UAE Laws and Islamic Finance

Laws of the UAE and Islamic Finance

Exploring Sharjah Free Zones

 

 

Sharjah Airport FZE (SAFE):  http://www.saif-zone.com/intro.html  Sharjah is the third largest Emirate in the UAE and could be considered an industrial suburb of the Emirate of Dubai.  The emirate is devoted to mainly industrial activity and contributes nearly half of the UAE’s industrial GDP.  The current Ruler of Sharjah is H.H. Dr. Sheikh Sultan bin Mohammed Al Qassimi.  It is the only UAE Emirate with ports on the Arabian Gulf’s west and east coast with direct access to the Indian Ocean (Port Khor Fakkan and Port Khalid), and an international airport.  A modern highway connects both coasts (Port Khalid and Port Khor Fakkan) to the SAFE zone thereby enabling companies to have access to the “Sharjah Link.”  The 120 KM road transfer can save up to 48 hours shipping time as well cut freight and insurance costs for both importers and exporters.  Sharjah’s strategic location in the center of the UAE makes it an ideal hub for industrial activity and in fact has been so for the past 65 years. 

The SAFE free zone is located adjacent of the Sharjah International Airport, has approximately 3900 companies currently operating out of it, and possesses all the usual benefits applicable to UAE free zones as well as a no deposit customs policy for cargo in transit between Sharjah Seaports and the SAFE zone.  The SAFE zone also has back-up services provided by the Sharjah Chamber of Commerce and Industry, Sharjah Expo Center, and over 40 international banks.  Sharjah International Airport dominates the charter operations sector and handles more export volumes than any other airport in the Middle East region. In fact,   Lufthansa Airlines, which runs its second largest cargo hub out of Sharjah after Frankfurt, operates 360 flights and moves more than 48,000 tons of cargo out of Sharjah per month.[1]  Sharjah airport has cargo airlines operating to 42 Commonwealth of Independent states and 32 Indian and Far Eastern destinations.

Facilities for manufacturing, assembling, packaging, import, re-export, trade and value-added activities are provided for at SAFE.  All types of services and activities are permitted within the SAFE zone except those restricted by law.  Currently, companies in the SAFE zone are operating in aviation, manufacturing, services, and trading.  In addition, the SAFE zone has a 24 hour hotline for hire of equipment and cargo movement.

SAFE zone provides temporary storage, bunkers and container parking, as well as four different sizes of pre-built warehouses in addition to the temporary 82 square meters warehouses offered for immediate customer use.  The warehouses can be used for storage and distribution, assembling and packaging, and for light and medium industrial use.  In addition, the free zone provides fully serviced and furnished executive offices with reception and secretarial services as well as leased land for unrestricted private development.  Office sizes start from 21 square meters and rentals are inclusive of utilities and parking. 

There are four types of licenses available in the SAFE zone: Industrial, Commercial, General, and Service Licenses. There are four possible company vehicles within SAFE: Free Zone Establishment, Free Zone Company, and Branch of Foreign Company.  In order to set up the Branch Office, the investor needs to have a company already registered in the UAE or overseas including offshore.  In terms of the Free Zone Companies and Establishments, both vehicles are separate legal entities and provide limited liability. 

An incorporator(s) must have a minimum capital of 150,000.00 AED in order to apply for company incorporation within SAFE.  In order to apply for company incorporation, one must submit a complete application and project outline to the Sales and Marketing Department.  Once an approval letter is obtained, the investor then must pay the lease amount and sign the lease agreement with the Sales and Marketing Department.  The investor will then obtain the license, lease agreement and keys of the leased premises.  Permits and licenses can be issued within 24 hours.  Depending on which company vehicle the investor would like to incorporate, the following documents are required to submit: Application Form, Project Summary, Passport Copies of Owners/Managers; Certificate of Incorporation of Registration; Memorandum or Articles of Association; Board Resolution to open a branch in the SAFE zone and Power of Attorney Appointing Person in Charge; Bank Statement of Account for the last three months; Balance Sheet for the last two months; Local Auditor Letter; and Statement of Minimum Capital Requirement. 

Hamriyah FZE: The Hamriyah Free Zone, also located in Sharjah, has all the usual benefits applicable to UAE free zones in addition to having its’ own port. Additional advantages include: 25 year renewable land leases; pre-built warehouses and office units for lease; furnished executive office suites; international business center; on-site accommodation for investor’s employees; highly developed infrastructure and telecommunication’s link with three sea ports (Khalid, Khor Fakkan and Hamriyah); cheap energy costs, and an affordable cost of living.  

Port Khalid offers the following advantages: Equipped with 13- berth deepwater facilities; Handles a wide variety of tonnage ranging from tankers, container vessels, Ro-Ro ships, pure cargo carriers, reefer ships, passenger ships, heavy lift ships, jack up rigs, bulk carriers, and traditional dhows; Equipped with a modern container terminal; 24 hour operational port, container/freight station/ distribution center and a Ro-Ro terminal; at the forefront of offshore/onshore oil-related activities; leading Ro-Ro port in the Middle East for vehicles; A host of shipping services including ship repair facility; Public user cold stores; Customs bonded stores; Dedicated warehousing facility, Temperature controlled storage facilities; Support bases on Sharjah Creek; and Efficient customs clearance facilities.[2]

Port Khor Fakkan offers the following advantages: Connected to Port Khalid, the airport and Hamriyah Free Zone by a modern highway; 4-berth facility served by 10 container gantry cranes, Close to main east-west shipping lanes and outside the straits of Hormuz; Hub Port for trans-shipment traffic into the Arabian Gulf, Indian Sub-Continent, and CIS countries; Transit Cargo represents over 75% of the cargo handled; All port operations controlled by online Advanced Container Management System (CMS) and interface conversion programs developed to integrate CMS with various shipping lines worldwide; and Repair facilities at Khor Fakkan Container Terminal.[3]

Furthermore, through the Emiri decree issued on November 12, 1995 regarding the establishment of the Free Zone, investors are guaranteed security of investment and full repatriation of capital and investments. 

All activities are allowed except those prohibited by law.  There is no requirement to add-value to products and investors can use Hamriyah free zone merely to ship goods in and out of the country.  The Sharjah Chamber of Commerce provides assistance to international investors in the Hamriyah Free Zone.  Investors whom are exporting goods require Chamber membership in order to get the Certificate of Origin from the Chamber and membership can be arranged through the Free Zone Authority. 

In order to open a bank account in the UAE, a business/ investor is required to submit the following: An introductory letter by the Hamriyah Free Zone Authority; Submission of a copy of the Hamriyah Free Zone License; A copy of the Sharjah Chamber of Commerce Registration Certificate; A copy of the Power of Attorney of the Authorized Signatory Regarding Bank Operations; and A copy of the Company Registration Certificates.   The documents must be attested by the UAE Embassy in the parent country followed by attestation by the Ministry of Foreign Affairs in the UAE.

The types of licenses issued by the Hamriyah Free Zone include: Industrial; Commercial; Service; and Conditional National Industrial Status for Industrial License Holders.  The types of company vehicles available in the Hamriyah Free Zone include: Branch of a UAE Company; Branch of an International Company; Single Shareholder Free Zone Establishment; and Multi-Shareholder Free Zone Company. 

Free Zone Establishments and Companies are limited liability entities.  A Free Zone Entity must have only one single shareholder while the Free Zone Company must have a minimum of two shareholders and a maximum of five shareholders.  The minimum capital requirement is 150,000.00 AED with the Free Zone Establishment shares in multiples of 150,000.00 AED and the Free Zone Company shares in multiples of 1000.00 AED.  No shares may be transferred without the prior approval of the Hamriyah Free Zone.  For both entities, there should be at least two Directors and one Secretary.  If a foreign national is appointed as a Director or Secretary, that person must hold valid residence and work permits for the UAE.  At least one of the Directors and the Secretary must be resident of the UAE.  The Secretary and Director can be the same person.  Both entities must abide by the Implementing Rules and Regulations, which is equivalent to the Articles of Association. 

In order to incorporate a Free Zone Company or Establishment, if an individual applicant, one must submit the following: Personal Details of the Shareholder/Shareholder (Passport Copies); Banker’s Reference (Original); Appointment of Manager and specimen of his or her signature (Original/Notarized); Appointment of the Negotiator and Specimen of his or her Signature (Original/Notarized).  If a Company Applicant, one must submit the following: Certificate of Registration/Good-Standing of the Company (Notarized); Articles of Association (Notarized); Board Resolution of the Company to own the Free Zone Establishment/Company (Notarized); Bank References(Original); Appointment of Manager and specimen of his or her signature (Original/Notarized); Appointment of the Negotiator and Specimen of His Signature (Original/Notarized). 

Then, the investor needs to submit the Application Form with the documents stated above.  On approval of the project, the Free Zone Authority will issue a letter to a UAE Bank so that the Investor can open an account in the name of the company and deposit the minimum capital.  On presentation of the Bank Certificate certifying the minimum capital requirement, the Free Zone Authority will then issue the Certificate of Incorporation.  The Investor then submits the Certificate of Incorporation to the Bank and can start using the Bank Account for business. 

*This information was taken from UAE Free Zone Investment Guide, Edition 2; Setting Up in Sharjah by Essam Al Tamimi and the following websites:

http://www.saif-zone.com/

http://www.hfza.ae/home.php

http://www.sharjah.gov.ae/

http://www.sharjahports.ae/porthamriyah/index.php

http://www.sharjah-welcome.com/

http://en.wikipedia.org/wiki/Sharjah_(emirate)


[1] UAE Free Zone Investment Guide, Edition 2, p. 74.

[2] Essam Al Tamimi, Setting Up in Sharjah, p. 99.

[3] Ibid p. 100.

1 Comment

  mohammad iqbal noor wrote @

sallam i am iqbal from pakistan i want to open cargo buessness in sharjah city small office how much invesment requre for this


Sorry, the comment form is closed at this time.

UAE Laws and Islamic Finance

Laws of the UAE and Islamic Finance

%d bloggers like this: