Different types of company formations in UAE
Dubai keeps attracting more investors due to its wide range of business facilities and infrastructure. UAE has become the most desired location to invest, work, and live. With different economic diversification projects, accelerating GDP, increasing FDI, and friendly business setup laws widen the opportunities for every investor.
Since UAE provides various tax exemptions, it’s a hotspot for new business setup. Business setup in Dubai requires much attention; business setup consultants can guide you throughout the process.
Entrepreneurs can choose from the company types and register it with the mentioned legal requirements. The legal requirements may differ according to foreign and local investors. The country fosters distinct business activities and so, every business needs a legal structure to incorporate.
Different types of company formations in Dubai, UAE
Starting a sole proprietorship company means, the individual owns 100% of the entity and control its operations. Moreover, they hold 100% shares to profit. Similarly, the owner should bear any debts or financial duties. However, most business activities follow such legal forms, you have to follow few general rules before proceeding with sole proprietorship.
Individual investors of any nationality can own a professional-type sole proprietorship company
GCC and UAE nationals can own a 100% commercial or industrial sole proprietorship company.
In case, the business owner is not UAE national, you can appoint a LSA or Local Service Agent for starting a sole proprietorship company.
LSA will help you in obtaining the license and comply with other government related approvals for the business.
The LSA and owner of the sole proprietorship should sign an agreement. It must be attested as well as certified by the Court or Notary public within the court.
LLC is a common legal form of company registration in UAE. In LLC, minimum 2 or maximum 50 shareholders can invest and become liable to the extent of their shares. Here, profit or loss is divided equally between the parties. Apart from banking sector or professional businesses, LLC allows you to conduct industrial or commercial business activity.
LLC company setup has some rules,
- You cannot increase capital or secure loans by distributing it as public stocks.
- The LLC must have one to five managers which can be elected from the legal partners.
- You need a UAE accredited auditor to oversee financials and transfer shares.
- You should add ‘Limited Liability Company’ as abbreviation in the trade name.
Private Shareholding Company
A private joint stock company or private shareholding firm is formed with a minimum partnership of AED 2,000,000 at least from 3 investors. Private shareholding is compatible with all sorts of industrial and commercial activities besides professional businesses.
You need a manager to oversee the operations
- UAE national should own 51% shares or 100% by GCC nationals
- With certain conditions, the business can be converted into public company but after 2 years. Although, the stocks cannot be opened for the public,
Public share holding company
Public share holding company should have a minimum of AED 10,000,000 with transferable shares.
The public share holding company formation in Dubai requires 10 investors. But, according to the respective authority, it can be below 10.
To finalize the company establishment formalities with government authorities, you need a panel with minimum 3 to maximum 5 members.
A major portion of the board directors must be UAE nationals including the chairman.
The founders can subscribe to minimum 20% and maximum 40% association’s capital.
Branch office in Dubai/UAE
Branch office is an outlet of a popular company. It’s physically apart and doesn’t constitute as a separate business entity. Branch offices serve as a means to expand your business and flourish over UAE. They establish your presence in new regions and enhance the sales or revenue.
Branch office incorporation is done with the help of a local service agent.
We need approval from the respective authority regarding the business activity
The local economic department will register your branch office and then, you will get the business license.
What are the different branch offices in Dubai?
Foreign company branch – branch of a foreign company can be established with 100% ownership. The branch operates as per the directions of headquarters. However, for any importing of goods you need to contact a local trading firm.
UAE company branch – it’s a basic extension of UAE based company willing to expand its presence within UAE. The company takes up one or more business activities based on the company license.
Free zone company branch – the branch office aims at expanding the business operations over other zones across UAE. The free zone branch can be established in mainland by acquiring the proper license from DED. Additionally, they need an Emirati shareholder to open their branch office. Companies without a local shareholder cannot get approval from the ministry of economy.
How Flybiz business setup consultants can help you in company setup?
Flybiz is a dedicated business setup company in Dubai with a successful track record of establishing hundreds of companies across UAE. Furthermore, we provide complete business setup services right from the idea conception to final launch. Since, UAE provides different business structures, company jurisdictions, and legal entities; we help you choose the perfect company type with impeccable results.
We work as a team to encourage entrepreneurs and SMEs to establish their presence in UAE. Apart from choosing the right legal structure, we handle your license application, assist with the opening of bank account, and advise on the appropriate financial institution according to your business needs.
In short, we establish your company on your behalf. If you plan to start a company in UAE, you can contact our business setup consultants today!