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New law for Dubai government entities to set up companies

Dubai - The Director General of Dubai's Department of Finance will issue all the bylaws required to implement the new resolution.

Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, Crown Prince of Dubai and Chairman of the Dubai Executive Council, said the continuous development of the emirate's legislative framework is crucial to the achievement of Dubai's strategic objectives. The enhancement of the legal framework is a vital element in enhancing the growth prospects of various sectors, he stressed.
"As part of implementing the directives of His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, to accelerate economic development and promote investments, Dubai places high importance on creating an integrated legislative infrastructure that facilitates equal opportunities for public and private sectors. We are keen that the private sector plays a major role in shaping the future of the national economy and achieving sustainable development. A legislative framework that protects their interests is critical to their growth and success."
He added: "We do not want to be a competitor to the private sector, but rather seek to complement it. The partnership between the public and private sectors adds significant value to Dubai's sustainable development."
Sheikh Hamdan's comments came as he issued Executive Council Resolution No. (23) of 2020 on the terms, conditions and regulations governing the establishment of companies by Dubai Government entities. The resolution standardises procedures for establishing government-owned companies in line with international best practices. It seeks to encourage investments in various sectors and ensure strong governance at government-owned companies.
According to the resolution, a government entity is allowed to establish a company if its main activity falls within the objectives and responsibilities of the entity. It should also contribute to Dubai's sustainable development plans and offer products and services of strategic economic importance.
To establish a government-owned enterprise, the government entity must follow the standardised procedures outlined in the resolution. It should coordinate with Dubai's Department of Finance to prepare a feasibility study for the new enterprise and adhere to the articles of the UAE Federal Law No (2) of 2015 on Commercial Companies. Dubai's Department of Finance, in coordination with the General Secretariat of The Executive Council, will review the company's feasibility study, conduct competitor analysis and submit its recommendations to the Chairman of The Executive Council or the First Deputy Chairman of The Executive Council for approval.
The newly established company must uphold the principles of fair competition. It will not enjoy any advantage or receive any financial support from the government. Government-owned companies should pay all taxes, fees, charges and tariffs specified by federal and local legislations.
All government-owned companies under the purview of this resolution must abide by its provisions within two years of the date of its activation. The Director General of Dubai's Department of Finance will issue all the bylaws required to implement the resolution.
The new resolution annuls any other legislation that contradicts or challenges its articles. The resolution will be published in the Official Gazette and will be effective from the date of publication. - business@khaleejtimes.com