Delegate authority for smooth management of company

Delegation without supervision is also risky. Make sure that there are a minimum of two persons to complete one transaction where work of one can be overseen by the other.

Q: We have a trading LLC in Sharjah for items for furniture manufacturing. Now we are planning a backward integration to enter into manufacturing of these items. Please let me know the procedure. - FF, Dubai.
A: Manufacturing is a complete different activity compared to trading. To secure a manufacturing licence one needs to apply for the same as the trading licence does not entitle manufacturing. Before granting the said manufacturing licence the authorities would require that you have a sufficient rented or owned premises suitable for the manufacturing of the desired item/s. You would need to furnish the process of manufacturing and the layouts of the plans for the machinery, electricity drawings, waste disposal, etc. If any hazardous items are used in the manufacturing process or the end product itself is fire prone than you would also need to comply with the requirements of the Civil Defence. Authorities usually will do inspections of the site as the work progresses for granting the approvals. Initial application will have to be made to the Economic Department, which can grant you provisional approval. An amendment has to be made to the memorandum of the LLC to incorporate the change or inclusion of the additional activity in the licence. On the fulfilment of the department's requirements the department shall issue the manufacturing licence after payment of the relevant fees.
Q: I have a building material trading company in Dubai. Most of the materials are sourced from China and the Far East and a little from Europe. I have to travel considerably to find new products and suppliers. Business is running fine though I am not able to supervise fully the management affairs and I am afraid that some undesired thing may happen. How can I ensure that my company is managed as desired even in my absence? - SJ, Dubai.
A: As the business grows it is virtually impossible for a single person to run and manage the show efficiently. Delegation of the authority will be required to ensure that work is completed in a planned manner as per the policy of the management. Delegation without supervision is also risky. Make sure that there are a minimum of two persons to complete one transaction where work of one can be overseen by the other. It is advisable that an internal audit is done as you have very limited time to supervise and manage. Such internal audit can be done by either hiring an experienced team in the company or hire an external audit firm which can continuously or periodically monitor the organisation working and report to you for any deviations on the company's policy and also report on the various risks. Internal audit function in an organisation also helps in keeping the company personnel be watchful as they are aware that mistakes or fraud can be caught by the internal audit team.
Q: We are a group based out of Algeria. We act as agents to supply materials. Materials are mostly sourced from China and to some extent Europe for customers in Africa. Goods are directly shipped from China to the customer and we get our commission. We would prefer to have an entity in a tax free country like the UAE. Please let us know a cost effective solution to form a UAE entity. - AK, Dubai.
A: As your entire business pertains to direct shipments and your company will not do business in the UAE I think that a UAE offshore setup will possibly suit you. Setting up a UAE offshore company is much more cost effective than setting up any other type of company in the UAE, however, local business is not permitted. There are four free zones, which offer offshore company setup; you may choose any one. You can also have bank account of such offshore company in a UAE bank. Online banking facility is available with most banks hence you can access your bank account from any place.
The writer is partner at Crowe Horwath, UAE. You can send your business queries to him at Views expressed are his own and do not reflect the newspaper's policy.

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