UAE made a historic decision in 2022 when it amended the Commercial Transaction Law, lowering the legal age to establish a firm from 21 to 18 years old (Federal Decree-Law No. 50/2022). The upcoming generation of entrepreneurs has responded actively to this significant change, which gives them an opportunity to start their businesses earlier and make use of such a supportive entrepreneurial environment.
The amendment is significant because it gets rid of the restriction that blocks aspiring young entrepreneurs from pursuing their goals before the age of 21. It also creates new chances for people who would not have been able to launch a business because of the existing legal age restriction. The new effort has been praised by the business sector as an outstanding way to bring in more talent and investments to the UAE. This law revision seeks to assist the expansion of SMEs in the UAE.
In this light, it is relevant to analyze the additional conditions that this law revision has added to allow those under 21 to access the world of entrepreneurship. Particularly, there are three main conditions comply with. Firstly, a financial guarantee should be provided by the entrepreneur’s guardian (which also implies his/her permission). Secondly, the appropriate education and knowledge to establish a business. Thirdly, the legal procedure related to the business’ registration and form apply. These three cumulative conditions are logical and not excessively time consuming.
What are the implications of this law revision?
Firstly, a significant increase in the number of businesses should appear. This is because a certain age range (from 18 to 21 years old) now have the chance to start a business. Indirectly, an increase in companies also means an increase in job availabilities and a reduction of unemployment.
Naturally, the rise of startups implies the rise of innovation, creativity and fresh ideas. These young entrepreneurs will generally dive into untraditional fields, leading to a more diverse and competitive national economy.
Additionally, an impact that is often neglected is the ability of the youth to take part in succession planning. This allows for a long-term continuity of existing businesses. The future of family businesses is especially important in the UAE’s culture, where family businesses is very common (60% of the country’s GDP).
On a professional level, this law revision will provide youth with an opportunity to grow as entrepreneurs and to acquire the knowledge and expertise required to flourish in the business sector.
The decision to revise the legal age of launching a business in the United Arab Emirates, is an encouraging move that should strengthen the economy of the nation and promote more young people to pursue entrepreneurship. It enhances the UAE’s standing as a Middle Eastern center for entrepreneurship and offers additional chances for SME growth and innovation.
The UAE is securing the economic and social future of its youth by facilitating their journey into entrepreneurship, equipping them with the necessary resources and training. Consequently, this presents a prime opportunity for young individuals to initiate their business ventures within the United Arab Emirates.
BY Egli HAXHIRAJ, Anamaria MESHKURTI, Jonida GJUZI and Noor ALI.
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