The Business Environment in U.A.E.
UAE offers the business sector all the advantages of a highly developed economy. The infrastructure and services match the highest international standards, facilitating efficiency, quality and service.
Among the benefits are:
Free enterprise system.
Highly developed transportation infrastructure.
Top international exhibitions and conference venues.
High quality offices and residential accommodation.
Inexpensive Workforce and Easy Recruitment Procedures
Reliable power, utilities etc.
Great hotels, hospitals, schools, shops and Cosmopolitan lifestyle.
Obviously, the economic development strategy has been successful and the investment incentives, infrastructure, banking services, insurances and political and social stability created an excellent business climate.
The golden rule regarding companies being established in UAE is that they must have one or more national partners whose share in the company capital must not be less than 51% of the company’s capital.
Therefore, foreign investors wishing to establish business operations in Dubai engaged in most of the commercial business activities must do so with a partner who is a UAE national.
Those intending to establish service companies and/or branch offices, where 100% foreign ownership is permitted, are restricted to non-commercial activities.
Generally, all licenses are issued by the Dubai Economic Department (DED). However, licenses for some categories of business require approval from certain ministries and other authorities e.g.:
- Banks and Financial Institutions from the Central Bank of the UAE;
- Insurance Companies and related agencies from the Ministry of Economy and Commerce;
- Manufacturing from the Ministry of Finance and Industry;
- Pharmaceutical and Medical Products from the Ministry of Health.
More detailed procedures apply to businesses engaged in Oil or Gas Production and related industries.
Practicing some trade activities (e.g. Jewellery and Insurance) requires the submission of a financial guarantee issued by a bank operating in Dubai.
In general, all commercial and industrial businesses in Dubai should be registered with the Dubai Chamber of Commerce and Industry.
In the past, each emirate followed its own procedures governing the operations of foreign business interests.
In practice, however, Dubai and the other emirates followed the same general system, where foreign companies are operated in one of three ways: with a local sponsor, through a partnership with a UAE national or company, or through a private limited company or public shareholding company incorporated by Ruler's decree.
Since 1984, steps have been taken to introduce a codified companies law applicable throughout the UAE. Federal Law No. 8 of 1984, as amended by Federal Law No. 13 of 1988 - the "Commercial Companies Law" - and its by-laws have been issued. In broad terms the provisions of the Law are as follows:
The Federal Law defines seven categories of business organization which can be established in the UAE. It sets out the requirements in terms of shareholders, directors, minimum capital levels and incorporation procedures. It further lays down provisions governing conversion, merger and dissolution of companies.
Legal Structures for Business
The Federal Law stipulates a total local equity of not less than 51% in any commercial company and defines seven categories of business organization, which can be established in the UAE. It sets out the requirements in terms of shareholders, directors, minimum capital levels and incorporation procedures. The seven categories of business organization defined by the Law are:
- General Partnerships
- Simple Limited Partnerships
- Joint Participation (Ventures)
- Public Joint Stock Companies
- Private Joint Stock Company
- Limited Liability Companies
- Partnerships Limited with Shares
Out of these seven activities LLCs are more commonly used by the foreign investors.
Apart from these seven categories, FDIs are encouraged through Branches and Representative Offices of foreign companies and 100% foreign owned Professional Firms .
100% Foreign Ownership is permitted in the UAE Free Zones.
Steps followed for a UAE Company Formation:
- Name & Activity Approval
- Company License Registration with Article of Association (notarized in the court)
- Assistance with Funding of Paid Up Capital for the New Company
- Company Immigration / Labor Approval
- Arrangement of Local Sponsor / Partners
- Drafting of all Legal Documents for the Company Registration
- Assistance with Visas for Partners and Employees
- Assistance for Business Offices
- Assistance for new Bank Account