Benefits of a company registration in Dubai attract many investors; as well as entrepreneurs from all over the world; that is, to this exciting city every year. Because, Dubai offer a favorable business condition for doing business in this region. As a matter of fact, it is one of the major reasons; for expat from all part of the world; that is to consider company registration in Dubai is the first choice.
There are number of options for company registration in Dubai. The most ideal choice of course depends on the type of business and its goals. This post is about company registration in Dubai; that is it clarifies the various options for company registration Dubai. In order to set up a company in the UAE; an expat investor is require to setup a formal legal presence; that is directly or through an agent; within the UAE through any of the following form:
Company registration in Dubai Free trade zone.
Register a branch or a representative office in Dubai.
Dubai Company registration in main land
Commercial agency relation ship.
We will discuss these various options for Company registration in Dubai methods in detail.
Company registration in Dubai free trade zone
There is more than 10 free trade zone in Dubai; that is where expat business man can start their company. It is true that the business back ground in the U.A.E has been improve a lot; that is with the presence of these free trade zone. The U.A.E free trade zone offers a best alternative to U.A.E local main land company. U.A.E free trade zone are also useful for those companies; that is who wish to carry out their business with countries other than U.A.E. The main benefit of free trade zone company registration in Dubai; is that an expat can 100% own the company. A Dubai company registration in free trade zone; can also offer some additional financial advantages; that is depending on the policies as well as rule of the free trade zone authority.
A free zone company registration Dubai will usually take one of the following three forms:
Branch or representative office of a foreign company.
Free trade zone establishment; that is FZE.
Free trade zone Company; that is FZCo.
The main restriction of a free trade zone; is that it only allow to conduct business activity within its relevant free trade zone. But it can trade in a local market after pay 5% duty tax.
A free trade zone company must hold one of the following form:
(i) Trading license.
(ii) Service license.
(iii) Industrial license.
For a free trade zone company to sale in the Local main land market; that is outside of the free trade zone; the company will have to keep a commercial agent or in other words will keep a distributor. However, A free trade zone company with service license allow to offer services out side of their free trade zone; that is without an agent or distributor.
Company registration in UAE: Branch or Representative Office
The company law Art. 313 to 316 allow foreign companies to open their office; as well as a branch company in the UAE. A 100% foreign owner ship is allow to branch or a representative office of a foreign company. However, Art 23(1) of the UAE Commercial Code allow an expat to perform commercial activity in the UAE; that is with the help of a UAE national who will owns 51% of the share in the company. Accordingly, a branch as well as a representative office can only perform a non commercial activity.
In addition, a branch office must only take part in those activities; that is which are performing its parent company. A representative office is more restricted than a branch office in term of activities. A representative office may only perform marketing and administrative functions; such as business services for its parent company.
Company registration in Dubai Mainland
A local company can be register under either the UAE Civil Code or the Company Law.
Company registration in Dubai under the UAE Civil Code
Dubai company registration; that is under the U.A.E Civil Code is not allow to carry out a civil activities; these are the activities that stimulate the expertise; or in other word the ability of the people directing to the business. Mostly the production of works of art or literature; as well as consultancy services and the sale of agricultural products; of farmers are the prime examples of this activities.
It will take one of the following forms:
(i) Professional services company.
(ii) Speculative venture partnership.
(iii) Islamic Sharia compliant arrangement known as a Mudaraba.
Although these 3 units are form of the company; but in general on the other hand they are not a company. The only companies which may be setup in the U.A.E are those register under the Companies Law.
The most common form of a UAE civil code entity; is to register for expat; that is the professional services company. Such as a company can only carry on services business.
The main advantage of a professional services company formation in Dubai; is that an expat can hold 100% of share in the company. However, a local service agent must be engage by all the company. As a matter of fact in Dubai company registration; a local service agent receive a fix fee. He or she is not liable for the liabilities of the company; as well as he or she has no administration role. The agent is use to sponsor the company for a lot of thing in government bodies.
Dubai company registration under the Companies Law
All locally register companies; that is other than those which register under the Civil Code. It must be register under the Companies Law. The company’s law allows these companies to take one of the following forms:
Private Joint Stock Companies (or PJS).
Limited Liability Companies (or LLC).
Public Joint Stock Companies (or PJSC).
Limited Partnerships (or LP).
Joint Participation Ventures (or JPV).
General Partnerships (or GP).
Partnership Limited with Shares.
The option as shown above for Dubai company registration; in fact these all are the legal form of company registration in Dubai. But most of expat pick the option of an LLC; because they have a great control over the working of an LLC. In addition to this, it requires a small amount of capital to start an LLC.
Such a company may not be suitable to run into certain business goals. For example, company link to insurance, to banking; as well as investment activity for third parties; they can only do this through a public joint stock company; that is not through an LLC. LLC are not offers their share for public subscription; which is an essential feature of the public joint stock company.
LLC form of company
The main control on company registers under the Companies Law; is that a local sponsor will hold 51% of the share of a company. However, it is possible for the LLC; that is to hold the following provisions; which are design to shield the interests of a foreign share holder:
Foreign share holder may appoint the general manager.
The foreign share holder of an llc may also appoint all the directors.
Foreign share holder may have the veto decisions maker of the company.
Expat partner may also be entitle to more than 49% of the company profits.
Foreign share holder may also be entitle to all the assets of the company on winding up.
Commercial Agency Relationship
If an expat investor wishes to do business in the UAE; but he or she does not wish to keep physical presence in the UAE; then he or she has an other way; that is to enter in to a commercial agency relation ship; with a wholly local own company or UAE Local. Agents are usually use by the foreign companies; as well as traders who are involve in the import of goods in to the UAE.
Under this agreement, the foreign companies; as well as the agent agree in to the terms of the sale commission; as well as the territory of the distributor ship and the duration of the relation ship. If the agent registers the agreement with the Ministry; then the agent can get several shields afford to the agents under the UAE Commercial Agencies Law.
These protections include:
Exclusivity: that is register agents have the special right; so that to import as well as export the goods; which are the key matter of the agency.
Commissions: that is register agents are allow to get commissions on the sales which they make; as well as commissions on sales made in the UAE by the principal or any third party.
Termination: the principal may only end a commercial agency arrangement individually for material reasons. Such as the reasons must be acceptable to the Commercial Agencies Committee.
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