UAE Scraps Dh. 150,000 Capital Requirement to Start Up LLC Companies


Dh150,000 company start-up hurdle axed

UAE - AUG 11: The Dh150,000 capital requirement for start-up companies has been scrapped by the Government to help small businesses get off the ground without the burden of expensive red tape.

The change is expected to provide a boost to small and medium-sized limited liability firms which have been among the hardest hit by the global financial crisis.

“Smaller businesses are generally the main drivers of any economy and make up the bulk in terms of employment,” said Robert McKinnon, the head of research at Al Mal Capital, a Dubai-based investment bank. “This is a step in the right direction.”

Under new rules announced yesterday, partners in new business ventures will be able to determine the start-up capital needed to run their businesses.

The previous system required a minimum commitment of Dh150,000 (US$40,000).

The changes were contained in a decree issued by Sheikh Khalifa bin Zayed, President of the UAE, the state news agency WAM reported. It amends a federal corporate law dating back to 1984.

The change may help entrepreneurs such as Sabri Pozam, 29, from Turkey, who moved to Dubai five years ago and is starting his own business. “It’s a big relief, to be honest with you,” he said. “It’s going to speed things up and affect our initial investment so we have more money to invest.”

Mr Pozam plans to establish a business called Jungle Models, an online modelling portfolio website aimed at the fashion industry. He said he was shocked by the costs involved in establishing a new venture.

“It’s very expensive. The system has been designed for medium and big companies, but not for small businesses. You can see the effects on the economy,” he said.

The removal of the capital requirement represents the latest attempt by the Government to provide assistance to small businesses and start-ups that have struggled to overcome tightening credit, late payments and declining orders across many sectors of the economy.

In June, the Federal Cabinet approved the creation of the Emirates Development Bank, aimed at helping small businesses owned by Emiratis, while Sharjah has also launched a stimulus package to encourage banks to lend to small and medium-sized firms.

The Government has also made about Dh120 billion dirhams available to banks to stimulate lending.

“The issuing of the decree is aimed at limiting bureaucratic procedures as the investor won’t need any bank certificates, for instance. This will limit the process time to set up private business in the country,” WAM reported.

Hamad Buamim, the director general of the Dubai Chamber of Commerce & Industry, said: “We believe the new decree will definitely help in enhancing the UAE’s appeal to investments and will provide the private sector with the right impetus it needs in these challenging times.”

The changes could help the UAE become more competitive, according to Jitendra Gianchandi, who runs a company that advises start-up firms.

He had received about 200 inquiries a week from people seeking advice on forming their own businesses before the financial crisis hit the region last year. Since then, that number had halved.

“Clients had started complaining about the UAE’s high capital requirements for would-be partners,” he said. “It was very high and used to put off many ventures.”

The change will affect companies operating outside free zones, enclosed business parks that allow companies to operate without a local sponsor and to repatriate 100 per cent of profits.

“So far, the law is for the LLCs [limited liability companies] which are outside the free zones. Different free zones have different requirements of capital for different classes of companies,” said Mr Gianchandi.

Sultan bin Saeed al Mansouri, the Minister of Economy, described the move as “a positive step to attract more investments to the country”.

He added: “This decree underlines our leadership’s vision and strategy aiming at developing the investment environment in the UAE, diversifying sectors and activities of our economy to ensure economic prosperity.”

I thought I was a good driver until my blind spots were pointed out

DUBAI - AUG 11: I turned the wheel of the Nissan Altima into the Enoc petrol station car park on Emirates Road and prepared for Nazar Hussain to pass judgement.

I had been assured this was not a driving test. But after 20 minutes behind the wheel with the instructor from Emirates Driving Institute watching, it certainly felt like one to me. This was, after all, the first time in nine years that my driving abilities had been appraised.

Perhaps my nervousness could also be attributed to being told an hour earlier that Dubai’s roads were six times more dangerous than those in my native Canada and that half the drivers I shared the road with would be involved in a collision in the next six months.

That cheery news had been shared as part of the institute’s defensive driving course, which was relaunched by the company yesterday. Now I was to receive my evaluation after a 20-minute drive on a few of the emirate’s roads.

When I told friends I would be taking the course, their eyes lit up at the thought of me learning how to correct oversteer by throwing my car into a powerslide or racing over soaked tarmac to get hydroplaning experience.

I did nothing of the sort and did not even go near water. But Mr Hussain, a Pakistani who has trained drivers at the institute for 19 years, nine of them teaching the defensive driving course, was certainly trying to cleanse me of my bad motoring habits.

This course, available to everyone, is predominantly taken by people sent by their managers because their jobs have them on the road a lot, such as logistics and delivery company employees. Generally, they have been driving for two or three years.

The institute scores drivers with an initial assessment and a second evaluation and provides them and their companies with a personal development plan.

Human error and unsafe driving practice cause 95 per cent of all accidents, according to the institute, which is why it says it is essential for motorists to continue to work on their driving, improve their skills and be aware of practices that would improve not only their own safety but that of other road-users.

Mr Hussain, a friendly man who did his best to keep me relaxed with calm, clear instructions and words of encouragement when I was doing well, guided me around Dubai’s roads, through side streets, a roundabout, large signalised intersections and finally, to the Emirates Road motorway, having me drive at different posted speed limits, perform U-turns and constantly change lanes. Fortunately, he never had need to use the additional brake pedal on the trainer’s side of the vehicle.

You might say my performance had heads turning, even if that head was my own, after Mr Hussain revealed that I was not doing a proper right shoulder check before changing lanes. “Your driving is very good but there are still some places we have to develop, especially in your shoulder checks,” he said.

“I was not happy with your right shoulder check, because you were in between the right mirror and here,” he said, indicating my head had turned only about 45 degrees. “Do you know what we mean by shoulder check?”

It was not a rhetorical question.

We chatted for about 20 minutes, with him pointing out the bad driving habits he had picked out and dropping in questions to test my knowledge. As he went over each point, he marked down a score between 1 (weak) and 4 (strong) on my “record of development” sheet.

“He’s being a bit tough,” I thought as he scored another 2 beside a box labelled “interactions – other cars”.

Mr Hussain had good reason to drive home this safety message. Side impacts are the No. 1 cause of crashes in the UAE, he said, because too many drivers rely heavily on their side mirrors, ignoring the “blind spot”, in which a vehicle drawing alongside you is invisible to the mirrors.

“I personally suggest you need to check your shoulder,” he said. “Where? Exactly behind the passenger seat.

“In driving you only have one chance. This is white, this is black. There is nothing in between it.”

My bad habits did not end there. While offering advice “as a friend”, he pointed out that I had turned my indicator off before completing my lane changes, which had confused at least one fast-moving BMW driver who had driven his silver beauty breathtakingly close to my rear bumper as we both attempted to occupy the same lane.

Mr Hussain was also not happy with my failure to check my central rear-view mirror before changing lanes, a bad habit practised by 99 per cent of drivers, he said.

I had also not left enough space, or kept a “circle of safety” between my vehicle and vehicles ahead of me when changing lanes. With less than a two-second gap between me and cars in the lanes I was entering, I was putting myself in precarious positions.

Mr Hussain also advised me to lean my body forward to see over or around road obstructions rather than edging the nose of the car into traffic and suggested I toot my horn when pedestrians were not looking towards the vehicle.

The institute has trained more than 700 instructors over 18 months to apply a “coaching method” to teaching, in preparation for relaunching the course.

It differs from the past courses because it is teaching people how to “think about driving” rather than just reinforcing mechanical driving skills that had been previously taught, said Robert Hodges, development manager at the institute.

My coaches, including Mr Hussain in the car and Khalid Javed, who lectured me in the classroom session beforehand, not only had me thinking about factors that influenced my driving, but encouraged me to take responsibility for my driving and that of the drivers around me.

Back at the petrol station, Mr Hussain took the wheel and put on a masterclass of driving that featured a running narrative of what was happening on the road. Talking, even to yourself, about what you see on the road is one way to maintain focus that Mr Hussain promotes.

He not only named the colours of cars and described what they were doing but told me what was going on along slip roads long before cars merged in.

Being observant of what is happening up the road and anticipating the actions of other drivers is key to improving driver safety, the institute says.

Finally, I got back into the driver’s seat for my chance to show Mr Hussain I had taken his lessons to heart. Guiding us back to the institute, my head was swivelling, my eyes checking my central mirror and scanning the road from a far distance, to a middle distance, to a near distance. He showed me how by just easing off the accelerator, I persuaded vehicles that were getting too close for comfort either to reduce their speed or to overtake, leaving me in a safe circle.

Back at the centre, Mr Hussain was much more pleased with my driving and my record of development score, and recommended I return in a year.

I had improved in all my areas that were weak, advancing from twos to threes and fours.

“In use of mirror, of course you improved,” he said. “Shoulder checks, you did great.

“Space management, you improved it. I hope in future you will also improve it.”

Since completing the course, I have not made a lane change without thinking of Mr Hussain’s advice.

I suppose Mr Hodges was right when he assured me I was not being tested.“It’s about your safety,” he said. “I can’t actually make you safer after today. I’m not going to be with you in your car tomorrow. But if I put these good practices in your mind, you will find that you will start to feel safer.”

Four banks in UAE put on ratings review

UAE - AUG 11: Four UAE banks have been placed on review for possible downgrade, Moody’s Investors Service said late yesterday.

Emirates Bank International, National Bank of Dubai, Mashreq Bank and Dubai Islamic Bank will have their financial strength ratings and long-term debt and deposit ratings placed on review.

The move was triggered by the strained domestic property market, particularly in Dubai, as well as an economic slowdown forecast for this year with a modest recovery in 2010, Moody’s said.

The agency expects that the pressures facing the country’s banking system will result in rising corporate and retail lending defaults, with the latter of particular concern among unsecured credits.

However, during the first two quarters of this year, the rated banks reacted to the expected drop in asset quality by increasing their provisioning levels and Tier 1 capital ratios, Moody’s said.

Moody’s said it would complete the review in coming months.

Woman hurt in balcony fall at mall

SHARJAH - AUG 11: A 50-year-old Ukrainian woman is recovering after an accidental fall from a second-floor balcony inside Sharjah Mega Mall on Sunday evening.

A security guard who witnessed the incident said the woman had landed on her left side, apparently breaking her left leg and arm and injuring her head.

“We all believed she had died; blood was everywhere, and police immediately cordoned off the area and took her to hospital,” he said.

According to Sharjah Police, the woman was at the mall in the company of a colleague to shop before her return to Ukraine next week.

“She was scheduled to leave the country on Monday,” the colleague, also a Ukrainian woman, told police in a statement. The police declined to name the company where the woman worked or to say what kind of work she was doing.

“All we can tell you is that our investigations have established it was not a suicide bid,” a senior police officer said.

Police said, however, that the woman had been behaving erratically before falling, and that they had established that she had been on medication for psychological problems.

Sources from the Kuwaiti Hospital said the woman was in a stable condition but was likely to stay in hospital for a few more days.

This is the second serious fall in less than a week in Sharjah. An Indian national fell to his death from a fourth-floor apartment opposite Sharjah City Centre.


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