules and regulations required for coordination between the Programme and the Concerned Authorities. 3. Monitoring the performance indicators of the Programme and approving its annual report on the SMEs. 4. Conducting periodical review of the effectiveness of the SMEs classification criteria and proposing the appropriate amendments and submitting the same to the Council of Ministers. 5. Setting up the conditions and criteria for the Programme's membership. 6. Any other relevant tasks to be assigned to it by the Council of Ministers.

Article (8) The Programme Terms of Reference The mandates of the Programme shall be as follows 1. Coordinating with the Concerned Authorities in drawing up the general guidelines regarding the provision of technical, administrative, and training expertise and assistance in the various fields for the purpose of supporting and developing enterprises and establishments. 2. Preparing a periodic assessment report on the enterprises and establishments with the

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Federal Law of 2014 on Small and Medium Enterprises (SMEs) 7 challenges faced and the appropriate solutions for such challenges and submitting that report to the SMEs Council. 3. Coordination with the Federal and local government entities and the private sector for marketing the enterprises and establishments products inside the UAE and abroad. 4. Coordination with the Concerned Authorities for the purpose of providing advantages and incentives for the enterprises and establishments. 5. Coordination with the relevant regional and international organisations for support of the development of the enterprises and establishments sector. 6. Development of awareness raising programmes to encourage creation of the enterprises and establishments together with introducing the investment opportunities that are available and appropriate for the enterprises and establishments and their risks as well as introducing local and international exhibitions and assisting in taking part in the same. 7. Creation and categorization of a database of the registered enterprises and establishments. 8. Encouragement of self-employment, joint cooperation and merger between enterprises and establishments. 9. Approval of the applications for granting concessions to the enterprises and establishments that are members of the Programme such as the local funds, institutions, programmes and entities. 10. Any other related tasks to be determined by the SMEs Council.

Article (10) Facilities and Incentives Owners of enterprises and establishments enjoying membership of the Programme shall avail from facilities and incentives extended by the public and private sectors, as follows: 1. Credit facilities and promotion and marketing facilities provided by the private sector, on condition these facilities shall not be in conflict with any financial or legal obligations. 2. Commitment on the part of the Federal entities to contracting with the enterprises and establishments in the UAE at a ratio no less than 10% of the total contracts prices in order to meet their purchase, service and consultation needs. 3. Commitment of companies where the Federal Government owns no less than 25% of their respective capital to contracting with the enterprises and establishments in the UAE with a ratio no less than 5% of the total contracts prices in order to meet their purchase, service and consultation needs. 4. Streamlining of the procedures, reducing the fees of licensing and utilization of land for industrial or agricultural purposes by owners of enterprises and establishments, in accordance with the applicable legislations and in coordination with the Concerned Authorities. 5. Allocation of appropriate space in the exhibitions the UAE participates in abroad, to showcase the national products contributed by the enterprises and establishments owners, and providing any necessary information on the external markets in accordance with the regulations to be prescribed by the Executive Regulations of this Law. 6. Setting up local, specialised exhibitions or participating in other domestic exhibitions for

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Federal Law of 2014 on Small and Medium Enterprises (SMEs) 9 promotion and marketing of the enterprises and establishments products. 7. Enterprises and establishments may, due to their production purposes, be exempted from customs tax on equipment, raw materials and intermediate goods, subject to a resolution to be issued by the Council of Ministers and the competent authorities in the Emirates that are members to the Federation, each in their respective areas of competency, and subject to a recommendation by the Minister of Economy. 8. Enterprises and establishments shall be exempted from the clause of providing a bank guarantee in respect of the workers they employ, on condition the Council shall, in coordination with the Ministry of Labour, set the regulations and conditions required for the said exemption.