Company Formation Dubai
Last updated on October 17, 2018
Company formation in Dubai demands a wide range of knowledge; skill and also understanding about the market place in UAE. There is different type of Company Formation Dubai. Every company has its own merits and as well as 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. Let me tell you one thing about our team; that is our team of expert consists of very experience people. Our team has deep knowledge and understanding of Company formation and its structure. UAE is a great choice for company formation. UAE Company 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
First of all in the first place; to run a company in Dubai; you must have a valid license from the govt of Dubai. License is a legal document which allow a Company to operate their business activity. Another word we can also says that a license is a certificate; that allow a company to practice any type of activity. It this point let me tell you one more thing; that is there are special department in each state of UAE to issue license to companies. In dubai DED is the concern body to issue license. A company register with DED is allow to do business in local market without any restriction.
Company Formation Dubai | Professional License
- First of all in the first place; this type of a License Issue to Professionals only.
- The most important point about this type of license is that; It is an Unlimited Liability license.
- For this type of a License UAE National is a Local Service Agent; that is LSA.
- Expat can get 100% share of the company.
- This type of a license is use for Service.
Company Formation Dubai | Commercial License
- First of all in the first place; this type of a License is for any Entrepreneur.
- The most important point about this type of license is that; It is an LLC License.
- For this type of a license UAE local is a Partner in the company.
- Expat can get Maximum 49% share of the company.
- This type of a license is use for trading.
Company Formation Dubai | Industrial License
- First of all in the first place; this type of a License is for any Entrepreneur with expertise.
- The most important point about this type of license is that; It is an LLC License.
- For this type of a License UAE National is a Partner in the company
- Expat can get Maximum 49% shares of the company.
- This type of a license is use for manufacturing
First of all in the first place; DED is responsible for issuing these type of license. But some activities require approval from other 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 etc.
Company formation in Dubai need an office inside in Dubai. It this point let me tell you one more thing; that is DED do not allow to apply for a virtual office. In addition to all these point; let me tell you one thing more; that is that It is necessary to do a tight analysis before applying for license.
Local sponsor for Company Incorporation in Dubai
First of all in the first place; you must need to know that; expat are not allow to hold 100% of company share in an LLC. 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 share. And therefore, the foreign investors will owns the 49%. The profit and loss distribution with local sponsor (UAE National) is a separate contract. It this point let me tell you one more thing; that is Local sponsor is a person 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
Legal form of Company Formation in dubai
Following are the main legal form of company formation in UAE.
- Sole Proprietorship / Establishment
- 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
- Civil Companies
- Branch and Representative Offices
Sole Proprietorship form of a Company formation in Dubai
First of all in the first place, if only one person form a company; then it is a Sole Proprietorship form of a company. 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 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. It this point let me tell you one more thing or you can say one more point; which i think is a key point for all of us; and also i think it will work to understand the whole case; and show all the thing in clear way; that is JLC option is not available to expat; because mostly their assets are locating outside the UAE.
Simple Limited Partnership (SLP) form of a Dubai company formation
This kind of a company is form under the Art. 47 of Company Law. It is the type of company formation Dubai. In which one or more partner are jointly connected. That is they are liable for the company liabilities to the amount of all their assets. Also note that there are one or more sleeping partner; that is to form this kind of company. That is liable only to the amount of their respective contribution in the capital. It this point let me tell you one more thing; that is this type of partner ship is also limits to 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 note that in JV the business is run on the name of one partner. In addition to this a local will hold at least 51% of share in JV. But they will agree to profit and as well as on a loss sharing. JV forms of company formation in Dubai; are also fit for to work on short term basis. Joint Venture JV agreement controls the relation ship between partners. It this point let me tell you one more thing; that is in practice, there is no set up for the Joint Venture JV in the real. Joint Venture JV partner ship 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. In addition to this, it must have at least 10 founding members; except in case where the government body is involve. Also note that in any company in which the gov’t; or Public Organizations hold any share should be form as Public Joint Stock Company. The board of directors have a minimum of 3 and max 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 (PJS) Company formation in dubai; has the same character 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.
LLC 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. This type of a company form under the Art 22 of the Company Law. In this type of company a UAE local is require; that is he will hold 51% of share; also expat can hold 49% of share. But the most important thing which you need to know is that; both parties will agree on distribution of profit as well as on lass. The minimum of 2 & the max 50 share holders can form an LLC. The minimum 300,000 AED share capital requires for an LLC. Also please note that 1,000 Dhs 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
This type of a company form under Art. 256 to 272 of the company Law. That is, It seem like, Simple Limited Partnership (SLP); as it is define in Company Law Art 256. That is, “A company where share holders are jointly liable to the amount of all their company assets; also there are some contributing share holders; which are liable only to the amount of their share only in the capital”. It this point let me tell you one more thing; that is, that only the liability of a UAE local is not limited. In this type of a company the minimum share capital is 500,000 Dhs.
Civil company formation in Dubai
Civil Company is an other form of company formation in Dubai. In a simple word we can say that, 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. In this type of company skills of a share holder are judge. Civil company formation in Dubai follows the Federal Law No. 5 of 1985. In a simple word we can say that, it is form of company formation Dubai. In which expat can get 100% share of the company. But it subject to certain situations. In this type of company an LSA is require instead of a local sponsor. For example HR consultancy, Legal consultancy, Management consultancy; is the best example of this type of a company. This type of company is similar to the GP; that is in form of legal status.
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 as well as representative offices in the UAE. Let me tell you that there is only one rule of UAE; that is separate license for each entity. So it is very clear that, branch license and as well as representative office; need separate license for each of one. Even though they are consider as the part of their parent company. In terms of legal form and set up process. So it is very clear that, the branch and also representative offices are similar; but, there are certain differences between them. For example, in the first place branch can perform the same activity of the parent company. However, the representative offices can only promote their parent company. And also note that it is not allow doing any trade or providing services.
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