In September 2018, the Abu Dhabi Department of Economic Development (ADDED) had announced its first phase of the Dual Licenses Initiative. This enables the companies to carry out their commercial activities both in Abu Dhabi as well as in the Emirate’s free zones.
In this endeavor, Ras Al Khaimah Economic Zone (RAKEZ) introduced a Dual License. This allowed investors to operate in both the free zone and mainland, without setting up any additional office in the mainland. The new structure has been introduced by the economic zone in collaboration with Ras Al Khaimah Department of Economic Development (RAK DED).
Dual license holders will be able to distribute products and offer services in free zone as well as in mainland areas, with a free zone license issued by RAKEZ and a ‘branch of free zone company license’ issued by RAKDED. The unique dual license system entitles foreign investors a 100 percent ownership of their company and the eligibility to bid for government contracts. Holding a dual license for business can be a cost-effective way to obtain a trade license (for the mainland) while maintaining your free zone entity and the benefits associated with it.
RAKEZ Group CEO stated that they want to provide their clients with the best solutions. They introduced the dual license structure in order to offer them the best of both free zone and mainland benefits, without them separating a different company. Basically, this system increases the scope for a new market for their business and expands the ability to reach customers.
Benefits of having a dual license:
Cost-efficient as there is no requirement to set up an office in the mainland as well as bear the highly competitive costs involved in setting up the new entity
The time involved in establishing the mainland branch of the free zone company is usually quicker than establishing a new entity
Improved business developments, particularly where a mainland license may be required to contract with particular government entities
Reducing the risk of non-payment for mainland contracting
Expand operations in the UAE as the presence of a mainland entity may allow you to obtain more visas
The companies operating in the free zones do not need to appoint a local sponsor while availing the Dual License in Dubai mainland as the free zone itself acts as the National Service Agent (NSA) or sponsor.
The NSA will not have a shareholding right in the company’s mainland branch under the Dual License and will only function as the representative of the company. The NSA’s area of responsibility is limited to administrative and immigration matters.
The Dual License Initiative is undoubtedly a positive step that encourages businessmen and investors to expand their investments in Abu Dhabi, as a result of which, the advancement of economic development, prosperity and growth in Abu Dhabi will get a real shot in the arm. Previously, the Offshore companies were restricted and confined to the limitations under the Free Zone in which they were established.
The Dual License will be open to the companies that are headquartered in Abu Dhabi and its various Free Zones, including Abu Dhabi Global Markets (ADGM), Khalifa Industrial Zone (KIZAD), the Abu Dhabi Airport Free Zone, MASDAR also called Abu Dhabi Future Energy Company etc.
