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Apply to central bank for exchange firm licence

Q: We are a group of individuals who are having several businesses in UAE. Most of the residents in UAE transfer funds to their home country with the help exchange companies and hence we think that there is a large market for such business. Please guide us on the requirements of setting up such exchange business in UAE. AM, Sharjah
A: Exchange activity is one of the activities which falls under the regulated entities governed by the Central Bank of UAE. A company or individual who wishes to have such exchange activity business needs to apply to the Central bank and satisfy their criteria. Any natural or juridical person can submit such application to the Central Bank. If individual, the person should be a UAE national of 21 years age and above; for companies the share of the UAE national should not be less than 60 per cent. If you wish to have limited liability of the company than the minimum capital should be Dh50 million. In case of unlimited liability for individual held license the minimum capital should be Dh1 million where activity is only sale and purchase of foreign currencies however if it is intended to carry on remittance businesses for the establishment than the capital shall be Dh2 million minimum. Each branch added to the license would require the capital to increase by 10 per cent. In addition to the above the exchange house is required to provide a bank guarantee of up to 100 per cent of the paid-up capital in a UAE bank and it will be under lien with the Central Bank.
There are many other requirements and conditions which needs to fulfilled including submission of audited accounts every quarter. Central banks allows such approval only if all the criteria is satisfactorily met. As this is a regulated activity the day to day compliance should also be in line with the central bank requirements.
Q: I am an expat and would like to establish my trading company in the UAE free zone. One of my other requirement is to secure my residence visa as investor and my son's visa as director of the same company. I have heard that there are some restrictions for visa on certain nationalities, how do we have a surety of the visa? AI, Dubai
A: Incorporation of a company and applying for visas in the same company are two different matters. A company can be incorporated in the concerned free zone where free zone is the authority of the incorporation. Visas, on the other hand are governed as per the policy of the immigration department as far as investors are concerned. It is their prerogative to grant or reject visas. Certain nationalities may face more scrutiny than others. Many free zones for this reason have a process of pre-approval, where, by payment of a nominal fee an investor can apply for a pre-approval of his/her visa. Pre-approval, though does not guarantee the visa but there is a very good chance that it will be granted. You may adopt his route before the incorporation of the free zone company to avoid unpleasant surprises. Standard procedures for the submission of documents will apply.
Q: I have a small company in Dubai which employs five people. I am aware that the UAE law requires that the employee be entitled to a gratuity. Is there any need to deposit such amount to any bank account on a yearly basis? SJ, Dubai
A: All UAE companies need to calculate and make gratuity payment to their employees as per the simple method known to most of us. So far there is no stipulation for the companies to deposit such amount into a monitored bank account. As a proactive company, one may choose to deposit the gratuity provisions into a non-risk profit bearing or interest based bank account so the employee is secured and gets the extra benefit of the profit/interest earned.
The writer is partner at Crowe Horwath, UAE. You can send your business queries to him at atik.munshi@crowehorwath.ae. Views expressed are his own and do not reflect the newspaper's policy.