New decree in UAE erases minimum capital requirement for LLCs

The minimum capital requirement for establishment of a Limited Liability Company (LLC) in the UAE was Dh 150,000 till date. This is, however, abolished by a Presidential Decree that has been made effective this week.

The decree, issued by the President, H.H. Shaikh Khalifa Bin Zayed Al Nahyan, states that the amendment is retroactive to companies established on or after 1st June 2009, and permits new businesses to determine the capital required for establishment and sustainability of their companies.

According to experts, this amendment to Federal Law No.8 of 1984 stipulates requirements for companies to begin operations designed to stimulate growth in small and medium enterprises sector, while also removing bureaucratic hurdles, including the need to produce bank certificates.

LLCs constitute the large majority of Small and Medium Enterprises (SMEs) in the UAE, a segment which makes up more than 80 percent of the country’s business.

According to the Minister of Economy, Sultan Bin Saeed Al Mansouri, the decree is a positive step aimed at attracting more investments to the country. It also helps in diversifying sectors and activities of the economy to ensure economic prosperity and welfare of UAE community.

A senior consultant at Dun & Bradstreet–South Asia and Middle East, Karthik Ganesan, said that the new decree implies that aspiring businessmen can now aim to set up businesses in the UAE, without having to arrange funds for minimum capital requirements. Therefore, this will help in formation of new sectors such as trading and services, wherein business models may not require high capital investments.

The new decree emphasizes the interest by the government to help private sector in overcoming the challenges faced, thus ensuring continuity in growth of business and investments.

Posted on 12/8/2009

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