He stressed that the decision guarantees that the public sector will not compete with the "private" in the conduct of economic activities in Dubai
Hamdan bin Mohammed approves the regulations for establishing companies by government agencies
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His Highness Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, Crown Prince of Dubai and Chairman of the Executive Council, issued Council Resolution No. (23) of 2020 approving controls, conditions and procedures for establishing companies by government agencies in the Emirate of Dubai, which was issued in implementation of Decree No. (1) for the year 2019 regarding the regulation of the establishment of companies by government agencies in the Emirate of Dubai.
Legislative environment
His Highness affirmed the continuation of the process of developing the emirate's legislative environment in a way that serves its strategic objectives, ensures the creation of the space for various business sectors within the various disciplines, and ensures equal opportunities and their balance between the institutions of the public and private sectors within the framework of the partnership that has long brought the two sides together in the process of development and comprehensive development in Dubai. Which is based in essence on solid foundations of 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, in the matter of creating the best conditions necessary to encourage various business sectors in Dubai, stimulate investment, and attract more new investments, efforts are continuing to develop An integrated legislative structure 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 best international practices in this regard.
His Highness stressed the keenness of the private sector to continue its role as a partner in promoting the future of the national economy and achieving sustainable development, saying: “We do not delay in giving its institutions all possible space to carry out their activities easily and easily, within a legislative framework that safeguards their interests and helps them to achieve the highest levels of excellence.”
Government sector
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 steps it takes, especially those of an economic nature, and in line with the leadership's vision for the future of the government sector and its contributions, and we do not want it as a competitor to the sector. The private sector, but rather complementary to 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.
Establishing companies
The issuance of the decision comes with the aim of organizing the establishment of these companies by 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 entrusted to them by law, and providing services It is also intended to ensure 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.
Apply the decision
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 .
Corporate obligations
Executive Council Resolution No. (23) of 2020 obligated the companies established under its provisions to a number of obligations, the most prominent of which are: Implementing the rules of fair competition with other privately-owned companies, so that they do not enjoy any preferential advantage resulting from being fully or partially owned by the government agency. And ensuring the sustainability of its financial resources, so that after its incorporation it does not obtain 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 entity Government entities belonging to it, so that no government assets are mortgaged or restricted in the name of the company, or obtain loans with the guarantee of the government’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 restrictions The normality 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 the 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, Federal and local legislation regulating commercial companies.
Crown Prince of Dubai:
"Continuing to develop the legislative environment to ensure equal opportunities and balance them between the public and private sectors."
Regulations for establishing companies
* That the basic activity of the company to be established is directly related
With the main powers entrusted to the government entity in accordance with the legislation in force.
* That the activity has a positive impact on the sustainable development plans in the Emirate of Dubai.
* That the company's goal is to produce and provide goods or services of strategic importance to the emirate or the state.
* That the applicable legislations stipulate or require the public interest for the production and provision of those goods or services by the government agency.
* 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.
* That the public interest requires government intervention to enhance competition, achieve prosperity, provide good or service in a sustainable and high-quality manner, as well as provide multiple options for the public.
* That the analysis of competition between the public and private sectors shows that the production and provision of the good or service is feasible for the company, and that it does not negatively affect the private sector.
Competition analysis and cycle
According to the decision, the Finance Department, in coordination with the General Secretariat of the Executive Council, studies and evaluates the analysis of competition between the public and private sectors that the government entity 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. Enable 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.
A comprehensive study before establishing the company
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 subsidiary companies, and evaluate them in a manner that ensures the enhancement of the quality of those goods or services, and the efficiency of their production and provision, and submitting the analysis to the Finance Department, Attached to it is a comprehensive study supported by documents, data and statistics, that 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 10-year financial planning for the company, performance indicators of the company to be established and targets, the proposed capital for the establishment of the company, and methods Financing it, stating the distribution of shares, the proposed legal form of the company, determining the company's activities and objectives, and the person with whom the government entity wants to establish the company, whether it is a natural or legal person, his nationality, his financial solvency and his previous experience, and the analysis of the public and private sector competition, to show the extent of the company's influence To be established on the private sector.
Termination of the company through its liquidation, sale or merger
According to the decision, the companies covered by the provisions of this resolution 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 entity to which the company belongs, based on reports Annual performance and analysis of competition between the public and private sectors, in specific cases: the lack of financial sustainability of the company, its incurring repeated financial losses or its inability to compete in the market, and the evidence of the company's competition for companies owned by the private sector, the negative impact of the company's presence on the competition and the attractiveness of the investment environment in The emirate, the company’s deviation from its basic goals, and the disappearance 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.