Business - Setting up
The company formation specialists
Company Formation - Links Corporate Solutions
There are many ways in which foreign entities (individuals or companies who are not nationals of the UAE) can seek to establish a business presence in Dubai. In the following summary of a recent article by Jerry Parks of legal consultants Taylor Wessing, we provide a useful guide to the options available.
The principal ways by which a foreign entity might consider establishing a business presence in the UAE are by means of –
- A branch or representative office of a foreign company,
- A limited liability company
- A professional partnership
- A Free Zone entity
Except in relation to Free Zone entities, it is generally necessary to enter into some form of agreement with a UAE national or a company wholly owned by UAE nationals.
Branch or Representative Office
It is possible for a foreign company to establish
- A federally registered branch
- A federally registered representative office
- A locally registered branch office
Federal registrations fall within the jurisdiction of the UAE Commercial Companies Law whereas local registrations fall within the jurisdiction of the relevant Local Order applicable in each Emirate. The distinction lies in the fact that under the federal jurisdiction either a trading branch office or non-trading representative office license may be obtained, whereas under local jurisdiction only a non-trading branch office license may be obtained.
A Limited Liability Company
The most common form of commercial company adopted by foreign companies is the Limited Liability Company. The law currently provides that in most cases at least 51% of the total shareholding in a limited liability company must be held by a UAE national (or a company wholly owned by UAE nationals). There are exceptions providing that certain activities, such as real estate-related businesses, can only be conducted by entities that are 100% locally owned. A reduction in this minimum local shareholding requirement is anticipated to be enshrined in the new Commercial Companies Law, but a timetable for the issue and application of that law has not yet been fixed.
Professional Partnership
Professional business is defined as ‘work based on investing mental talents and acquired information’.
The conduct of professional business is governed by Local Orders in each Emirate. If a non UAE national person or a corporate body wishes to conduct professional business, a UAE national local service agent must be appointed.
Free Zones
The UAE boasts several Free Zones. The attraction for some of establishing an entity in one of these areas is that there is no UAE national shareholding requirement. The Free Zone authorities also generally guarantee investors that they will not be liable for corporation tax for a specific period of time. Free Zone entities are not liable for import or export duties for goods imported into and exported out of the Free Zone.
A Free Zone entity can take one of four forms
- A branch office of a foreign company
- A Free Zone establishment
- A Free Zone Company
- A Free Zone Offshore company (in Jebel Ali Free Zone only)
For further information on company formation please visit the Links Abu Dhabi website
http://www.linksabudhabi.com
