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Watch a short video by Christine Maksoud, Associate, introducing the changes for the Dubai Creative Clusters Zone.
Dubai Creative Clusters Authority (“DCCA”) was initially developed with the goal of providing infrastructure for technology and media companies which promoted Dubai as one of the world’s most attractive cities for creative businesses.
In line with its mission of excellence and continuous growth, the DCCA has issued its 2018 Licensing Classifications Decision for the Dubai Creative Clusters Zone (“LCD”) which replaces Decision no. 1 of 2014 concerning license categories.
The LCD provides new compliance and licensing requirements as well as innovative Segments and Activities which accommodate the market needs and cater for new diversified businesses in the zone.
The LCD introduces two new compliance obligations that licensees need to be aware of:
Firstly, the mandatory requirement to prepare audited financial accounts. This is applicable for both free zone limited liability companies and branch offices who will be required to prepare and submit audited financial accounts for the 2018 financial year, and for subsequent years thereafter. This means that the first submission of audited accounts will need to be made in 2019.
Secondly, the mandatory requirement to maintain written confirmation of the ultimate beneficial owners (“UBO”) details at the licensees’ premises in the free zone. The UBO information must fully disclose the natural/ legal persons that are the ultimate owners/ controllers of the licensee, whether registered as a branch office or as a free zone limited liability company.
In addition to the new compliance obligations, we set out below a summary of the changes introduced by the LCD in comparison with the main earlier decision of 2014.
1. The minimum paid up capital for free zone limited liability companies’ generally is reduced to AED10,000 except for specific segments and activities.
2. A general obligation to abide by Dubai/UAE law such as obtaining any other permit, license or approval from such other regulator as may be required by the laws of Dubai and the UAE in general.
3. DCCA is now issuing licenses for non-for-profit entities and associations subject to obtaining the approval of the Community Development Authority.
4. A new “Property Holding Company” activity is allowed under the LCD, however, the licensee conducting the activity of a ‘Property Holding Company’ may not exercise any other activities in conjunction therewith. This is subject to any exemption granted by the DCCA.
5. Specific additional obligations on Executive Search /Operation Support / Event Management licence holders that were previously the subject of separate decisions are now covered under the LCD such as maintaining deposits or bank guarantee.
6. Social Media Platforms and Influencers are now subject to the registration requirements of the National Media Council (NMC) alongside other publishers and broadcasters. E-commerce businesses may be required to register with and follow the requirements of the NMC to the extent they are dealing in media-related content.
7. Licensees of the Dubai International Academic City must ensure that any advertising, public relations or similar publicity or awareness raising actions comply with the requirements of the KHDA.
8. Certain aviation activities such as aerial photography and video require additional Dubai Civil Aviation Authority licensing approval.
9. A licensee may (subject to the per segment limits set out in the LCD) include additional activities to its license from the same segment for no additional license fee.
10. A new Information and Communication Technologies Freelancer Segment is defined in the LCD such as web, mobile, software development and architecture freelancers, IT and telecommunication networking freelancers and customer service freelancers.
11. A new “social media influencer” freelancer activity is included in Dubai Media City.
12. Certain Food & Beverage (F&B) activities have been moved from the Service Providers segment to the Support Services segment to allow for new set-ups by DCCA free zone company and are as such no longer required to only be a branch of an existing DED licensee.
13. City Centre additional activities now included as a separate segment.
14. Hotel Segment is updated in line with latest Department of Tourism and Commerce Marketing classification. The Hotel licensing process is now regulated under the LCD.
15. In5 and SME programmes are now detailed in LCD. These were previously set out in separate decisions.
16. The extent of authority of the General Manager whose name shall be on the trade licence is now regulated under a specific schedule in the LCD. The relevant provisions provides for, amongst other matters, the method of determining the managers powers, the method for the resignation of the General Manager and the consequences of failure by the licensee to appoint a replacement.
17. The penalties provisions that were in a separate decision are now codified in a separate schedule in the LCD.
Our Corporate Structuring team will be delighted to advise you on the implementation of the new licensing requirements whether you are an existing licensee in the DCCA looking to ensure ongoing compliance with the LCD, or whether you are contemplating to set-up a new business in DCCA.
Associate, Corporate Structuring
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