UAE SMEs to be exempt from bank guarantees by October - Gulf Business
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UAE SMEs to be exempt from bank guarantees by October

UAE SMEs to be exempt from bank guarantees by October

The new decree aims to support the initiation of new projects

Exchange houses hold talks with UAE Central Bank over new rules

The UAE’s Ministry of Human Resources Emiratisation had announced a new decree to exempt Emirati small and medium enterprises from bank guarantees by the beginning of October.

In a statement published by the ministry yesterday, it said the new decree aims to support the initiation of new projects. Bank guarantees were initially required to safeguard workers’ rights.

“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 talents,” said minister of human resources and emiratisation H.E Saqr Ghobash.

Those wishing to apply for the category one classification for lower ministry service fees must meet several criteria.

These include ownership by an Emirati or the employment of an Emirati director, where the owner is a partner in a maximum of five companies.

Only two companies under the same owner can apply for the exemption, where the owner and his/her partners are UAE citizens and the owner’s must not be under investigation by the ministry for irregularities.

The SME must also be a member of the Youth Project Development Organization and its first licence issuance date must not exceed three years. Should this be the case the SME will be accepted for a bank guarantee exception only provided its first licence was issued within five years.

The ministry describes small enterprises as those employing a maximum of 15 workers, medium ones as employing up to 50 workers

“If a company wishes to increase the number of workers over the proposed limitations, a degrade re-classification shall follow, yet, bank guarantee exemptions still apply, unless the company grew to employ over 100 workers,” the ministry said.

SMEs will lose their exemption if they fail to pay workers’ wages for more than two consecutive months and they will be downgraded if they are found to be using workers registered to other companies without the ministry’s permission or to be involved in a sham working relationship.

If the company is sold without notifying the Youth Project Development Organization or there is proof it is not being run by an Emirati the benefits will also not apply.


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