Many fake trade license cases are getting the attention of authorities in many regions, including the UAE. These fraudulent licenses mislead investors and customers. It can lead to serious legal and financial consequences. That’s why verifying a trade license is really important before doing any business.
Here in this blog, you will learn about the trade license verification, why it’s important, and how to verify it easily online through official portals like the Department of Economic Development (DED).
What is a Trade License?
The Department of Economic Development (DED) or the relevant Free Zone Authority. This License is just like a permit that allows a business to operate legally in the UAE. It confirms that a company follows all the local regulations, commercial laws, and zoning guidelines.
Types of Trade License in the UAE
These are trade license that authorities issues to businesses according to their activities:
- Commercial License
- Professional License
- Industrial License
- Tourism License
Why is Trade License Verification Important?
These are the reasons why trade license verification is important:
- Helps Verify Business Legitimacy: Trade license verification confirms a business’s authenticity. It is legally registered and permitted to operate.
- Protects Consumers and partners: A valid trade license confirms that the business is following health, safety, environmental, and zoning regulations.
- Prevent Legal and Financial Issues: If you are Operating a business without a valid license can lead to penalties, fines, or business shutdowns.
- Help in due diligence and Partnerships: It helps in verifying partners, suppliers, or investors, and smooths out the due diligence process before entering into contracts or financial arrangements.
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How to Verify a Trade License Online?
Follow this simple step by step guide to do trade licnese check online in UAE:
From Dubai (DED) Trade License Verification
- Visit the Dubai Economy (DED) website.
- Go to “License Information Verification” or “Business Activity Search”.
- Enter the trade License Number or Business Name.
- View the business details for verification.
Trade License Verification UAE
For businesses that verify multiple vendors and suppliers can use Trade License Verification API. It helps connect businesses to verify business licenses, status, and ownership information.
Common Issues Found During Trade License Verification
- License Expired or Not Renewed: The Trade License has only one year of validity; businesses need to renew this license every year. Any delays in renewal can lead to license expiry and penalties.
- Incorrect License Number: Any mistake in entering the license number or other business details may result in “no record found”. Make sure to carefully double-check each spelling and digit while submitting details.
- Change of Ownership Not Updated: In case the business owner has changed, it must be updated in the records. An old owner’s name showing during verification can cause rejection in audits or renewals.
- License Suspended Due to Non-Compliance: Non-compliance with UAE laws or unpaid renewal fees may lead to suspension.
Legal Consequences of Operating Without a Trade License
Operating a business without a trade license can lead to several legal consequences, including fines, penalties, and business closure.
- Fines: Businesses can face fines of AED 5,000 to AED 50,000 if a business is found operating with an expired license or no valid license in the UAE.
- Business Suspension / Closure: The business can be closed or suspended if it is operating without a valid business license.
- Reputational Damage: While less quantified in legal documents, sources clearly state that operating without a valid license results in loss of credibility with customers, partners, banks, and may block participation in tenders.
Conclusion
As fake trade license news is increasing day by day, verifying it is extremely important. It helps to do business with the fake entity and associated financial and legal losses. You can verify this license from the DED portal and with the Trade License Verification API. Operating a business or doing business with an entity that does not have a trade license can result in fines and reputational damage.
FAQs
Ques: What is a trade license, and who issues it?
Ans: It is an official authorization from a local government. It gives permits to individuals and businesses to conduct a specific business in an area.
Ques: Is a trade license mandatory for all types of businesses in India?
Ans: No, it is not mandatory for all types of businesses in India.
Ques: Why is trade license verification important for businesses?
Ans: It confirms that business is legitimate and follows the necessary safety guidelines.
Ques: Can I check my trade license validity online?
Ans: Yes, you can check the trade license from the state municipal corporation website.
Ques: What is the validity period for a trade license?
Ans: It is valid for one year and must be renewed annually before its expiry date.
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