Establishing a business in the UAE?
That's our business.
As a foreign company wishing to establish your corporate presence in the UAE, you have various options available, some of which are outlined below. To learn which set up is best suited to your business, one of our experienced team will guide you through the complexities of deciding on the right way ahead for your company.
Our services are designed to be efficient, cost-effective and tailored to your individual needs. Our aim is to relieve you of the burdens and legalities of business set-up in the region, and enable you to focus on running and growing your business.
The UAE is the leading business center in the GCC region and there are various ways in which in which foreign companies, or indeed individuals, may establish a legal presence in the country. It is a requirement of all the Emirates in the UAE that in order to conduct any form of commercial activity a licence is required. Essentially there are three kinds of licence:
- a commercial licence which covers trading activities.
- an industrial licence for manufacturing or industrial activities.
- a professional licence, which is appropriate for those activities which are of a professional nature.
Federal Law No 8 of 1984 commonly referred to as the “Companies Law” sets out the various legal structures that may be established in the UAE in order to carry on a business. Those most relevant to foreign owners are as follows:
A Limited Liability Company usually, referred to as an LLC, is the most commonly incorporated commercial entity used to conduct commercial activities in Dubai. As it is a private company its shares may not be allotted to the general public. However, the partners do benefit from the advantage of having limited liability to the extent of their contribution to the share capital. In the past the minimum share capital was fixed in the Companies Law at AED 150,000. However a recent amendment to the Companies Law has relaxed this to abolish the need for a specified minimum share capital, and instead stipulates that the capital should be sufficient for the company’s needs.
A Limited Liability Company must have a minimum of two shareholders, with a maximum of 50 shareholders. The maximum shareholding of the foreign party, be it an individual or a company, should be no more than 49% of the paid up share capital. The Companies Law does, however, permit the profits and losses to be shared in a different ratio to that of the share ownership up to a certain extent.
There are no restrictions in the law in respect of the nationality of the manager of the company, and the LLC may be operated under one manager or via a board of directors who would usually appoint a general manager for day-to-day operational purposes.
The exception to the rule of a minimum shareholding of 51% for the UAE national party concerns other GCC nationals. In accordance with a UAE Cabinet Resolution, GCC nationals may own all the shares in a UAE-incorporated LLC, provided there are no non-GCC national partners in the company.
The Companies Law governs the formation and regulation of branches and representative offices of foreign companies in the UAE. These offices may be 100% foreign-owned, however they must appoint a UAE national individual or a 100% UAE owned company to act as a Local Service Agent, commonly referred to as a “sponsor”. The main role of the Local Service Agent is to assist the company in obtaining visas and licences and generally to liaise with government departments.
Broadly speaking, a branch of a foreign company may only carry out those activities undertaken by that of its parent and in addition must also seek approval and registration in the Foreign Companies Register maintained at the Ministry of Economy.
In respect of representative offices, their activities are strictly limited to promoting the services or products of their foreign parent company, and they are not permitted to trade as such in these items. A representative office may not generate any income, nor issue any invoices. Generally speaking representative offices take on the task of acting as marketing or administrative centres for the foreign company.
Professional firms may take on the form of sole proprietorships or civil companies. However, both of these carry unlimited liability and therefore differ significantly in that respect to the limited liability arrangements described above. A UAE national, or 100% UAE-owned company, must be appointed as a local service agent, although the national party has no direct involvement in the business and is usually paid a lump sum for performing similar services to a sponsor for a branch office.
