Capital Rule for Start-ups abolished by UAE

On Monday, the UAE scrapped the minimum capital requirement of Dh150,000 for setting up a private sector company. This move, which encourages stimulation business start-ups and investment in the nation's ailing economy, was being awaited from quite some time now.

It was through a new decree issued by The President, His Highness Shaikh Khalifa bin Zayed Al Nahyan, that the latest amendment to the corporate law came into force.

Under the changed law, the prospective partners would be given the freedom to decide the capital requirements of their new company. The good thing is that they will no longer be bound to provide a bank guarantee of Dh150,000, as required by the previous law, for forming a company.

It should be noted that the capital requirement for setting up a limited liability company in Dubai was Dh300,000, twice as high as the national minimum.

A well known news agency reported: "The amendment of federal law number 8 of 1984 in regard to corporate law is aimed at reducing the cost of setting up new businesses. The move reflects the federal government's stance to boost the investment environment."

It added: "The amendment also aims to limit bureaucratic procedures, as the investor need not have to produce any bank guarantees to set up a business. It is hoped the move will benefit the small and medium-sized business sector and will promote innovation and the spirit of entrepreneurship among business leaders."