Following an announcement made on 15 September 2018, the Abu Dhabi Department of Economic Development (DED) has launched the first phase of its Dual Licence Initiative (DLI). The DED is the regulatory body responsible for determining the economic policies and the issuance of licences in the Emirate of Abu Dhabi.
With the implementation of DLI, companies registered in Abu Dhabi free zones will have the capability of holding dual licences, allowing for such a company to establish and operate an onshore branch in Abu Dhabi, Al Ain and the Al Dhafra regions without going through the current full branch registration process. The preceding licence system placed various conditions on free zone companies looking to operate onshore, such as applying for a separate onshore licence, associating with an onshore service agent, leasing suitable premises.
Eligibility and Requirements
Dual licensing will be available to companies that are registered in one of Abu Dhabi's free zones, but will not apply to entities registered as branches in such free zones.
Previously, a branch of a free zone company in Abu Dhabi was required to have its own distinct address and, therefore, a separate office would need to be sourced and a lease agreement negotiated. The DED has set aside this condition and pursuant to the DLI, there will be no requirement for a physical address or nameplate to form part of the branch's submissions to the DED. As such, a dual licence branch will not need its own separate address in order to be registered with the DED and may operate from the same office as its parent company. It is still possible for the dual licence branch to have its own address, however this new approach provides far more flexibility and cost saving by not setting this as a prerequisite.
Unlike other Emirates, the appointment of a service agent will not be necessary for the establishment of a dual licence branch, as the parent company will effectively act as the sponsor (national agent). By waiving the requirement to partner with a national agent, companies interested in acquiring a dual licence are able to avoid the additional costs and paperwork associated with these associations, as well as the time spent finding a suitable agent. It should be noted that the dual licence branch will not be issued with its own establishment card and it will be the responsibility of the parent company to sponsor dual licence branch employees. This should ease the process for hiring employees as it will not be necessary to go through standard onshore immigration channels in order to obtain work permits.
It will be compulsory to appoint a manager of the dual licence branch. A power of attorney in favour of the manager will also be desirable to ensure the manager has sufficient authority to act on behalf of the dual licence branch and make requisite decisions.
The timeframe and cost for the issuance of a dual licence will depend largely on what activity the dual licence branch wishes to undertake, as this will determine whether any additional approvals are required from other regulatory bodies. It is, nevertheless, a more straightforward and cost effective process than the preceding licence system. By removing the requirements of the preceding system, it is possible to better predict a timeframe for the issuance of a dual licence as there will be no third parties to negotiate with, which could delay the application process.
What DLI hopes to achieve
DLI is part of a wider strategy designed to stimulate economic growth in Abu Dhabi by easing the limitations placed on foreign investors. Specifically, DLI aims to provide a more streamlined approach for free zone based entities to operate onshore and to alleviate the costs and restrictions associated with onshore expansion. The DED has indicated that the second phase of DLI is underway and will aim to further extend the eligibility for dual licences to a more diverse assortment of company types.