Business License Freezing in UAE

COVID-19 wave has changed the world economy and resulted in a million of employees working from home and some of them losing their jobs. It resulted many companies that are forced to cease their business.

Businesspeople start asking question, what other alternative do you have other than closing your company? If you are in UAE and you plan to temporarily close your business, then the best option would be to freeze the business license. Dubai of Economic Development implemented a rule and came up with a temporary solution that could be a great help to you!

Instead of liquidating your company, you can freeze your business licenses upto a period of 3 years, by paying a freezing fee. For sole establishments registered in DED, freezing is allowed for a period of one year. Please note that this option is not applicable in all emirates and freezones.

 

Business License Freezing :

Freezing business license means that you can keep your license inactive for a specific period of time which about 3 years.

Company should not carry any of its operations, once the license is frozen as it is illegal.

The owner of a frozen license or a shareholder can start a new business by applying for a new license under his name.

The office will be close and not allowed to run even just selling your goods/services online.

If an owner fails to renew his license after the 3 years validity of the freezing license, fines will be applied every month or year.

The license will be automatically canceled if not renewed over 5 years in a row.

The freezed license can only be deactivated only once throughout the duration of the freeze period.

 

Requirements for freezing the license :

Issue a letter on the corporate letterhead requesting to freeze the license temporarily. The letter should contain details on the reasons and justifications behind the decision.

Cancel all the issued employment visa under the company

Confirmation letter from Ministry of Human Resources and Emiratisation mentioning that there are no sponsored people on your license must be obtained. The letter must also confirm that labor restrictions are not imposed on the license.

The freezing fee of AED 2,000 per year along with AED 210 per each due month since license expiry date must be paid, after submitting the application to Dubai Economic Development. And also you need to submit a report from the inspection division in DED.

 

Before you start the procedure of freezing the license, make sure there are no pending legal actions against your company at the time of application. You should be aware that creditors do not lose their right to claim against a company and initiate a court case against a company with a frozen license. In case of court claim Department of Economic Development will de-freeze the license.

To restart after the completion of the freeze period, the manager or shareholders must submit an application for renewal with a valid lease contract registered in Ejari at the Economic Department.

 

The main benefit of freezing business license is to help company which is non-active with expired licenses to keep the license, suspend business and prevent from paying license non-renewal fines. This temporarily solution will help some companies in difficult times to avoid liquidation, and the chance to renew operations, restart businesses and avoid going through the new set up procedure with relevant new set up costs.

 

FOR MORE INFORMATION, CONTACT US :

Phone : +971 52 1952 532 / +971 4 240 1110

Mail-Id : info@yugaaccounting.com

Website : www.yugaaccounting.com

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