As time passes by, the UAE government keeps making positive changes and other improvements to benefit the different business sectors. Not long ago, the UAE government approved crowdfunding in both the public and the private sectors in the country. Since it is a significant matter, we will provide you with the information you need to stay up-to-date with news like this.
In this article, you will learn everything you need to know about the crowdfunding announcement made by the UAE government. You will also discover how this matter can influence your business if you own a company in the country. Plus, here you can also find interesting information to make improvements in your company to make it more profitable. Let us observe:
- What is the new UAE Cabinet’s announcement about?
- How does crowdfunding work and how would it be implemented in the UAE?
- How many benefits can crowdfunding offer?
- What should you know about the UAE Cabinet’s strategy to regulate crowdfunding?
- What is the UAE System for crowdfunding platforms operators?
- How can Connect Resources help you?
1. What is the new UAE Cabinet’s announcement about?
During the final Expo 2020 Dubai Cabinet meeting, His Highness Sheikh Mohammed bin Rashid Al Maktoum made an important announcement. The Vice-President and Prime Minister of the United Arab Emirates announced the authorization of crowdfunding in the public and private sectors. And the main purpose of this initiative will benefit these business sectors significantly in the short or long term.
Crowdfunding in these business sectors has the main goal of financing new projects, according to Sheikh Mohammed bin Rashid. He also assures that this is an effective method to secure funding for innovative business or commercial ideas. Furthermore, the Prime Minister of the UAE also states that this method would also help young people and new entrepreneurs.
There are several aspects that we must mention in order to understand how the new crowdfunding system will work. Besides, you will surely desire to know how it will support the financing of small and medium-size commercial projects. Therefore, keep reading below to find more interesting information about this important strategy made by the UAE Cabinet.
2. How does crowdfunding work and how would it be implemented in the UAE?
As you may know, crowdfunding is a method used to raise money to finance a variety of businesses and projects. Usually, the fundraisers can collect said money from many people via online platforms that were developed for this purpose. It is indeed an innovative and modern method of sourcing funding for new business ideas and projects. Besides, it also enables interactions between the crowd and the fundraisers.
As for how it works, there can be crowdfunding campaigns that offer incentives to motivate the crowd to donate money. For example, some of the most incentives are special access or pricing at the launch of a particular product. On the other hand, it is vital for fundraisers to set a clear goal during the setup process of a crowdfunding campaign.
The fundraising goal is usually the amount of money that is necessary to start working on the desired project. And you should also know that this method can eliminate the back-and-forth that there usually is between entrepreneurs and investors. In fact, entrepreneurs can seek financial support from the crowd by taking their offers directly to them. This significantly reduces the waiting period between having an idea and raising the funds to work on it.
Now that crowdfunding for the private and government sectors is allowed, the strategy should cover all technical aspects. And these aspects are related to the regulation of crowdfunding platform operators, which includes definitions, the scope of application, and more. Plus, it is also associated with the following aspects:
- Operator licensing requirements.
- The operator’s obligations towards SCA and investors.
- Financing applicant obligations.
- The rights of the investor, the operator, and the financing applicant as well.
3. How many benefits can crowdfunding offer?
As we mentioned before, crowdfunding can be an excellent way to introduce a venture’s overall mission/vision to the target market. Besides, an active crowdfunding campaign is also a free and uncomplicated way to reach multiple channels as well. And in most cases, crowdfunding platforms involve social media mechanisms, which makes it easy to get referral traffic to the website. It also applies to other social media pages.
Therefore, it allows entrepreneurs to present their businesses and products and share the message and also the purpose behind them. Furthermore, entrepreneurs can use crowdfunding campaigns to pre-sell their products while raising money to take their projects off the ground. And lastly, it can also be used to gauge user reaction and analyze the market before launching a new business idea.
3.1. Which are the most popular crowdfunding platforms?
Some of the most popular international platforms that are used for crowdfunding are GoFundMe, Patreon, Indiegogo, SeedInvest Technology, and more. Mightycause and StartEngine are some other popular online platforms that people can use to raise funds. But, in the UAE, there are three main platforms that you can use, which are Beehive, Eureeca, and DubaiNext. This last one was launched by the Dubai Government.
4. What should you know about the UAE Cabinet’s strategy to regulate crowdfunding?
There are many other important strategies related to the crowdfunding initiative that His Highness Sheikh Mohammed and the Cabinet approved. As they approved the crowdfunding for the private and government sectors, they also approved the Crowdfunding Platform Operators strategy. In addition, these other strategies were approved in order to improve those business sectors:
- The Collective Labour Disputes Committee.
- The UAE Gender Balance Council.
- Protection of worker’s rights.
- The Cooperatives Law.
- The Community Farming initiative.
- A new National Strategy for Nursing and Midwifery professions.
- The National Child Protection Policy.
4.1. The Collective Labour Disputes Committee
One of the main elements that the UAE Cabinet recently approved is the Collective Labour Disputes Committee. As the authorities stated, it will be chaired by Dr. Abdulrahman Al Awar (the Minister of Human Resources and Emiratisation).
As for its purpose, this new committee will have one main goal, which is to consider disputes referred by the Ministry. However, it mostly focus on disputes in which the number of workers exceeds 100.
4.2. Protection of workers’ rights
Besides the crowdfunding initiative, the Cabinet also approved new federal legislation and a system for work injuries. With this system, it will be possible to protect the private sector workers’ rights in case they get hurt on duty.
As for the federal legislation, it will specify the mechanism for reporting and investigating the injuries. It will also state how injured workers should receive their compensation in these cases.
4.3. About the new Cooperatives Law
There will be also a new Cooperatives Law, which will adopt the basic principles of cooperatives based on international standards. Besides, this new law will also include the establishment of new types of cooperatives. For example, some of them are digital, financial, professional, and many others.
Furthermore, it will also permit the inclusion of cooperatives in the many financial markets, according to specific conditions and standards.
4.4. About the Community Farming initiative
And the UAE Cabinet has also approved this new initiative that targets social welfare categories. For instance, it targets divorced women, widows, the elderly, and also people of determination.
As for its main goal, the Community Farming initiative aims to provide greenhouses that include different spaces for the beneficiaries. This way, it will make it possible to maintain food security and also the sustainability of resources. In addition, it will support family cohesion and increase income as well.
4.5. The National Child Protection Policy
With this new policy, it will be possible to ensure a healthy learning environment for children in educational institutions. The Cabinet approved it in order to protect children from all forms of harm. It will ensure the implementation of child protection measures in all educational institutions in accordance with the legislation in the UAE.
4.6. The National Strategy for Nursing and Midwifery professions
On the other hand, you will also find another new strategy, which is related to the nursing and midwifery professions. Its main goal will be to enhance these professions and their sustainability.
In this way, it will be possible to ensure proper planning of the nursing and midwifery workforce. And it will be in terms of recruitment and retention in response to the priorities and needs.
4.7. About the UAE’s Gender Balance Council Strategy 2022 – 2026
Finally, you should also be aware of this new strategy that the UAE Cabinet approved recently. The UAE’s Gender Balance Council Strategy will involve four main pillars, which are economic participation, wellbeing, protection, and entrepreneurship.
On the other hand, this strategy aims to further reduce the gender gap that there is across all business sectors. It will enhance the country’s ranking in global competitiveness reports regarding gender equality. Also, it will help achieve gender balance in leadership positions and promote the country’s status as a benchmark for gender legislation.
5. What is the UAE System for crowdfunding platforms operators?
The UAE Cabinet appointed the Securities and Commodities Authority (SCA) as the authority responsible for the regulation of crowdfunding activities. Therefore, the Cabinet has approved the UAE System for Crowdfunding Platforms Operators, which was designed to carry out these activities. It will cover every technical aspect that we previously mentioned, which are the following ones:
- Definitions and scope of application.
- The operator licensing requirements.
- The operator’s obligations towards SCA and investors.
- Financing applicant obligations.
- And the rights of the investor, the operator, and the financing applicant as well.
In addition, this strategy will also address supervision, inspections, and penalties related to this new crowdfunding initiative.
On the other hand, the Cabinet has also approved another important decision regarding this affair. And that decision is about establishing a general secretariat for the Emirates Development Council and a federal law. This law will be about the approval of a supplementary budget to the federal budget of the country for the fiscal year 2022.
As we mentioned before, the Cabinet will also establish the Collective Labour Disputes Committee. It will be chaired by the Minister of Human Resources and Emiratisation, Dr. Abdulrahman Al Awar.
6. How can Connect Resources help you?
If you require more information about the new crowdfunding strategy that the UAE Cabinet implemented, we can help you. Our specialists will provide you with the information you need to understand it and get its benefits for your business. Connect Resources can also provide you with different HR services to help your company achieve its goals in the UAE.
For example, in case you require to process visas and other legal documents, you can request our visa and government services. With them, you will be able to obtain all the legal paperwork you need to stay compliant with the law. Make sure to get in touch with our team to get more information about our different business and support services.
Would you like to contact our team to obtain more information about crowdfunding for the public and private sectors? If you have any questions, please call us at +971 43 316 688. Additionally, firstname.lastname@example.org is another way to reach us.
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