21st February 2015
All construction and engineering companies setting up in Abu Dhabi are required to register their business through a process called Contractors and Consultants Classification. During the incorporation process, companies will be required to sign an undertaking letter to complete the registration process within 12 months of obtaining their Trade License. It is a mandatory requirement for such companies to be classified in order to renew their Trade License.
The purpose of the Classification registration is to ensure each company’s competencies, i.e. that they are experienced and qualified to meet the criteria for the category in which they wish to be classified. The ultimate aim is to ensure excellence and quality control.
There are two separate Classifications – one specifically for Contractors and the other specially for Engineering companies. However, each Classification is based on the same criteria, which covers the following:
- Experience Conditions (executed projects during the previous six years)
- Technical Conditions (number of specified staff (engineers & financial) with a pre-determined number of years’ experience.
- Other Conditions (ISO 9001, ISO 14001 and OHSAS 18001)
- Assets and Capital Value
For Contractors there are seven categories in which it is possible to Classify:
- Special Category enables participation in projects exceeding AED100,000,000;
- First Category enables participation in projects between AED60,000,00 and AED180,000,000;
- Second Category enables participation in projects between AED30,000,000 and AED100,000,000;
- Third Category enables participation in projects between AED10,000,000 and AED60,000,000;
- Fourth Category enables participation in projects between AED 8,000,000 and AED30,000,000;
- Fifth Category enables participation in projects AED10,000,000 or less; and,
- Sixth Category enables participation in projects AED7,000,000 or less.
For Engineers there are three categories in which it is possible to Classify:
- Special Category enables participation in projects valued at more than AED70,000,000;
- First Category enables participation in projects valued between AED20,000,000 and AED100,000,000; and,
- Second Category enables participation in projects valued at less than AED30,000,000.
The criteria for each category is different. To give two examples:
1) An engineering company registering in the Special Category:
- Experience Conditions – AED480,000,000 value of previously completed projects, none of which must be less than AED60,000,000, within the last six years.
- Have a minimum of five specialized, qualified engineers, with a minimum of 15, 15, 10, 10 and 10 years’ experience, respectively). These staff must all be visa’d in Abu Dhabi.
- Other Conditions – Demonstrate ISO 9001 certification.
- Capital Value – A minimum of AED4,000,000 in Abu Dhabi.
2) An engineering company registering in the Second Category:
- Experience Conditions – N/A
- Have a minimum of two specialized, qualified engineers, with a minimum of 10 and 4 years’ experience, respectively). These staff must be visa’d in Abu Dhabi.
- Other Conditions – N/A.
- Capital Value – A minimum of AED2,000,000 in Abu Dhabi.
In addition to meeting the various criteria for the specific Categories, it is necessary to complete an application form, supply various paperwork relating to the conditions in certain formats and also an audit in Arabic conducted by a locally-registered auditor.
How to reduce the impact of the above Classification requirements
For engineering companies setting up as a Limited Liability Company (LLC) it is possible to reduce the requirements, as follows, when partnering with an Emirati engineer:
- Reduces the need for one of the engineers, thus saving a visa, monthly salary and benefits package for a highly-paid qualified engineer.
- Reduces the Capital Value requirements as follows:
- Second Category – AED2,000,000 is totally waived
- First Category – AED3,000,000 is reduced by 50%
- Special Category – AED4,000,000 is reduced by 50%
Partnering with an Emirati engineer can make a significant impact financially. Gateway Group has an Emirati engineer and therefore we are well positioned to save you money, as well as guide you through the Classification requirements.
How much does Classification registration cost?
There are no fees payable to the Classification team, which forms part of Abu Dhabi’s Department of Municipal Affairs. However, it should be noted, that for companies wanting to Classify in the higher Categories which need to demonstrate previous completed projects, there are a significant amount of paperwork requirements, and if the projects have not been completed in the UAE and the paperwork therefore is not in Arabic, it will be necessary to arrange attestations in the countries where the projects were completed, prior to arranging legal translations into Arabic and stamps from the Ministry of Foreign Affairs here in the UAE. From experience, due to the size of documents, the fees for translations and attestations can be costly.
How long does the Classification registration process take?
This depends how quickly the applicant can arrange the required paperwork. From experience it is advisable to start the process early, allowing sufficient time for the attestations, especially if overseas.
What is the validity period of Classification registration?
Classification registration lasts for two years. At that point it will be necessary to renew the application.
Is it possible to change Classification categories once registered?
Yes, providing all of the criteria is met.
Is it possible to avoid Classification?
To avoid Classification registration, the activities on the Trade License should avoid activities that are construction and engineering-related which have been highlighted as requiring Classification.
Related Blogs that you may be interested in:
Complete guide to starting a company in Abu Dhabi CLICK HERE
How to choose a local sponsor in Abu Dhabi CLICK HERE
For sponsorship, company formation and assistance with your Classification registration when setting up your onshore construction and engineering company in Abu Dhabi, contact Gateway Group of Companies. Email us at: info@GatewayToAbuDhabi.com