As we like to say, "Trust, but check you must". That is why before you start working with any company in the UAE, you must ensure that your future partner is properly licensed and this license is not cancelled. This allows to avoid situations, when upon receipt of payment from you such company runs away.
The objective of this article is to guide you as to how to conduct due diligence on the companies based in the UAE. Tools and processes we share will be helpful irrespective of the fact if you are permanently based in the UAE or you reside outside of the country and cannot visit relevant government authorities.
Now let's start.
YOU DO NOT NEED TO BE A SHERLOCK HOLMES
You do not need to be a Sherlock Holmes to find out the status of a company incorporated in the UAE. There is a number of methods you can use and ideally combine all of them for your own security. It is important not only to place enquiries with local authorities but to resort to other mechanisms and tools that we will share with you below.
We suggest to take the next main steps:
1. check the status of company's license online via governments web-sites;
2. send written requests to relevant government authorities to confirm that company is registered;
3. request a UAE company to provide corporate documents and a copy of trade/service license;
4. request a UAE company to provide Certificate of Good Standing issued by local registration authority;
5. request a UAE company to legalize Certificate of Good Standing and stamp it at the Ministry of Foreign Affairs in UAE.
To complement above steps and to provide for a greater security, you can also includethe following in your due diligence process:
1. request recommendation letters from UAE company's clients and partners;
2. use internet to check information on the company, its management, business owners, employees and read reviews and testimonials of clients.
Now let's have a closer look at every suggested approach.
MAIN STEPS IN DUE DILIGENCE
If you and your UAE partner discuss cooperation, the partner shall be open to provide necessary documents for verification purposes. In such case scenario, you will not need to look for a registration or license number of this UAE company. Instead you can simply request to send you a copy of company's license. If your potential UAE partner does not wish to share this information, this must put you on guard. License does not contain any extremely confidential information. The document lists the name of the company, office address, registration number, license number and a full name of the manager of the company.
It will be also good to request a copy of company's MOA, a document which specifies business owners. Should you have any disputes with your partner-company in the future, you will know the names of individuals you will need to file a case against. If your future partner refuses to share a copy of MOA referring to confidential nature of the document, request him to arrange for a“List of shareholders”, which can be issued by authority, where company is registered. This document will specify company's shareholders and state number of shares they hold in the company. Licenses of certain free zones specify the names of business owners.
Should you have no copy of the license but know the exact name of the company and be aware of authority this company is registered with, status of the company and its license can be checked in the following manner:
1. if you are dealing with a local UAE company, such companies are registered by Departments of Economic Development of relevant emirates. Dubai companies can be checked online via the web-site of Dubai Department of Economic Development by entering company's name in respective search field,
2. if a company is registered in one of free zones, in most cases status of such company is not possible to check online. The alternatve will be to send a query to relevant registration authority by email, stating the name of the company and asking to confirm if the company is registered and if its license is active. If you are based in the UAE, you can also visit administration of relevant free zone in person.
If you represent a large organization and you are entering into agreement that involves high value transactions, request UAE company to obtain from its registration authority Certificate of Good Standing. This document is valid for a period of 3 to 12 months and proves that company is in good standing. In addition to the said certificate, request a license copy and a copy of company's MOA. One of three documents (license, MOA or Certificate of Good Standing) you shall request to legalize in the Ministry of Foreign Affairs in the UAE. If you see stamps of UAE MoFA on the documents, you may be sure that documents are valid and genuine. If you do not reside in the UAE, you may request UAE company to further legalize stamped document by the embassy or consulate of your home country in the UAE.
Once you completed steps we recommended in this section, you may be sure that UAE company is duly regisered, licensed and is in good standing.
ADDITIONAL PRECAUTION MEASURES
Even if you completed all above suggested steps and the company seems to be legitimate, it cannot hurt to take additional precaution measures and do further due diligence on the company.
If a company has testimonials and recommendation letters from clients, this demonstrates a high level of credibility of this company and gives you an indication that you can work / partner with this company.
As we are living in the era of technologies, internet has always been and remains a very affordable instrument for background checks. If a company was involved in any scams, disputes or illegal activities, there is 99.9% probability you will find this information on the internet. This information is always publiched in news, blogs and on forums.
We trust that suggested steps for due diligence will allow you to develop certain policies with respect to screening of UAE companies and minimize chances of fraud.
NOW LET'S SUMMARIZE
- If you plan to start working with a company from UAE which you never worked before with, verify this company and conduct due diligence.
- Check the status of the company and its license via web-site of a respective licensing authority.
- Send a query to relevant registration authority requestng to confirm if the company is registered and if its license is valid.
- Ask a company to send copies of its corporate documents, including a trade/service license.
- Request a company to provide a Certificate of Good Standing, a document issued by licensing authority. Ask a company to legalize at least the certificate in the UAE MoFA and the embassy/consulate of your home country in the UAE.
We are constantly working on publishing up-to-date practical material that helps businessmen to do business in the UAE and with UAE companies. You can find more of our articles in our INFOCENTER section on www.uae-consultants.com
P.S. IN LIGHT OF THE COMMENTS TO THIS ARTICLES POSTED BELOW:
Thank you all for your comments. I reviewed all of them and would like to share some of the thoughts I have in light of your feedback.
Some of you were disappointed not to find any links to the websites, where you could check everything online. Please bear in mind that as written in the article you first need to find out where the company you need to check is registered. In the UAE in general company may be registered with one of over 50+ authorities. As such, one of the reasons why no links are provided, is that it would take the whole page to do it. Additionally, web-sites of authorities DO NOT list companies' confidential corporate data. In other words, you will never find more than the legal name, office address, sometimes business activity and contact details of the company. In the UAE there is NO information on the shareholders, directors, managers, share capital and other confidential corporate information in the public domain. Therefore, the second reason why no links to registration authorities were provided is the absence of the information you are looking for on these web-sites.
If you still wish to find some basic information on the company and to check at least that the registration of the company did not expire, where the company is registered, how old is the company, which activities the company conducts, you can do so here:
In addition to this, there is a government entity Al Etihad Credit Bureau providing credit score and credit reports on individuals and companies. Please note that these reports can be issued solely upon the request of the person or entity, for whom report is required. As such, you will not be able to get a report without the consent of the other party.
Link to the web-site of Al Etihad Credit Bureau is below:
Hope you found this information of help.