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KenyaDubaiAbuDhabi
4 Chapter Incorporation
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how to open a company
To better understand incorporation processes in Dubai we must take into consideration regulations in the UAE as well. Generally, in order to start a company, you need an initial approval from the Department of Economic Development of the respective emirate. This can be done at the departments offices or by visiting their e-Services websites. After the initial approval there are additional approvals from other authorities which is required in case of certain business or trading activities. It is required to have capital investment and paying for licenses and employee visas. The cost of setting up a business depends on the nature of the activity and license required; whether it is commercial, industrial or service-oriented and it depends as well on the legal form of the company; whether it is an establishment, a company, or a branch.How to open a company in Dubai?Incorporation is regulated by the Dubai Company Act, in some cases it is required that foreign investors must have a local partner who will own the majority interest, only in Dubai´s free trade zones investors may incorporate fully foreign owned companies. Requirements are different for every type of company. According to the Company Law, investors may set up the following types of companies in Dubai:-
Limited liability companies.
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Private and public joint stock companies.
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Partnerships.
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Branch offices.
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Subsidiaries.
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Free zone limited liability companies.
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Free zone establishments.
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Requirements to open a company in Dubai
Many foreign investors choose to open companies in Dubai for the free zones as these offer an easy procedure and require few documents. Here are the main steps to follow:1-Choose the type of legal entity Free Zone Limited Liability Company or Free Zone Company and Free Zone Establishment.2- Choose a business name for your company and verify its unicity and conditions imposed by the free zone authority.3- Apply for a business license with the local authorities, depending on the primary activity of your business.4- Find an office it could be either rent or purchase, virtual offices are another option.5- Register your company and obtain the license..png)
Other requirements for company formation in Dubai are:• Drafting and notarizing the company’s memorandum and articles of association.• Opening a corporate bank account.• Registering native workers with the Ministry of Labor.• Registering native workers with the social security authorities.Mainland Company Formation.Capital requirements for a company on the mainland vary according to the legal form of business. For a Public Joint Stock Company, the minimum capital is AED 30 million. For a Private Joint Stock Company, it should not be less than AED 5 million paid in full.For other type of businesses, the UAE Commercial Companies Law did not specify a minimum capital. But it stated that the minimum capital should be mentioned in the Memorandum of Association and must be enough capital to achieve the purpose of the business incorporation.Benefits of forming a Mainland Company:• No limitation in visas.• Flexibility to rent office anywhere.• No limitations in office space requirement.• Great opportunity to expand by forming branches.• Freedom to do business with the local market in any part of UAE.Documents Required:• Passport copy• Visa Page copy• NOC (If on another visa in UAE)• Minimum three trade names for the business.• CV for each shareholder.• Professional or bank reference letter for each shareholder.
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Free Zone Company Formation.
If you do not wish to partner with a UAE national or you do not know any UAE national to partner with, you can set up a business in a free zone. Free zone offers 100% foreign ownership of the enterprise.In a free zone, goods may be landed, handled, manufactured, reconfigured or re-exported without the intervention of the customs authorities. Only when the goods are moved to consumers within the country in which the zone is located do they become subject to the prevailing customs duties. A free zone is often organized around major seaports, international airports, and national frontiers - areas with many geographic advantages for trade.
Benefits of setting up a company in a free zone
• 100% import and export tax exemptions.• 100% repatriation of capital and profits.• No corporate tax.• No personal income taxes.• No import/export tax.• Easy start-up and licensing procedures.The types of businesses you can place in Dubai are numerous and in any different field such as financial, educational, retail, hospitality and media to name a few. Companies established in free zones are governed by the rules of each different free zone. Below is a general guideline of steps and documents needed for approvals:
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Certain activities may be subject to approval from external authorities. Refer to special cases. For freelancers there are less documents required.-
Application for registration.
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CV.
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Bank reference letter.
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Registry Identification Code Form (RIC) (Original and notarized).
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Offshore Company Formation.
Offshore Companies are virtual companies with no office requirement or visa eligibility. The shareholders will get certificate of incorporation or provide required documents and sign their memorandum and article of association with offshore authority. For this type of company there is no need for the expat´s presence and the company can be formed in two days subject to government approval. Offshore companies can hold bank account without any shareholder being a resident of the country.Benefits:
• 100% foreign ownership.• Great tax incentives.• Asset security.• Risk mitigation.• Privacy & Anonymity.• Low cost company configuration.• Property rights.• International trade facility.• Zero bureaucracy & modern administration. -
Professional Company Formation.
A professional company in Dubai is an organization which operates out of the intellectual efforts of its partners, a good example is a law firm. Professional companies must appoint company formation specialists in Dubai, this specialist will handle the licensing requirements and will apply for professional licenses, work and residence permits on behalf of their clients. If the owner of the professional firm wants to apply for more than one professional license, the company will have to be constituted as a Dubai civil company.This are the steps to follow to incorporate a professional company:
1-Indicate the type of activity the company will follow2- Appoint the Dubai agents for company incorporation who will handle the licensing requirements.3- File for initial approval with the Department of Economic Development.4- Choose the name for the Dubai company.5- Pay the registration fee.6- Rent an office.7- Submit all documents for final approval with the Department of Economic Development.The following documents must be submitted for initial approval when applying for a professional license in Dubai:
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A prescribed application form.
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Copies of the passports of the owner or partners.
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Copy of the local partner’s naturalization book.
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Add a “No Objection Letter” from the sponsor for foreign partners,
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Foreign partners must also submit a copy of the visit, tourist or transit visa,
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Initial approval from the relevant authorities depending on the type of activity to be undertaken.
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Branch of Foreign Company Formation
There are two types of branch offices which can be established in Dubai, branches set up in mainland, and free zone branch offices. The differences are that when creating a branch office in Dubai mainland, there are no minimum share capital requirements and free zone branch offices will be subject to specific share capital requirements in Dubai free zones.To operate as a branch in the UAE companies must get a license that specifies the activities which the company is permitted to conduct in the country. The Commercial Companies Act indicates that in order to establish the branch there must be an UAE national or a corporate body, the partners or shareholders of which are all UAE nationals, as agent of the company for getting the license. To set a branch the office will be required to complete the same activities of the foreign company; for these activities, the parent company must apply for the necessary licenses with the Dubai authorities. The branch office is not considered a separate legal entity from the foreign company; the parent company will be liable for the obligations and debts of the Dubai branch office..png)
Documents required after getting the Initial Approval for an LLC Company:• Initial Approval receipt.• All documents submitted before in order to get the Initial Approval.• Photocopy of office lease including the plot number.• Original photocopy of the Memorandum of Association duly authenticated by the Notary Public.• Contract of Limited Liability Company.• If the partner is an existing corporate entity in UAE or abroad the Memorandum of Association and the Commercial Register Certificate must be attested by UAE embassy or consulate or by a GCC state embassy or consulate and UAE Ministry of Foreign Affairs, and duly translated into Arabic.Public Shareholding Company.Documentation required:-
Founders’ agreement.
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Prospectus or invitation for public subscription.
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Business plan or Feasibility study.
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Auditors certificate.
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Due diligence survey.
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Memorandum and articles of association.
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