A Private Shareholding Company (Private Joint-Stock Company) is a partnership of 2-200 individuals. The minimum share capital for the private shareholding company is AED 5,000,000 in the business. A Private Joint-Stock Company can be created only for any commercial or industrial type of business and will not be possible to incorporate Professional activities.
A private shareholding company can be owned by partners of any nationality in accordance with Department of Economic Development business regulations. A business body can establish and own a private shareholding company and the term “private shareholding company” shall be annexed to the company’s name. At least 51% of a Company must be owned by UAE Nationals, and can be owed 100% by GCC nationals. The company must appoint a manager as per DED business regulations.
An approval from Ministry of Economy must be obtained to establish a private shareholding company. The Ministry of Economy has 3 phases of verification as below
Phase 1: Studying the application for establishing a private joint stock company
Duration: 15 days Approx
1. Original copy of certificate of trade name reservation and initial approval of the competent local authority.
2. Memorandum and articles of Association.
3. The economic feasibility of the project and the time period for implementation.
4. The spitting image of the UAE identity book for all the founders in case of natural persons, or mirror image. The origin of the commercial register in the event that the founders of legal persons.
Terms & Condition
1. The founders of the company shall not be less than 2 founders, except one Person Company which must be owned. To a single legal person owned by Malika for the citizens of the State.
2. That is not public floatation.
3. Company’s capital is AED (5.000.000) fully paid (100) %.
4. The nominal value of the share shall not exceed 100 dirhams and not less than (1) dirhams
5. In the case of entry in capital shares in kind, it requires the evaluation of the quota in kind by a house of expertise that the Ministry is considering.
6. The number of founders / shareholders shall not exceed (200) founder / shareholder
7. The share of the citizens of the State in the capital of the Company shall not be less than (51%).
8. Get the other approvals according to the nature of the activity required to practice.
9. A written acknowledgment by each member of the Board of Directors of the names of the companies in which he serves as chairman or vice president. Member of the Board of Directors or Managing Director of the Department and the date of filling each of these positions. (In case the Board is appointed. With the Memorandum of Association and the Statute, otherwise it shall be submitted at the election later)
Phase 2: Announcement of the establishment of a private joint stock company
Duration: 5 days Approx
1. Certificate of deposit capital in a bank operating in the State.
2. The Memorandum of Association is authenticated by the Notary Public and the Company’s Articles of Association as approved by the Assembly
3. Minutes of the general meeting of the Constituent Assembly approved by the President of the Assembly or the Board of Directors as the case may be and the Assembly of Votes
4. The Reporter of the meeting and the External Auditor.
5. Confirmation of receipt of the full capital by the external auditor
Terms & Condition
1. They need to obtain the preliminary approval of the competent local authority to establish the company, with the approval of the other parties according to nature
2. Activity required (insurance activity from the insurance agency, banking activity from the Central Bank of the UAE … etc) before applying to the Ministry.
Phase 3: Registration of a private joint stock company
Duration: 1 day Approx
1. Copy of the trade license
2. An acceptance from the Ministerial Decision by the Declaration of Establishment in the Official Gazette.
Terms & Condition
1. The application must be submitted within one month from the date of issuing the commercial license.
Whilst the shares of a Private Shareholding Company cannot be presented to the public, the business can be converted to a public shareholding company after two years or more from its creation, under provided terms and conditions:
The nominal value of the issued shares is fully paid up. A period of not less than two financial years has expired. During the two years preceding the application for conversion, the company achieved net profits distributable to the shareholders, the average value of which is not less than 10% of the capital. A resolution of the extraordinary assembly for the conversion of the company is adopted by a majority of shareholders representing at least three quarters of the company’s capital
The trade name should be reliable and in proportion with the commercial activity of the firm and followed by the phrase “Private Shareholding Company”.
The company can have more than one branch. Each may undertake one or all of the activities included in the main business license. Private shareholding company branches can be sold and waived to any party or company. The owner(s) can also change its legal form according to DED procedures.
This blog post is written by Mr. Ananth. Feel free to call our Business Adviser today for a quality consultation relating your queries. Please send inquiry to info[at]flyingcolour[dot]com or call +971 4 4542366.