Hamdan bin Mohammed approves the controls, conditions and procedures for establishing companies by government agencies in Dubai
His Highness Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, Crown Prince of Dubai and Chairman of the Executive Council, affirmed that the process of developing the legislative environment for the emirate will continue to serve its strategic objectives, and ensure the creation of the space for various business sectors within the various disciplines, and ensure equal opportunities and balance between the institutions of the public and private sectors within the framework of The partnership that has always united the two sides in the process of development and comprehensive development in Dubai, which is based in its essence on solid foundations, taking into account the data that help the two parties to this exemplary partnership to reach the highest levels of success.
His Highness said: "Pursuant to the vision and directives of His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, may God protect him, regarding creating the best conditions necessary to encourage various business sectors in Dubai, stimulate investment and attract more new investments, efforts are continuing." Developing an integrated legislative structure that supports the private sector in Dubai and ensures the balance of opportunities available to it on the basis of full transparency and good governance, in line with the best international practices in this regard .. We are keen on the private sector to continue its role as a partner in promoting the future of the national economy and achieving sustainable development. We shall not delay in giving its institutions all possible space to carry out their activities with ease and ease within a legislative framework that safeguards their interests and helps them achieve the highest levels of excellence.
His Highness added: "We also want the government sector to be a model to be emulated in preserving resources and rationalizing their employment, and to ensure the feasibility of all the steps it takes, especially those of an economic nature, and in line with the wise leadership's vision for the future of the government sector and its contributions ... as not." We want it to compete with the private sector, but rather complement it, as it has been for decades, given the value of this integration in accelerating access to the goals set for the future of the comprehensive and sustainable development process in Dubai. "
This came on the occasion of the issuance of His Highness the Crown Prince of Dubai, Chairman of the Executive Council of the Emirate of Dubai, Council Resolution No. (23) of 2020 approving the controls, conditions and procedures for establishing companies by government agencies in the Emirate of Dubai, which was issued in implementation of Decree No. (1) of 2019 regarding the regulation of incorporation Companies by government agencies in the Emirate of Dubai. The issuance of the decision comes with the aim of organizing the establishment of these companies through codifying the controls and procedures that government agencies must adhere to in this regard, and in line with the best global practices in force in this regard, and ensuring that government agencies focus on exercising the competencies assigned to them by law, and providing the desired services Including, as well as ensuring that the public sector does not compete with the private sector in conducting economic activities in the Emirate of Dubai, except in cases required by the public interest.
The decision also aims to open the way for the private sector to actively contribute to the development of the national economy, achieve sustainable development, encourage growth and investment in various fields, and ensure good governance for companies that are established by government agencies, in a manner that ensures their economic and financial viability, and creates added value For the emirate and the beneficiaries, in addition to ensuring that the profits of companies established by government agencies are employed in achieving the comprehensive development goals in Dubai, and providing the public treasury with financial resources that enable the government and government agencies to improve the standard of living in the emirate and provide the desired services efficiently and effectively.
The provisions of this resolution apply to companies that are established by government agencies whose annual budget is part of the general budget or the budget attached to the government, and its provisions do not apply to companies that are established by government agencies specialized in investing government funds, and that operate on commercial basis, as well as companies Which are established by the authorities supervising the special development zones and the free zones, including the Dubai International Financial Center, and the activities of the companies covered by the provisions of this resolution must be limited to the production and provision of goods and services of a commercial nature, which are directly related to the competencies of the government agency established for them under the applicable legislation .
Regulations for establishing companies
The decision specified a number of controls that must be taken into account when establishing the company, namely: That the basic activity of the company to be established is directly related to the main competencies entrusted to the government agency under the legislation in force, and that this activity has a positive impact on sustainable development plans in the Emirate of Dubai, and that the company's goal is to produce and deliver Goods or services of strategic importance to the emirate or the state, and that applicable legislation stipulates or calls for the public interest to produce and provide those goods or services by the government agency.
The regulations for establishing the company also include that the private sector is unable to produce, provide and provide goods or services to the public in a competitive manner with high quality and acceptable prices, and that the public interest requires government intervention to enhance competition, achieve welfare, and provide good or service in a sustainable and high quality manner, as well as providing There are multiple options for the public, and that the analysis of the competition between the public and private sectors shows that the production and provision of the good or service is feasible for the company, and does not negatively affect the private sector.
The mechanism of establishing companies
According to the decision, the government entity, when it wants to establish the company, must follow several steps and procedures, including: List all goods or services that can be provided to the public through affiliated companies, and evaluate them in a manner that ensures the enhancement of the quality of those goods or services, the efficiency of their production and provision, and the raising of the analysis The Department of Finance, accompanied by a comprehensive study supported by documents, data and statistics, includes everything related to the establishment of the company, and includes in particular: a statement of economic feasibility behind the establishment of the company, a ten-year financial planning for the company, performance indicators of the company to be established and targets, and the proposed capital for the establishment The company, its financing methods, the statement of the distribution of shares, the percentage of its participation in it in case the company is to be established in partnership with others, and the proposed legal form of the company according to the forms specified in Federal Law No. (2) of 2015 regarding commercial companies and its amendments, and the definition of the company's activities and objectives, And determine the person with whom the government entity wishes to establish the company, whether it is a natural or legal person, his nationality and the extent of his financial solvency And his previous experiences, and an analysis of public and private sector competition conducted by the government agency, to show the extent of the impact of the company to be established on the private sector.
The decision stipulated that the Finance Department, in coordination with the General Secretariat of the Executive Council of the Emirate of Dubai, undertake the review of the study prepared by the government agency, to verify the extent of the need to establish the company, whether by the government entity alone or in partnership with others, and to determine the best options available in this regard, provided that This review includes an analysis of the competition of the public and private sectors, and this analysis is conducted in accordance with what is specified in this decision, and the Finance Department, in coordination with the General Secretariat of the Executive Council, submits a report containing their recommendations regarding the establishment of the company to the Chairman of the Executive Council of the Emirate of Dubai or his first deputy, to take the appropriate decision. In order to approve the incorporation of the company or not, and in the event that the establishment of the company is approved, the government entity, in coordination with the Finance Department and the Legal Affairs Department of the Government of Dubai, completes the incorporation procedures with the competent authority in accordance with the legislation in force.
Competition analysis and cycle
According to the decision, and in coordination with the General Secretariat of the Executive Council, the Finance Department studies and evaluates the analysis of competition between the public and private sectors that the government agency conducts, to determine the feasibility of producing and providing the good or service by the company to be established, and the extent to which it achieves the public interest. Enabling the government to determine the preference for the production and provision of a good or service directly by the government, by that company, or by the private sector.
After establishing the company, the government entity must conduct a competition analysis periodically, at a rate of once every three years as a maximum, in order to ensure efficiency and sustainability, and submit the results of this analysis to the Finance Department, for review in coordination with the General Secretariat of the Executive Council of the Emirate of Dubai, provided that it is The companies covered by the provisions of this resolution are subject to all applicable federal and local legislation, including legislation regulating commercial companies, competition, bankruptcy, good governance, public-private partnership and the financial system.
Corporate obligations
Executive Council Resolution No. (23) of 2020 obligated the companies established pursuant to its provisions, with a number of obligations, namely: the application of the rules of fair competition with other companies owned by the private sector, so that they do not enjoy any preferential advantage resulting from being fully or partially owned by the government agency, And to ensure the sustainability of its financial resources, so that after its incorporation it does not receive any financial support from the government, and that the prices it charges cover the total cost of the goods it produces and the services it provides, in addition to a fair return that achieves a reasonable and acceptable profit margin, and that the company enjoys complete financial independence from the government agency. Of the company, so that no government assets are mortgaged or restricted in the name of the company, or obtain loans with the guarantee of the government entity’s assets or funds, and not to abuse the monopoly or the dominant position in the pricing, production, distribution and other processes, because it is able to act independently of the normal restrictions That can be imposed by competitors, suppliers and consumers.
The companies established under the provisions of this resolution must also commit themselves to not competing with companies owned by the private sector, or negatively affecting the competition and the attractiveness of the investment environment in Dubai, and to pay all taxes, fees, prices, tariffs and other financial allowances decided under the legislation in force on commercial companies, And federal and local legislations that regulate commercial companies or that govern their activities and business, and coordination with the concerned authorities in providing job opportunities for state citizens, while the decision specified rules for pricing the goods and services provided by the company, and a mechanism for following up on their annual performance.
Company termination
According to the decision, with observance of the provisions of the legislation in force in the Emirate of Dubai, the companies covered by the provisions of this decision shall be terminated through liquidation, sale or merger by a decision issued by the Chairman of the Executive Council of the Emirate of Dubai or his first deputy, based on the recommendation of the Finance Department and the General Secretariat of the Executive Council, and after coordination With the government agency to which the company belongs, based on annual performance reports and analysis of competition between the public and private sectors, in specific cases: the financial unsustainability of the company, its incurring financial losses or its inability to compete in the market, and it is proven that the company competes with the companies owned by the private sector, The negative impact of the company's existence on competition and the attractiveness of the investment environment in the emirate, the company's deviation from its basic objectives, and the absence of the main purpose of establishing the company. The government entity to which the company belongs, which is decided to terminate in accordance with the provisions of the decision, and in coordination with the Finance Department, must set a clear and specific time plan that does not exceed two years, to cancel the registration of the company with the competent authority, dissolve it and liquidate it.
The companies belonging to government agencies subject to the provisions of this decision, and existing at the time of its implementation, must adjust their positions in accordance with its provisions within two years from the date of its implementation, and the Director General of the Finance Department issues the necessary decisions to implement the provisions of this decision, and any text in any other decision is canceled to the extent that it conflicts It is with the provisions of this decision, and it will be published in the Official Gazette, and it will come into effect one month after the date of its publication.