Legislation Overview
- Title: Federal Law on Small and Medium Enterprises (SMEs) - Type: Federal Law - Issued Date: 04 Mar 2014 - Effective Date: 04 Jun 2014 - Sector: Economy and Business - Number of Articles: 51 - Status: Active
Summary
This Federal Law aims to develop and support small and medium enterprises (SMEs) in the UAE, making them a fundamental part of the country's economic development. It establishes the SME Council and a National Programme to coordinate efforts across government and the private sector to provide SMEs with technical, administrative, and financial support. The law also outlines various facilities, incentives, and obligations for SMEs to encourage their growth and competitiveness. (Federal Law on Small and Medium Enterprises (SMEs), 2014, Arts. 1-51) The legislation is significant as it formalizes the UAE's commitment to fostering an entrepreneurial ecosystem and promoting SMEs as key contributors to the national economy and employment. It aims to boost innovation, self-employment, and the UAE's position as a hub for startups and small businesses. (Federal Law on Small and Medium Enterprises (SMEs), 2014, Arts. 2, 7-8)
What is the scope and purpose of this law?
The purpose of this law is to develop small and medium enterprises (SMEs) in the UAE, making them a fundamental part of the country's economic development. It aims to encourage a culture of research, creativity, innovation, and entrepreneurship, as well as promote the competitiveness of SMEs to provide employment opportunities. (Federal Law on Small and Medium Enterprises (SMEs), 2014, Art. 2)
What are the key definitions?
According to Article 1, the key definitions in this law are: - "The UAE": The United Arab Emirates - "The Ministry": The Ministry of Economy - "The Minister": The Minister of Economy - "The Concerned Authorities": The local authority or entity in charge of applying the provisions of this law - "Enterprises and Establishments": Any sole company or establishment exercising an economic activity, whether small (including micro), or medium - "The Council": The Small and Medium Enterprises and Establishments (SMEs) Council - "The Programme": The National Programme of the Small and Medium Enterprises and Establishments (Federal Law on Small and Medium Enterprises (SMEs), 2014, Art. 1)
What are the main obligations and requirements?
The main obligations and requirements for enterprises and establishments under this law are: 1. Applying the facilities and incentives provided to their specified purpose (Federal Law on Small and Medium Enterprises (SMEs), 2014, Art. 15(1)) 2. Not changing the enterprise/establishment or transferring its title to another person/entity without approval of the Concerned Authority (Federal Law on Small and Medium Enterprises (SMEs), 2014, Art. 15(2)) 3. Maintaining transparency and disclosure to the Concerned Authorities (Federal Law on Small and Medium Enterprises (SMEs), 2014, Art. 15(3)) 4. Insuring the enterprise/establishment with an approved UAE insurance company (Federal Law on Small and Medium Enterprises (SMEs), 2014, Art. 16)
What are the rights and protections?
The key rights and protections granted to SMEs under this law include: 1. Access to credit facilities, promotion, and marketing support from the private sector (Federal Law on Small and Medium Enterprises (SMEs), 2014, Art. 10(1)) 2. Commitment from federal entities to contract with UAE SMEs for at least 10% of total contract values (Federal Law on Small and Medium Enterprises (SMEs), 2014, Art. 10(2)) 3. Commitment from companies with ≥25% federal government ownership to contract with UAE SMEs for at least 5% of total contract values (Federal Law on Small and Medium Enterprises (SMEs), 2014, Art. 10(3)) 4. Streamlining of licensing and land use procedures (Federal Law on Small and Medium Enterprises (SMEs), 2014, Art. 10(4)) 5. Allocation of exhibition space and provision of market information for exports (Federal Law on Small and Medium Enterprises (SMEs), 2014, Art. 10(5-6)) 6. Potential exemptions from customs tax and worker bank guarantees (Federal Law on Small and Medium Enterprises (SMEs), 2014, Art. 10(7-8))
What are the penalties for non-compliance?
This legislation does not specify any penalties for non-compliance.
How does this law interact with other UAE legislation?
The law references several other UAE federal laws, including those regulating: - Ministries and ministers (Federal Law No. 1 of 1972) - Commercial register (Federal Law No. 5 of 1975) - Industrial affairs (Federal Law No. 1 of 1979) - Commercial transactions (Federal Law No. 4 of 1979, Federal Law No. 18 of 1993) - Labor relations (Federal Law No. 8 of 1980) - Banking (Federal Law No. 10 of 1980) - Commercial agencies (Federal Law No. 18 of 1981) - Commercial companies (Federal Law No. 8 of 1984) - Civil transactions (Federal Law No. 5 of 1985) - Islamic banking (Federal Law No. 6 of 1985) - Trademarks (Federal Law No. 37 of 1992) - Securities and commodities (Federal Law No. 4 of 2000) - Money laundering (Federal Law No. 4 of 2002) - Commercial concealment (Federal Law No. 17 of 2004) - E-transactions (Federal Law No. 1 of 2006) - Insurance (Federal Law No. 6 of 2007) - Competitiveness (Federal Law No. 4 of 2012) - Notary public (Federal Law No. 4 of 2013) (Federal Law on Small and Medium Enterprises (SMEs), 2014, Preamble)
When did this law come into effect and what are the transitional provisions?
This Federal Law on Small and Medium Enterprises (SMEs) came into effect on 04 June 2014, three months after its issuance on 04 March 2014. (Federal Law on Small and Medium Enterprises (SMEs), 2014) The legislation does not specify any transitional provisions.
Source Documents
This article analyses Federal Law on Small and Medium Enterprises (SMEs) for legal research and educational purposes. For the purpose of interpretation and application, reference must be made to the original Arabic text. In case of conflict, the Arabic text prevails. This does not constitute legal advice.