Is your Dubai business licence expiring? Here’s why you should never let it run out

7 May 2019 Category :

Once you’ve set up your business in Dubai, you don’t want to lose it.

After all that administrative work to get your mainland registration with the Department of Economic Development (DED), or from one of the authorities in whichever of the 45+ free zones you’re based in, it might seem like you can finally just concentrate on the business.

But beware: you need to make sure you stay on top of your legal responsibilities. Because an expired business licence could undo your hard work and lead to critical problems for your company.

Here are four key points detailing why you need to remember to renew your business licence to avoid getting yourself into a difficult situation.

An expired business licence can lead your company to being fined

That’s right, you can face big financial penalties if you continue operating a company with an expired business licence.

First of all, the DED and other jurisdictions request that all licences are renewed before their expiry date or else you will have to pay a fine of approximately AED 200 for every month that it is outstanding. But it doesn’t end there. Because according to their rules and regulations, a business that continues working with a lapsed permit can also be liable for fines up to AED 5,000 – with another AED 250 added if the organisation again fails to renew business registration documentation and its licence within the specified time. Similarly, a rogue office established without permission that overlaps an existing business licence can potentially leave the investor open to a fine of AED 2,000 plus banking fines.

What this means for you as a business owner

As well as having to part with your hard-earned money, you will also have to answer questions about your situation and why you let your company get to the stage of getting fined. This is particularly problematic if you report to shareholders or investors, as letting your licence expire and risking financial penalties will almost certainly make you look unprofessional and irresponsible. You will not only have endangered the business, but will have put yourself at risk of repercussions too.

Your company can be blacklisted

If your business licence expires and you continue operating as a company (or fail to get a licence in the first place), you may not just face monetary consequences. You could also find your business is blacklisted.

Being blacklisted is a severe punishment that puts restrictions on all aspects of your operations, such as:

– The company’s transactional capabilities will be blocked.

– Visas could be invalidated and travel bans imposed.

– Sponsors could dissociate themselves from your company, leaving you without critical sponsorship.

– The owner, shareholders, directors and managers could even face deportation from the UAE.

What this means for you as a business owner

The good news is that there may well be a grace period allowing you to get your affairs in order and renew your business registration and licence. But if you still don’t comply with the requirements – and end up being blacklisted – you will find it very difficult to continue. You will find every aspect of your day-to-day activities are hampered and/or blocked completely and could even face the possibility of important people associated with the company having to leave the country. Which means it pays to stay on top of your legal responsibilities in the UAE and ensure you do not forget to renew your business licence.

Your expansion phase can be prohibited

There is a lot to think about when you start a business. Not only do you have to focus on finding clients and customers and making sure you provide them with what they need, but you also have a lot of administrative work to do in the background. Even if you are organised at the very beginning, chances are there will be things that get missed in a year or two as the work builds up.

In our experience, these factors play a big part in why SMEs and startups are the most susceptible to licence renewal problems.

Small businesses require annual licence renewals, making it tricky to manage and stay up-to-date because you have to do it so often.

If you are even a little late in renewing within the legal timeframe, your operations may be restricted and your company may not be allowed to expand in the future.

What this means for you as a business owner

When you’re a small business in the first few years of operation, even the minor challenges can prevent the kind of company growth and success you deserve.

Yet aside from the penalties we’ve already discussed, an expired business licence could also result in insolvency, rendering your business open to either voluntary or compulsory liquidation. Meaning it must be avoided at all costs.

An expired business licence could ruin your company

We know how difficult it can be to get a business off the ground and grow it successfully. It takes a lot of hard work, long hours and significant financial investment. So why risk everything by letting your business licence expire?

Make sure you know the expiry date and work in the time to get it renewed by the deadline. Designate someone in the organisation you trust to get it done or work with an external partner who can take the responsibility off your shoulders. Either way, keep your licence valid or your business will inevitably suffer and you could be at risk of losing everything.

Setting up your own business has never been easier. Virtuzone takes care of it all so you can focus on what matters – building your business. For more information about the VirtuFit licence, please call us on +971 4 457 8200, send an email to info@vz.ae, or click here.

Disclaimer

UAE laws and regulations as well as pricing related to company formation are subject to change without notice. While we produce our content on the basis of thorough research, we do not take any responsibility for the accuracy and reliability of the information provided on our website. Furthermore, responsibility for any information in external links lies solely with the operator of the third party website.

About the author: George Hojeige is CEO at Virtuzone

About the author: George Hojeige is CEO at Virtuzone

George Hojeige is CEO at Virtuzone. As CEO, George ensures the company maintains its position as one of the fastest growing business setup operators in the region. Born in Beirut, his family emigrated to Canada in 1986 where he grew up in the English-speaking suburbs of Montreal. A natural communicator and networker, George held sales positions in the telecoms industry and medical field in North America before moving to Dubai to run the family business in construction. Since then, he has taken on high-profile sales roles – including as Group Commercial Director at ITP Media Group, working on prestigious titles such as Arabian Business and Esquire Magazine. George graduated from Ecole Polytechnique de Montreal with a bachelor’s degree in Industrial Engineering.