Overview of Mainland Limited Liability Company (LLC) Formation in United Arab Emirates
The Limited Liability Company in the UAE is one of the more predominant types of business structure in the UAE.
Following are the important points to be understood for LLC legal structure.
- Forming an LLC company in Dubai or any other emirates of the United Arab Emirates requires a minimum of two and a maximum of 50 shareholders.
- UAE nationals must own at least 51% of the firm’s equity while a foreign investor must not own more than 49%. Of firm’s equity.
- All liabilities of a company are limited to the company only under this legal structure. Shareholders are personally not liable for the company’s liabilities.
- The required minimum capital to form LLC in Dubai Mainland Company is AED 300,000. However, the required minimum capital in the other Emirates Mainland Company is AED 150,000. This share capital can be increased.
- The distribution of profit or loss can be agreed upon while the responsibility of managing of LLC can either be vested on the UAE national or ex-pat shareholders or even a third party. Shares of LLC are neither open for public subscription nor can they be issued as negotiable.
- LLC is not allowed to offer insurance, business banking, or money investment services on behalf of others. In addition, these shares cannot be represented as negotiable instruments.
- Though foreign equity in the company does not exceed 49%, profit and losses can be shared at a ratio different from the share capital distribution.
- Any legal commercial activity can be set up as LLC in Dubai Mainland.
- Branches of an LLC can be opened within the same emirate or in other Emirates jurisdictions.
- Day-to-day operations including banking operations can be managed by the manager appointed in MOA which is notarized in public notary. In most cases, the actual investor becomes the manager of the company. The company’s manager appointed by MOA is fully responsible for any misconduct or fraudulent activities taking place in LLC.
- A Limited Liability Company can enjoy credit facilities from banks and other money-lending institutions subject to credit approval from the respective lender.
- There are also special licenses issued by the Department of Economic Development. Approval from relevant authorities may be required for certain activities. These bodies include the DHA, KHDA, RTA, DTCM, and Dubai municipalities among others.
- It is mandatory to rent an office or shop in order to incorporate an LLC. However, the Dubai DED has recently approved instant licenses were renting an office was not required. Mainland Companies in Dubai can also be now registered on Desk facilities (Sustainability Centers) for certain activities.
- Trading LLCs are allowed to conduct business within the emirate as well as export and import goods freely.
- All ex-pat shareholders are eligible to get a residence visa valid for 3 years subject to a minimum holding AED 72000 share capital in the company. Expat shareholders can also sponsor his or her family, parents, and made subject to fulfillment of documents.
- Any number of employees can be recruited in LLC subject to fulfilling requirements from the Labour department.
- Liquidation of LLC goes through the process of producing audit reports from Government registered Audit firms and newspaper advertisements.
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