Why Dubai?
Businesses across the world have started establishing their presence in Dubai. From leisure and amusement to banking and construction, businesses in various domains have opened their branches in Dubai. Whether you’re looking for a multinational fashion outlet or a world- class restaurant offering exotic foods, you’re sure to find it in Dubai. The Advantages of forming a company in Dubai are
- Strategic location: Dubai is situated midway between the east and the west thus linking both sides of world. It has both seaport and airport that creates logistics much easier. Thus, business associated with international trading, import, export, tourism, and logistics can flourish successfully in Dubai.
- Political and economic conditions: The Dubai government has taken businesses seriously and giving the right political and economic conditions for a business to grow.
- 100% Ownership: There are two kinds of ownership of a business in Dubai. If you apply for a license in any of the free trade zones in Dubai, you get 100% ownership over the business. But if you want to form a business in Dubai outside the Free Trade Zone, then you required a local partner. This local partner can be an individual or company and they aren’t required to contribute financially for the formation.
- Competitive tax regime: The UAE corporate tax regime will be amongst the most competitive in the world
Types of Company & Legal Forms
Types of company based on Jurisdiction of UAE are Mainland company, Free zone company and Offshore company. The common legal forms of business in Mainland, Free zone and Offshore incorporation in the Dubai are
- Sole Proprietorship
- Civil Company
- Limited Liability Company (LLC)
- Partnership
- Private Share Holding Company
- Public Share Holding Company
- Branch of Foreign Companies/ Representative Office
- Branch of GCC companies
- Branch of Free zone company
- Branch of Dubai based companies
- Branch of UAE based companies
Under Law of UAE, there are five types of business establishments applicable to foreign establishments interested in establishing their presence in the UAE. UAE government has enforced wide range of economic and executive initiatives which has made UAE a fascinating business destination.
A company can form a perpetual establishment, form an entity in any of the UAE free zone, enter into a commercial agency agreement, establish a branch office, incorporate a civil company (presently possible to establish a company in Dubai, Sharjah and Ajman).
Limited Liability Company
A Limited Liability Company (LLC) is the most common type of registration in the Dubai and is recommended where the purpose of the entity is to make supply within the region. Still, 100 foreign holding of such an entity isn’t permitted. Under the UAE Commercial Companies Law (CCL), foreign investors are permitted to hold up to 49 per cent equity in UAE companies and 51 per cent of the equity must be held at all times by one or more UAE citizens.
As per Article (218) of the CCL a Limited Liability Company can be formed by a minimum of 1 (as per Article 8 of the Federal Commercial Company Law of 2015) and upto 50 shareholders whose liability is limited to their shares in the capital of the company. Recent amendments to Article (217) of the CCL that came into force in June 2009 removed the minimal share capital (earlier AED 300,000 in Dubai and AED 150,000 in other Emirates) allowing promoters of a limited liability company the freedom to determine the company’s share capital which could be lower than the before prescribed nethermost line.
A LLC must appoint atleast one manager and up to a maximum of five managers for the business. Managers must be appointed by a Memorandum of Association or by a management agreement, for a fixed term or an unlimited term. Unless the Memorandum of Association states else, the manager has full powers of administration and management of the Limited Liability Company. LLC isn’t allowed to commence its operation in the UAE without a Trade License and Commercial Registration Certificate.
Branch/ Representative Office
The legal identity of the branch office is same as its parent company and conducts business under the name of its parent company. A branch office may only be engaged in similar activities to those of its parent company but it isn’t permitted to carry on the business of importing the products of its parent company, an activity reserved for local trade agents. In some cases, the Branch of a foreign company are needed to get a supplemental license from UAE Ministry of Economy.
Representative office, on the other hand, is restricted only to promoting its parent company’s activities i.e. gathering information and soliciting orders and projects to be performed by the company’s head office.
‘Service agent’ for the branch or representative office must be a UAE national.
Civil Company
A civil company is a partnership business for professionals like doctors, lawyers, engineers and accountants. A civil company is 100% owned by the professional partners (except for engineering civil company), still, a UAE National Local Service Agent is needed. A foreign company can be a partner in a civil company, provided the foreign company need to be in same field as the civil company.
Steps of forming a business in Dubai
Company formation in Dubai are often complicated, but if you follow an easy step-by-step process and with the proper guidance, it would be much easier than you think that. KGRN has assisted countless companies in establishing themselves in Dubai and may simplify the method into the five steps listed below:
1. Decide a company structure:
The first step toward establishing your business and obtaining a license is determining the activities of your endeavor. choose from more than 2,000 business activities under the economic, commercial, industrial, professional, and tourism categories. you’ll find the whole list on the DED website.
Choosing the legal structure for your business is critical when launching a business within the UAE. It establishes the framework for handling earnings and losses, and the way to organise your resources and assets. you can’t apply for a business license until you’ve got determined the legal structure of your business. the subsequent are a number of the legal forms or company structures available for registration within the UAE:
- Limited Liability company (LLC)
- Sole establishment
- Civil company
- Free zone company
- Local or foreign company branch
2. Reservation of Trade Name:
Your brand name may be a critical component of the legal process. Unless the firm may be a branch of another, the corporate name should ideally reflect the essence of the business. it’s also critical to stick to the UAE’s strict naming conventions. it’s prohibited to use names that contain harmful language and are disrespectful
3. Pick up a good company location:
Mainland, Free Zone, and Offshore are the three economic zones or jurisdictions of UAE. Each jurisdiction has its own set of business-related laws and regulations and caters to varied company requirements. Choosing a jurisdiction for your business will depend upon your and the nature of your business.
Dubai is globally recognised for having the best and the latest infrastructural amenities and easy resource accessibility. Pick up a location and setup an office space which would be perfect for your business activity.
4. Get the Corporate Licence:
Now, the 4th step for you is to apply for a corporate license. A license is nothing but authorized paperwork which will permit you to commence your business activities in Dubai. you’ll need to take extra permissions if some business activities aren’t included in your license. Types of corporate licenses in Dubai are:
- Business License: Organizations associated with any form of trading works are required to obtain a business license.
- Professional License: Organizations involved in providing services, technicians, or artisans, got to obtain Professional license.
- Industrial License: Organizations involved in manufacturing of any form of industrial venture, need to attain an industrial license.
Company formation and licensing occur together. However, the documentation and approval process have several steps. During this phase, you need to obtain all necessary government approvals as required by the Department of Economic Development. the required documentation varies depending upon the firm type and activity.
5. Process your visa & open bank account
So, in the last step of starting up a business in Dubai. You may also apply for your employees and relations along with your visa application. Assuming all of the documents and information is in order, the process of getting visa consists of 4 stages:
- Getting an entry permit
- Changing your status
- Getting medical certificate
- Getting an Emirates ID and a visa stamp thereon
You will be required to open a separate business bank account to restrict all of your cash debits done in the name of the corporate . That’s why always choose a bank which will offer you trustworthy service and gives you with long-term advantages.
Documents required for business formation in Dubai
Regardless of whether you hire a business formation agent or submit your application on to the Department of Economic Development (DED), you have to include the below mentioned documents:
- Passport copy of the investor
- Passport copy of the local sponsor (if needed)
- No Objection Certificate (NOC) if any shareholder is employed in a UAE company
- Replica of Emirates ID of the shareholder(s)
- Application form of registration from DED
- An attested Memorandum of Association
- A certified tenancy agreement for the office premises (if any)
Cost of forming a business in Dubai
So, what would be the cost for obtaining a business license cost in Dubai? Not as expensive as you think that it’s going to be. The cost of incorporating your company in Dubai ranges from AED 12,000 to 30,000. However, the outlay varies based on the industry type and services. Additionally, an investor visa will cost between AED 4,000 to AED 5,500, and based on the category of employees you hire, their fee is between AED 5,000 and AED 7,000 per visa. Contact KGRN to get an up-to-date price tailored to your individual needs for an exact quote. Get in-tuned with one among KGRN’s business development managers if you’ve got any questions on the prerequisites. They will assist you in incorporating your company quickly while keeping you fully compliant.
