Shams Consultant
Company formation in Dubai, Company Formation Dubai

Company formation in Dubai | Company Formation Dubai

Company formation in Dubai demands a wide range of knowledge; skill and also understanding about the market place in UAE. There are different type of Company Formation Dubai. Every company has its own merits and demerits. So, it is very important to have knowledge about these businesses, legal form of the company and his main activity. Also, it is important to know the legal aspects of doing business in UAE. We at Shams Consultant offer Company formation services. We have experienced team they are expert of company formation. Our team has deep knowledge and understanding of Company formation and its structure. UAE is a great choice for company formation. UAE Company’s formation law is very flexible for new startup companies. If you are planning to start a new company in UAE. Then you are on a right place to get advice of experience consultants.

License for Company Formation in Dubai

To run a company in Dubai, company must have a valid license from the government of Dubai. License is a legal document which authorizes a Company to operate their business activity. Another word license is a certificate that authorizes company to practice a particular type of activity. There are special department in each state of UAE to issue license to companies. DED is the authorize body to issue license for company formation in Dubai. A company register with DED is allowed to do business in local market without any restriction.

Company Formation Dubai | Professional License

The characteristic of professional company formation Dubai is following.

  • Professional License Issued only to Professionals.
  • IT is Unlimited Liability license.
  • For Professional License UAE National is a Local Service Agent.
  • Expat can get 100% shares of the company.
  • Service Related Activities

Company Formation Dubai | Commercial License

The characteristic of commercial company formation Dubai is following.

  • Commercial License is for any Entrepreneur.
  • IT is a Limited Liability Company.
  • UAE National is a Partner in the company.
  • Expat can get Maximum 49% shares of the company.
  • Provision of physical services or trading activities.

Company Formation Dubai | Industrial License

The characteristic of industrial company formation Dubai is following.

  • Industrial License is for any Entrepreneur with expertise.
  • It is a Limited Liability Company (LLC).
  • UAE National is a Partner in the company
  • Expat can get Maximum 49% shares of the company.
  • In Industrial License activities involving manufacturing

Department of economic department is responsible for issuing these license. But some activities require approval from different ministries; also different authorities. For example, medical products from the Ministry of Health. Banks also other financial institutions; require approval from the Central Bank of the UAE; insurance companies from the ministry of economy and commerce; manufacturing companies from the Ministry of Finance.

Company formation in Dubai required a physical office inside in Dubai. DED do not entertain virtual office. It is necessary to do the maximum amount of preliminary analysis before applying for license.

Local sponsor for Company Incorporation in Dubai

Expat are not allow to hold 100% of company share register with DED. There must be a local sponsor which will have majority of share in the company. For company formation in Dubai local sponsor will hold fifty one percent (51%) of shares. And therefore, the foreign investors will owns the remaining 49%. The profit and loss distribution with local sponsor (UAE National) is extremely a separate contract. Local sponsor is an individual or a company of a local. They have no obligation towards the company. However, their duty is to help with all government work; such as getting permits, trade licenses, visas and labor cards. His/her signature are mostly, use on official document.

Local Service Agent for Company formation in Dubai

In professional form of company formation in dubai expat can hold 100% share of the company. But, it still requires a UAE national known as Local service agent. Local service agent has no share in the company. Local Service Agents are involved in contacts with government department on behalf of principal companies

Economic Activities of Company setup in Dubai

First – United Arab Emirates Nationals:

UAE nationals can operate all commercial; professional and also industrial activities; with company formation in dubai after all, they full fill all Terms and Conditions. They can carry on activities through the following legal forms:

  • Individual Establishment.
  • Limited Liability Company.
  • Joint Liability Company.
  • Private Shareholding Company.
  • Public Shareholding Company.
  • Civil Business Company.

Second – Nationals of GCCC

GCCC national may allow to perform activities; such as commercial, professional and industrial activities; whenever they fulfill all term and conditions. But in company formation Dubai; they cannot perform the activities such as Haj and Umra, journals also magazine publishing; houses of disabled and also old people; trade agencies, community service and also printing houses as they are limited only to UAE nationals. They can do the activities through any of the following legal forms:

  • Individual Establishment.
  • Limited Liability Company.
  • Private Shareholding Company.
  • Public Shareholding Company.
  • Civil Business Company.

Third – Nationals of Other Countries:

Expat are allow to operate their economic activities through any of the following forms:

  • Individual Establishment.
  • Limited Liability Company.
  • Private Shareholding Company.
  • Civil Business Company.

Fourth – Foreign Companies:

A company which incorporate outside the UAE; can also operate their business activities; as a commercial, industrial or professional; through one of the following legal forms:

  • Branch of a Foreign Company.
  • Limited Liability Company.
  • Private Shareholding Company.
  • Public Shareholding Company.

Legal form of Company Formation in dubai

Following are the main legal form of company formation in UAE.

  1. Sole Proprietorship / Establishment
  2. Commercial Companies
    • General Partnership
    • Simple Limited Partnership
    • Joint (Participation) Venture
    • Public Joint Stock Company
    • Private Joint Stock Company
    • Limited Liability Company
    • Partnership Limited with Shares
  3. Civil Companies
  4. Branch and Representative Offices

Sole Proprietorship / Establishment form of Company formation in Dubai

First of all, if only one person form a company; then it is called Sole Proprietorship. That is in this type of company formation in Dubai; one person runs the entire show. There for he is not only liable for his share; but also for entire company assets.  This type of company can either conduct professional activities or commercial activities in UAE. Furthermore, only UAE local; also GCC nationals can form Sole Proprietorship. They can perform commercial activities; as well as professional activities. However, expats can also own a Sole Proprietorship; only for performing professional activities; such as medical services, management consultancy; engineering consultancy, legal consultancy, also IT consultancy. Moreover for Sole Establishment; expat should appoint UAE national as a Local Service Agent; who will represent company in government departments. That is applying for work permits; employment visas and also other government approvals.

Commercial Companies form of Company formation Dubai

Commercial company formation Dubai has several type; these are specified in the Federal Law No. 8 of 1984 (Commercial Companies Law). They are basically setup to operate commercial activities in the local market; also subject to certain exemptions. Under the Commercial Companies Law; the company formation Dubai are normally define as “A contract in which two or more persons; are devoted to contribute in profit making economic project; either by providing cash or work contributions; and also to divide between them profit or loss rising from such project”. Following are the type of commercial company.

  • General Partnership / Joint Liability Partnership
  • Simple Limited Partnership / Sleeping Partnership
  • Joint – Venture
  • Public Joint – Stock Company
  • Private Joint – Stock Company
  • Limited Liability Company
  • Partnership Limited by Shares

General Partnership / Joint Liability Company formation Dubai

GP or JLC is yet another type of company formation Dubai; to emphasize on the agreement between two or more parties; in which each of them is equally liable; for the entire company liability. Also according to UAE Company Law Art 23; Only UAE nationals can setup this type of partnership. JLC Company formation Dubai; option is not available to expat; because mostly their assets are locating outside the UAE.

Simple Limited Partnership / Sleeping Partnership form of Dubai company formation

According to Art. 47 of Company Law a SLP; is the type of company formation Dubai; which is composed of one or more jointly connected partners. That is liable for the company’s liabilities to the amount of all their assets; together with one or more sleeping partners. That is liable only to the amount of their respective contribution in the capital. This type of partnership is also limited only for UAE nationals.

Joint Venture company formation in Dubai

JV company formation in Dubai is also a contract between two or more partners. They are sharing profit and loss of a commercial company. Also, in JV the business is run on the name of one partner. Furthermore local will hold at least 51% of share in JV. But they will mutually agree to profit and loss sharing. JV forms of company formation in Dubai; are also fit for working together on short term basis. Joint Venture Agreement controls the relationship between partners. In practice, there is no registration for the Joint Venture in the government departments. Joint Venture partnership will operate using the name of one partner.

Public Joint Stock Company formation Dubai

This kind of company formation Dubai is define as; company whose capital is divide into equal negotiable share value. Partners are liable only; to their share in the capital of the company. PJS company formation Dubai; requires a minimum of 10,000,000 share capital. A minimum of 25% share are available for subscription. A minimum of 55% share of a PJS company must offers to the public. Furthermore, it must have at least 10 founding members; except in case where the government body is involve. Also, any company in which the government; or Public Organizations hold any share should be formed as Public Joint Stock Company. The board of directors have a minimum of 3 and maximum of 12 board members. The chairmen also; a majority of the board members are UAE Locals.

Private Joint Stock Company form of company formation in Dubai

Private Joint Stock Company formation in dubai has the same characteristics as that of the Public Joint Stock Company. However, it has three exemptions as follows:

  • 2,000,000 AED is the minimum share capital
  • The company shares are not available to public.
  • Only minimum of three founder participants are requires.

We can convert private joint stock company to a public joint stock Company after fulfilling its requirements.

Limited Liability Company form of company formation Dubai

LLC is the most common form of company formation Dubai. That is, In LLC the expat can act as partners in the company. Also their liability limit; are only to their share in the capital. According to Art 22 of the Company Law; UAE local can hold 51% of share; also expat can hold 49% of share. Furthermore, both parties will commonly agree on distribution of profit & lass. The minimum 2 & maximum 50 shareholders can form an LLC. The minimum 300,000 AED share capital requires for an LLC. AED 1,000 is the minimum share value of each share. However, at is now necessary to have capital amount deposit in the bank.

Partnership Limited by Share form of company formation Dubai

Art. 256 to 272 of the company Law allow another type of company formation in Dubai. That is, Partnership Limits to the partner Share. It seems like, Simple Limited Partnership; as it is define in Company Law Art 256. That is, “A company formed by general partners; who are jointly liable to the amount of all their assets for the company’s liabilities; also contributing partners; are liable only to the amount of their shares in the capital”. Only the liability of a UAE local is not limited. The AED 500,000 is the minimum share capital.

Civil company formation in Dubai

Civil Company is another form of company formation in Dubai. Altogether, it is an association of two or more parties; who is agree to carry out professional work. They are liable to third parties against payment of consideration. Professional activity are also those activities which using intellectual abilities. That is professional skills of a shareholder. Civil company formation in Dubai follow the Federal Law No. 5 of 1985. This form of company formation Dubai expat can get 100% share of the company. But it subject to certain situations, it requires Local Service Agent instead of local sponsor. For example HR consultancy, Legal consultancy, Management consultancy etc. Civil Company is comparatively similar to the General Partnership; That is in form of legal status. In Civil Company partners are completely liable for the entire company’s liability.

Branches and Representative Offices form of company formation in UAE

it is another type of company formation in UAE. Both local and foreign companies can establish their branches and representative offices in the UAE. The rules of UAE especially demand for separate license. That is,  branch license and representative office license; even though they are consider as the part of their parent company. In terms of legal form and incorporation processes, the branches and also representative offices are similar; but, there are certain differences between them. For example, the branches can perform the same activities of the parent company. However, the representative offices can only promote their parent company. and not allow to do any trading or provide services. Furthermore, the representative offices cannot obtain credit facilities but the branches can get credit.

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