Saturday, Jul 23, 2016

Abu Dhabi: Small and medium-sized enterprises (SMEs) will be exempted from bank guarantees from October onwards, the Ministry of Human Resources and Emiratisation announced in a statement sent today (July 23).

The new decree aims to support the initiation of fresh projects, the statement added.

“Following our partnership with the SME Board, the ministry decided to support SMEs for playing a vital role in our national economy. The decision is considered a major step towards reaching a competitive knowledge-based economy that revolves around young Emirati talent,” said Saqr Ghobash, Minister of Human Resources and Emiratisation.

The Minister explained that bank guarantees had initially been imposed on enterprises registered with the Ministry in order to safeguard worker rights. The exemption decree was issued after a study of SMEs’ strong level of commitment.

Ghobash called upon Emiratis wishing to enter the SME sector to form value-added projects, which contribute towards innovation in the economy.

Certain guidelines and conditions are however applicable for SMEs to qualify for the exemption and be classified in category 1, which allows companies to pay lower Ministry service fees. For example, the decree applies to two companies held by the same owner. The owner and all partners must be Emirati, and the company must also be a member at the Youth Project Development Organization.

Additionally, the firm must be owned by an Emirati or employ an Emirati director, and the owner and partner can only run a maximum of five companies. The companies must also not fall under any constraints imposed by the ministry for upholding irregularities.

Additionally, if the company seeks to be classified in category 1, the first category, its first license issuance date must not exceed three years

The decree allows small enterprises to enjoy the proposed benefits by employing a maximum of 15 workers, while medium companies can have up to 50 workers. If a company wishes to increase the number of workers over the proposed limitations, a degrade reclassification shall follow and the bank guarantee exemption will continue to apply until it employs over 100 workers.

However, SMEs that fail to pay workers’ wages for more than two consecutive months will not qualify for the bank guarantee exemption.

In addition, companies shall be downgraded if they us workers registered under other companies without a written permission from the Ministry, provide other facilities to their own workers without a permission, or practise a sham working relationship between both parties. Also, if the owner sells the company without notifying the Youth Project Development Organization, or if there is clear proof showing that the firm is not managed by the owner or directed by an expatriate, the above benefits shall cease to apply.

Staff Report

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