The landscape of business setup in the UAE has undergone a giant leap by allowing 18-year-olds to become company owners. The revised Commercial Transaction Law (Federal Decree-Law No. 50/2022) has come into effect, reducing the legal age for anyone to start a business in the UAE. The business community has lauded the new move as a great initiative to attract more investments and talent into the UAE.
The benefits of lowering the age restrictions for company incorporation in the UAE are many. Business setup consultants in Dubai can advise young entrepreneurs on how to start a company in the country. Keep reading to know why the revision of the legal age marks the dawn of a new era in the environment of company incorporation in the UAE.
What Does the Revised Law Say?
As per Article 18.1 of the Law, “everyone reaches 18 calendar years of age and has no legal impediment, shall be eligible to practice the trade.” Apart from that Article 18.2 of the Law says “the minor, whether or not subject to conservatorship or guardianship, who reaches 15 calendar years of age, may trade on the terms and conditions issued by the resolution of the Cabinet, based on the proposition of the Minister of Economy.” This marks a significant change as previously the minimum age for becoming an entrepreneur in the UAE was 21 years old.
Impact on the Landscape of Company Incorporation in the UAE
Lowering the age requirement to 18 is likely to attract more youngsters into becoming business owners in the UAE. The forward-looking reforms are expected to usher in a new era in the following way:
More Youngsters to Contribute to the Economy
The new Law provides more opportunities for young entrepreneurs as an 18-year-old can become a shareholder in a UAE business. They can also become the sole owner and director in a Limited Liability Company (LLC) for which no guardian signature is required on the Memorandum of Association (MoA). Young entrepreneurs can generate substantial profits from a young age in a wide range of industries including tech, entertainment or any other sector. Giving youngsters the opportunity to open their own businesses in the UAE will attract talent, and capital and will give a big boost to the growth of the economy as a whole. Business setup consultants in Dubai can provide more information on the law.
Eases Succession Planning for Family Businesses
The new UAE Commercial Transaction Law is likely to ease succession planning for family businesses. As per reports, family-owned businesses contribute 50 per cent of the GDP and 80 per cent of its workforce. They also account for 90 per cent of the companies in the UAE. However, nearly 38 per cent of AUE family businesses are still chaired by the first generation, while 47 per cent are run by the second.
A meagre 15 per cent are managed by third-generation or later. The revision of the minimum legal age for owning a business in the UAE could significantly change this gap, allowing more youngsters to chair family businesses. We can also expect directorship and management changes in many family-owned companies in the UAE in line with the new change.
More Number of Startups can be Expected
Innovation is likely to get a big boost as more youngsters join forces to build the economy of the country. Youngsters as young as 18 can bring more innovative ideas to the table. It may usher in an increase in the number of startups in the UAE. As per the statistics by Startup Blink, the UAE is a leader when it comes to the startup ecosystem in the Middle East. The UAE startup ecosystem is ranked at number 27 globally and shows a negative momentum – 2 spots since 2021. The amended Commercial Transactions Law will significantly improve the UAE’s position as a global startup ecosystem.
How can Business Setup Consultants in the UAE Help?
As more youngsters enter the economy, they need the right to advice to clear the roadblocks in their path. Highly experienced business setup consultants in Dubai such as Jitendra Business Consultants (JBC) are in a better position to offer sound advice to young entrepreneurs. A 21-year-old company like JBC can show the right path for the young blood in terms of choosing the right licensing authority (free zone, mainland or offshore), selecting the business activities etc. We can also make them comply with mandatory regulatory requirements related to corporate tax, VAT, AML-CFT, UBO, ESR etc. Choose JBC for starting a business the right way.