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Business View: Suspending a business license
Samer Qudah and Jounama Azzam from the Dubai office of Al Tamimi & Company take a look at the suspension of company licenses in the emirate; which companies do it, why, and how?
February 27, 2011 1:52 by Samuel Potter
In the current financial climate with business budgetary constraints, an increasing number of companies licensed in Dubai declared their willingness to suspend their businesses and refrain from renewing their licenses.
The Department of Economic Development in Dubai (DED), being the official licensing authority, was keen to assist companies whose licenses have expired and whereby such companies are not able to run their businesses and maintain their welfare.
The DED came up with a temporary solution allowing such companies the opportunity to suspend their licenses to avoid any liquidation and prevent losses. Such assistance has been provided by giving companies the possibility to suspend their expired licenses for a limited period ranging from one to three years, during which time the companies’ licenses will be frozen and therefore be unable to operate their businesses.
Freezing a license means to stop the activity of the expired license and stop the accumulation of fines during the suspension period. Fines are imposed by the DED on monthly basis in case of license expiration without renewal. The license freeze can only be deactivated once throughout the duration of the freeze period.
The steps, documents and fees required for such deactivation are as follows:
• Submission of an application proving expiration of the license and inactivity of the company, and justifying such request; the application should be signed by one of the shareholders or by the authorized representative or manager of the company.
• A letter from the Labour Department proving that there are no labour restrictions imposed on the license.
• The request for suspension of license shall be submitted to any of the DED branches in Dubai or online (through DED e-services – note some e-services are yet to be activated by the DED), or to one of the certified offices approved by the DED which can serve the customers and provide them with the DED services.
• The fees for freezing expired licenses are as follows:
2000 AED per each year of suspension, to be added to the outstanding fines of 210 AED per month. The fines are enforced from the date of license expiration until the date of payment for the suspension.
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