The notes from Dr. Hesham Fawzy, Legal Advisor at the Federal National Council of the UAE, regarding Article 10, Clause 2 of the Federal Law Project on Small and Medium Enterprises:
Federal Law Project Concerning Small and Medium Enterprises
Notes from Dr. Hesham Fawzy (Legal Advisor at the Federal National Council of the UAE) on Article 10, Clause 2
Facilities and Incentives
“For project owners and establishments enjoying membership of the program, they can benefit from facilities and incentives provided by the public and private sectors, including:
.2 Federal entities contracting with state projects and establishments by a percentage not less than 5% of the total contracts, to meet their procurement, service, and consulting needs, while considering the agreements to which the state is a party.”
Dr. Hesham Mohammed Fawzy: (Legal Advisor at the Council)
“Your Excellency President, there is a distinction between public joint-stock companies and companies in which the government holds at least 25% ownership. A public joint-stock company may have no government shareholding at all or the government may only hold 5% or 2% in it. In public joint-stock companies, shares are offered for public subscription and listed on the stock exchange. Therefore, the matter rests with the council. If it only wishes to include companies in which the federal government holds at least 25% to commit to a 2% share of its purchases from small and medium enterprises, then this is one part.
The second part concerns public joint-stock companies. Does the esteemed council want to require them to adhere to this percentage or not? This is permissible. If the council wishes to mandate this, there is a social role for ownership. You own but you must fulfill a social role so that capital is not exploited. Therefore, it is possible to bind them to a range of 2% to 12% of their purchases from small and medium projects. This is similar to the ownership in lease agreements not exceeding 5% annually, which is constitutionally acceptable. Now we have concluded with the issue of companies where the government holds at least 25%, and the question remains whether to add public joint-stock companies to this clause or not. Thank you.”
President:
“And what percentage of commitment do you propose, 2% or 5%?”
Ahmed Abdullah Al-Ammash:
“5%, Your Excellency President.”
President:
“Please, Advisor.”
Dr. Hesham Mohammed Fawzy: (Legal Advisor at the Council)
“Indeed, as Ahmed said, companies in which the government holds ownership may not be public joint-stock companies; they could be private joint ventures or investment companies. Therefore, it is more precise to say, ‘The commitment of companies in which the federal government holds at least 25% of their capital to contract with projects and establishments in the state by a percentage not less than 5% of total contracts, to meet their procurement, service, and consulting needs.’ Thank you.”
President:
“Does the council agree with this formulation?” (Agreement)
