How to Setup Business in Dubai, UAE
Discussed below is a general overview on HOW to set up business in Dubai with Department of Economic development Dubai and all free zones across UAE including different forms of business structure.
Company registration with Department of Economic development Dubai
To date, there are at least quite a number of business structures/forms that are legally permissible to do business in Dubai, as provided for under the Federal Law No. 8 of 1984 as amended by Federal Law No. 15 of 1998 or otherwise known as the Companies Law of 1998. However, the discussion below is limited to the most commonly-used business structure/forms found in Dubai. The other forms or business structures will be discussed in detail in succeeding articles. Also, included herein are the list of the usual documents required in the application for trade/business registration, as adopted from Department of Economic Development – Dubai website.
I – Limited Liability Companies
This is the most preferred and widely used business structure that is appealing to foreign investors because of, among other things, the flexibility of its management structure, which has no restrictions as to who and what nationalities will manage the company. It is however required that, a minimum of 51% U.A.E. national ownership must at all times be maintained. However the UAE national partner has nothing to do with the expatriate’s business operations, profits and losses and he will charge fixed annual remuneration. This can be protected by a side agreement with two witnesses.
Documents needed for Registration of Business and Trade Name ( Limited Liability Company)
First: Documents required for Initial Approval
- Registration and licensing application, as well as proof of reserved trade name.
- Photocopy of applicant’s passport (together with residence permit / visa details for non-GCC states nationals).
- Photocopy of applicant’s naturalization identification for UAE nationals only.
- No-objection letter from the applicant’s current sponsor for non GCC nationals.
- Photocopy of the director’s passport, and no-objection letter from the director’s current sponsor.
- Permission from the court to practice business, for applicants under 21 years.
- Approval issued by other Government authorities according to the type of activity.
- The Company’s Board of Directors resolution to subscribe to the new company if the partner is an existing corporate entity in UAE or abroad (the resolution must be attested by UAE embassy / consulate or by a GCC state embassy / consulate and UAE Ministry of Foreign Affairs, and duly translated into Arabic).
Second: Documents required after getting the Initial Approval
- Initial Approval receipt
- All documents submitted before in order to get the Initial Approval.
- Photocopy of office lease including the plot number along with Ijari
- Original photocopy of the Memorandum of Association duly authenticated by the Notary Public
II – Professional Companies / Civil Works Companies
This kind of business structure generally allows a professional firm to be wholly owned by foreigners, save in cases of some sectors and activities which are restricted to either UAE nationals or at least imposes a UAE national shareholding requirement.
Professional firms may be in the form of a sole proprietorship or a civil company. Such firms may engage in professional or artisan activities but the number of persons that may be employed by such firms is limited. Further, a UAE national must be appointed as local partner for sole proprietorship, but she/he has no direct involvement in the conduct of the business except to assist in obtaining licenses, visas and labor cards for and in behalf of the Firm. The local partner is paid a lump sum amount accordingly. In cases where there are at least two or more partners, a Civil Works Company is created instead. It is also a must that all individuals directly connected therewith should have the relevant University level qualifications as to their field of business. Consultancy and service providers are among the most common forms of this structure.
Documents needed for Registration of Business and Trade Name (Professional / Civil Works Company)
First: Documents required for Initial Approval
- Registration and licensing application, as well as proof of reserved trade name.
- Photocopy of applicant’s passport (together with residence permit / visa details for non-GCC states nationals).
- Photocopy of applicant’s naturalization identification for UAE nationals only.
- No-objection letter from the applicant’s current sponsor for non GCC nationals.
- Photocopy of the director’s passport, and no-objection letter from the director’s current sponsor.
- Permission from the court to practice business, for applicants under 21 years.
- Approval issued by other Government authorities according to the type of activity.
Second: Documents required after getting the Initial Approval
- Initial Approval receipt
- All documents submitted before in order to get the Initial Approval.
- Photocopy of office lease including the plot number along with Ijari
- Contract of Professional Business Company duly authenticated by the Notary Public
- Appointment contract of Local Services Agent duly authenticated by the Notary Public in the Emirate for professional licenses of non GCC nationals.
III – Branch or Representative Offices of Foreign Companies
These types of business structures allows a foreign entity to wholly and completely own the branch or representative office provided that a UAE national is appointed as the local service agent, whose role is limited to administrative matters such as obtaining visas, licenses and dealing with local authorities. The local service agent is not entitled to share in the profits or losses of the business but is instead paid a fixed amount for the services rendered. The relations between the two parties shall be regulated by a service agency agreement and should not to be confused with a commercial agency agreement.
While a branch office may carry out activities similar to those of its parent company, however, there are certain activities that are restricted. A representative office on the other hand, may only act as administrative arm for and in behalf of their parent company’s head office but is not permitted to directly and actively carry out the business activities.
Documents needed for Registration of Business and Trade Name (Branch of Foreign Company)
First: Documents required for Initial Approval
- Registration and licensing application, as well as proof of reserved trade name.
- Photocopy of the director’s passport, and no-objection letter from the director’s current sponsor.
- Photocopy of the national agent’s passport & UAE naturalization identification.
- Approval from the Ministry of Economy & Commerce (commercial activities only).
- The Company’s Board of Directors’ Resolution authorizing opening of the branch in Dubai, duly translated into Arabic.
- Power of attorney issued in favor of the director.
- Main company’s Memorandum of Association.
- Photocopy of the main company’s certificate of Incorporation duly translated into Arabic.
- Approval issued by other Government authorities according to the type of activity.
Second: Documents required after getting the Initial Approval
- Initial Approval receipt
- All documents submitted before in order to get the Initial Approval.
- Photocopy of office lease including the plot number with Ijari
- The original appointment contract of national agent duly authenticated by the Notary Public (Engineering Consultancy Companies are excluded).
Company registration with Free zones across UAE
Foreign Investors who wishes to set up their businesses in Dubai must first consider the idea of having it within the so-called “Free Zone” areas scattered throughout the emirates. Not only for the practical reasons of not having to go through the legal and administrative complexities required for those establishing business outside of free zone areas, but also the substantial incentives and privileges it offers. While these “perks” may vary depending on what Free zone you are in, but basically the following are the most common items to be considered:
- 100% foreign capital ownership.
- Full repatriation of profits and capital is permitted.
- Exemption from corporate and income taxes for a certain determined period.
- Goods may be imported into the free zone, unrestricted and free of duty.
- No foreign currency restrictions.
- Exemption from local labour restrictions.
For Free Zone Areas, documents needed may vary depending on what free zone area one may intend to set up his business. Therefore, it is strongly advice to get in touch with the respective free zone authorities on this matter.
Free Zone Business Structures
Generally, there are at least three most common business structures found in these free zone areas.
First.
Branch or representative office- This does not require a minimum amount of capitalization provided they have a valid registration and license from the place where their parent office is located.
Second.
Free Zone Establishment (FZE)-If one partner only.
Third.
Free Zone Company- It should also have a board of directors, who must be residents of Dubai, consisting of a minimum of three and having at least two directors and one secretary.
Fourth.
Special Status Non-Resident Offshore Companies:
JAFZA , RAKIA and RAKFTZ offers offshore company formation. This types of companies are not allowed to conduct business within UAE. These types of companies can conduct international business outside UAE and can also own assets in UAE.
If you are looking for business setup consultancy, do not hesitate to send us an enquiry by clicking here, or call us directly on +971 -4-4542366.
