This Insight has been prepared as a guideline in relation to the incorporation of a company trading in gold (the “Company”) in the Dubai Multi Commodities Centre (the “DMCC”), Dubai, United Arab Emirates. It provides a general overview of the procedure and requirements for the setup and looks at the anti-money laundering requirements in relation to the operations and chain of supply of the Company. The publication outlines also an estimate of the total costs and time taken for the incorporation of the Company, Gold Dubai Multi Commodities Centre DMCC.
Incorporation Process of a Company Trading in Gold
The incorporation procedure is divided in to the following three (3) stages: The Pre-Approval Stage, the Registration Stage and the Licensing Stage.
The Pre-Approval Stage
In order to incorporate the Company under DMCC it is integral to first attain a pre-approval by submitting a Pre-Approval (name reservation) Form to DMCC. This form reserves the name of the company and enables DMCC to carry on due diligence on the individuals of the Company. The Pre-Approval and name reservation usually takes five – seven working days.
Once the Pre-Approval Stage has been completed, the Registration Stage shall come into play. For this stage, the relevant documents should be submitted to DMCC within six weeks of receiving name reservation.
This is the final stage and requires the tenancy contract to be submitted. Once this stage is completed, the applicant will be furnished with a “Trading License” – the activities covered by the license would allow the Company to trade in all types of physical gold within the DMCC Free Zone and with other countries – outside the UAE without any restrictions.
If it is desired to trade within the UAE (other than within the DMCC Free Zone or outside UAE) then there are two main methods for doing so:
- To trade directly with an LLC company that has an import/export license. As part of the terms of trade they would clear any goods through customs; or
- The Company may enter into an agreement with a logistics company that would clear the goods and deliver them to the mainland.
Signing of Tenancy Contract and Office Space
Once submitted it would take another ten (10) – twelve (12) working days to receive the Trade License and other constitutional documents of the Company.
Jumeirah Lakes Towers (the “JLT”) is the area in which offices for DMCC companies are made available for sale and/or rent. Approximately 29 buildings are available to accommodate commercial clients. Offices spaces may be “fitted” with ceiling/flooring (and perhaps partitions) or can be in a “shell and core“(bare/empty) condition.
Opening of Bank Account
Before the expiry of the Provisional Approval and Bank Account Opening Letter, the bank accounts of the Company should preferably be opened. Once they are opened, the share capital should be deposited and the letter request from the bank confirming the share capital is deposited should be submitted to DMCC.
Although it is required that the submission of completed and signed tenancy contract and bank letter will result in the issuance of the Trading License of the Company, in stances where the bank account takes a lot of time to open, the license can be issued on the basis of the tenancy contract and share capital request undertaking letter.
Immediate Steps Post Incorporation
Standard Documents to be Submitted
Within thirty (30) days of receiving the Trade License, the following documents have to be submitted to DMCC:
- Original stamped specimen letterhead
- Company seal/stamp
- Auditor’s letter of appointment
Certificate or NOC from the Department of Protective Systems
Since the Company will be trading in physical gold, it is required to attain either a NOC or a certificate from the Dubai Police Department of Protective Systems to satisfy the department of the security systems that have been placed in the office.
Compliance with DMCC guidelines on conducting due diligence and management on responsible supply chain
The Company is strongly required to follow the guidelines of DMCC in order to carry out risk based due diligence in the gold and precious metals supply chain. The DMCC guidelines (which are based on the matter of OECD) require companies to comply with and follow the following steps:
- Establishing robust company supply chain management systems to ensure that existing due diligence and management systems of companies in gold and precious metals supply chain are adequate to conduct effective due diligence on the company’s supply chain. One of the integral requirements is to appoint a compliance or risk officer (supply chain officer);
- Identifying and assessing the risks in the supply chain to ensure that the companies in gold and precious metals supply chain should use strong management system to identity and assess the risks associated with gold and precious metals which they produce, distribute, transport, export and/or purchase. Conducting a risk assessment on each part included in the supply chain from the mines to the company including suppliers, exporters and transporters (mined/recycled gold and precious metals) using a risk based approach;
- Develop and implement a risk mitigation/control plan to control the identified risks in order to mitigate any adverse implications;
- Carry out independent third-party audit to ensure that the gold and precious metals company is abiding by the standards appearing in the DMCC guidance; and
- Report annually on supply chain due diligence.
Visas are issued to the applicants based upon the area of the office (office space) taken up, for e.g. one (1) visa per 10 square meter (“sqm”).
Estimated Cost for the Setup of a gold company
The total estimated DMCC incorporation cost for the setup of the Company is USD 8,900. In particular the Trading License of the Company would cost around USD 5,561 (included in the total incorporation cost) and is renewable every year.
In addition to the licensing cost, there are one off preparation charges charged by the DMCC.
In addition to the charges of DMCC, on the operation costs side, besides the yearly license renewal and yearly rent; the electricity, water and air-conditioning (district cooling) payable would cost approximately USD 250 per month.
DMCC Guidelines on OECD Management on Responsible Supply Chain
DMCC has issued the practical guidance to assist DMCC licensed members and non-members within the UAE’s gold and precious metals industry on the implementation of the OECD guidelines on conducting due diligence and developing a risk management framework for responsible supply chain management of gold and precious metals when sourcing from conﬂict-affected and high risk areas.
The guidance provides a common reference for all actors in the supply chain on a step-by-step basis to ensure responsible sourcing and chain of custody of the gold and precious metals and to eliminate the risk of direct or indirect support to any kind of conﬂict in accordance with international standards.
A five (5) Step Framework for risk based on due diligence in gold and precious metals supply chains has been created. These steps are: Establishing robust company supply chain management systems (1); identifying and assessing the risks in the supply chain (2); developing and implementing a risk mitigation/control plan (3); carrying out independent third-party audit (4); reporting annually on supply chain due diligence (5).
lecocqassociate provides professional company incorporation and corporate administration services in Malta, Switzerland and the UAE.
This newsletter is for information purposes only. It does not constitute professional advice or an opinion. Please contact Hooriya Qazal Rajput at email@example.com