The Abu Dhabi’s Department of Economic Development (DED) recently launched the first phase of its Dual License Initiative in 2018. The DED is the regulatory body in charge of issuing licenses in Abu Dhabi.
What is a dual license?
Companies setup in free zones were earlier not allowed to directly conduct business in the mainland. For example, a company trading in furniture would have to appoint a local distributor (usually an LLC in Abu Dhabi) to distribute products in Abu Dhabi and the rest of the UAE mainland.
Also, free zone companies were not able to bid for government contracts, and hence missed out a lot of opportunities.
The Dual License Initiative will now allow companies setup in the Abu Dhabi free zones, such as KIZAD, to establish a branch onshore. Previously, there were additional conditions for formation of an onshore branch company in Abu Dhabi. These included going through an elaborate process of formation, leasing an office space and enlisting the services of a local service agent.
The above requirements are now waived. Which means, companies applying for the dual license will not have to take additional office space or take on a local service agent for their branch company.
The Dual License option hence reduces costs of operations by over 80%!
In addition to the above, companies with a dual license will be able to participate in government tenders, which will result in added flexibility for investors looking at setting up in Abu Dhabi.
Procedure for Obtaining the Dual License in Abu Dhabi
The dual licensing option will be available to companies setup in KIZAD Free Zone, and other free zones of Abu Dhabi. Since a branch company cannot create a branch of itself, the dual license option will not apply to branches of companies registered in the free zones.
Step 1 – Obtain an NOC from KIZAD Free Zone
KIZAD Free Zone will issue a no-objection letter to the Abu Dhabi DED, and also contain information and supporting documentation on the free zone license.
Step 2 – Apply to Abu Dhabi DED
This is a relatively simple process, wherein an application is submitted, approved and a payment voucher generated for payment of the associated license fees. These fees are standard, and depend on the legal form and other matters. However, since the requirements of a physical office and nameplate are waived, dual licenses cost upto 80% lesser than conventional licenses.
Most applications are processed within a day. In some cases, external approvals may be required and hence the process takes 2-3 working days.
What are the changes implemented with the Dual License option?
The following main changes have been implemented for a company with dual license:
- No requirement for a separate physical address in Abu Dhabi
Earlier, a branch company was required to lease an office space in the mainland, as a pre-requisite for licensing. This meant that a company setup in KIZAD, with a branch in Abu Dhabi, ended up having two separate lease agreements, and additional costs. This requirement is now waived. The KIZAD company can setup its branch in Abu Dhabi and have a dual license without taking on a separate lease.
- No requirement for a UAE National to act as local service agent
A branch company of KIZAD is 100% owned by the free zone company, but earlier, there was a requirement of having a UAE National act as local service agent. The main duty of the local service agent was to act as the liaison between the branch company, and the government authorities.
With the advent of the new dual license regime, this requirement has also been waived.
- Appointment of a Manager for the Branch Company
Since the branch company is not issued an establishment card, all visas are processed from the KIZAD Company, which will act as the sponsor of the employees of the branch. Hence, it is mandatory to appoint a Branch Manager for every KIZAD company that has a dual license.
How can we help you?
10 Zone is a registered consultant for KIZAD Company formation. We provide turnkey services for setup of the KIZAD company and the dual license branch in mainland Abu Dhabi.