Drafting mechanism on bank guarantee rules begins

Speaking to reporters yesterday, Dr Al Khazraji said that the bank guarantee committee of the ministry has been charged with the task of drafting the mechanism and the by-laws of the new Cabinet Order No 21 for 2003, which amends some of the bank guarantee provisions and exempts from the guarantee industrial establishments licensed by the Ministry of Finance, the national companies fully owned by locals, companies established by Federal or local governments, or those in which local governments are share holders.

Also exempted from the rules are companies in which 25 per cent of the employees are UAE nationals in addition to oil, gas, mining companies and establishments in the banking, tourism and hotels sectors, as well as the social welfare associations and bodies. The new rules will not cover the firms established under the employment projects for UAE youth.

The amended order reclassifies establishments to big, medium and small firms, wheras earlier there were five classes. Under the amendement, the big firms employing above 1,001 workers have to deposit a lumpsum of Dh500,000 covering their existing workers in addition to extra Dh3,000 for each new employee they recruit. The medium firms sponsoring between 101 and 1,000 workers have to pay a lumpsum of Dh300,000 in addition to Dh3,000 for each new recruit while small firms have to furnish Dh3,000 for each of their workers. The new order introduced an article allowing the ministry or the employees to request the court to order employer to pay up the bank guarantee.

Dr Al Khazraji said the by-laws for the implementation of the new changes will overcome the previous problems in the guarantee system implemented since 2001. "The ministry will overcome the shortage of employees needed to implement the new bank guarantee rules by introducing the most suitable, advanced and efficient computer software." he said.