Positive Amendment in minimum Share Capital Requirement for Hamriyah Free Zone
The Hamriyah Free Zone Authority has come up with a positive step to attract more investment. All Free Zone companies (FZC) and Free Zone Establishments (FZE) which will be incorporated, with effect from October 2009 are no longer required to meet the minimum capital requirement of AED 150,000.The move had been broadly welcomed as a method of increasing investment into the Free zone by supporting small and medium sized enterprises and reducing the administrative procedures of establishing a new company. It can potentially also lead to an increase in domestic, as well as, foreign investments.
The erstwhile minimum capital requirements were popularly viewed by investors, more as a procedural hurdle, rather than as a means of creditor protection. As per the previous regulation, a new company which was under incorporation was required to produce a bank certificate confirming the capital amount that had been duly deposited. Once the company was licensed, the money deposited as capital could simply be withdrawn. This superfluous requirement has now been abolished. An investor may now deposit capital as per their business needs, without having to adhere to any specific minimum amount.
This amendment has been greeted by the local business community as a step to assisting entrepreneurs to establish new businesses and it will also speed up the entire incorporation process.
(This article has been compiled by Stany Pereira, Partner and Jawhar A., Free Zone Coordinator)
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