Dubai: Want to become an entrepreneur or have the next million-dollar business idea but are only a teenager? In 2023, the UAE slashed the minimum age requirement to start a business, making it easier than ever for young go-getters to chase their dreams.
Although the legal age has changed as per the Commercial Transactions Law - Federal Decree by Law No. 50 of 2022, there are other factors to consider, especially when it comes to attracting investors and navigating the business setup process.
Gulf News spoke to UAE-based legal experts to shed light on the legalites involved in starting a business young in the UAE and what you need to keep in mind.
What is the legal age to start a business in the UAE?
“The UAE has amended the age requirement for trading or business ownership to 18 years, a reduction from the previously required age of 21 years. Now, individuals aged 18 and older are legally permitted to establish, own, operate, and manage businesses in the UAE,” Ludmila Yamalova, who is the founder and managing partner of HPL Yamalova and Plewka DMCC, said.
Although the age to legally establish a business has been reduced, Yamalova highlighted that some nuances may come into play.
“For example, at 18 years old, you are not legally capable of signing a power of attorney, contracts, or legal documents. In this case, a minor’s guardian may have to execute contracts or POAs, on the minor’s behalf,” she said.
There are still some business activities 18-year-olds can conduct independently, that do not require a guardian's approval.
"Minors, who are at least 18 years old, but are below the UAE official age of majority, being 21, have more freedom to act on their own. For example, such minors can open their own bank accounts, without the approval of the guardian. They can also incorporate a company in their name, without guardian’s approval." Yamalova said.
The UAE has amended the age requirement for trading or business ownership to 18 years, a reduction from the previously required age of 21 years. Now, individuals aged 18 and older are legally permitted to establish, own, operate, and manage businesses in the UAE.
Can a minor under the age of 18 open a business in the UAE?
“Minors under the age of 18 years old, but who are 15 years old and above, can engage in trade, subject to particular approvals".
The nature of these approvals depends on the type of transaction, she explained.
"For example, if the minor wants to open a bank account, they need approval and sign-off from their guardian. Similarly, if the minor, wishes to be employed, they also require approval from the guardian, or if he or she wishes to dispose of a real property, registered in his or her name, this must often be done with the court’s approval."
Source – uaelegislation.gov.ae
Can I start crowdfunding my business idea as a minor?
If you are seriously considering setting up your own business, you will need cash flow to hit the ground running. But what are the options for a young entrepreneur to start raising funds?
With crowdfunding platforms being introduced in the UAE, to help boost small and medium enterprises (SMEs), you can start testing your business idea, and fine-tuning it, by pitching it to potential investors.
However, some crowdfunding platforms do have certain age limits regarding fundraising.
“It is important to note that most crowdfunding operators specify in their terms and conditions the minimum legal age required for individuals to engage in transactions and contracts pertinent to crowdfunding,” Lien Haroun, a legal associate at Mahmood Hussain Advocates and Legal Consultancy, said.
Haroun cited the example of Dubai Next, a crowdfunding platform introduced by the Dubai government, that offers children as young as 12 years old the opportunity to pitch a business idea and raise funds. However, the platform clearly states that children need their parent’s or guardian’s approval to be a part of Dubai Next.
It is important to note that most crowdfunding operators specify in their terms and conditions the minimum legal age required for individuals to engage in transactions and contracts pertinent to crowdfunding.
What if no minimum age is specified in terms and conditions?
If a crowdfunding platform does not clearly define the age requirement, then children, teenagers and their parents must look at the licensing authority for the website, as the minimum age requirements may differ accordingly, according to Haroun.
She added that the laws and regulations governing the crowdfunding practice in the financial-free zones are different from those applied in the UAE mainland.
“Therefore, a person wishing to participate in a crowdfunding project must refer to the relevant laws in each jurisdiction to determine the legal age required for participating in crowdfunding projects,” Haroun added.
- Securities and Commodities Authority (SCA)
- Dubai Financial Services Authority (DFSA) of Dubai International Financial Center (DIFC)
- Financial Services Regulatory Authority (FSRA) of Abu Dhabi Global Market (ADGM)
You should be able to find the licensing authority for a crowdfunding platform mentioned on the crowdfunding platform’s website. Unlicensed crowdfunding platforms are prohibited from operating in the UAE.
Legal age to start to start crowdfunding in UAE
Here are the minimum age requirements for crowdfunding as per each regulatory body, according to Haroun:
• UAE mainland – 18 years old, unless the courts allow a minor, who is under the guardianship or custody, and has attained the age of 15 years old to engage in commercial transactions.
• DIFC and ADGM (free zones) – 18 years old.
This article was originally published on December 12, 2022 and has been updated since.
