Why Set Up a Company in UAE?

In the last few decades, UAE has become a hub for international trade. Lifestyle, corporate structuring and talent bank has made UAE corporate business hub and meeting point of the north & west.  Start-ups and young entrepreneurs find it easy to start a company in UAE. The local governments support along with minimal bureaucracy as against to other areas, has made UAE a very desirable location for business formation.

Types of Corporate Structures in the UAE

The UAE provides entrepreneurs with a plethora of business entities through which one can open company. Listed below are a few corporate structures offered by the government of UAE.

1.Sole Proprietorship

A Sole Proprietorship in the UAE is an establishment exclusively owned by one individual who is personally liable without limit to the full extent of his assets for the liabilities of the entity. This type of entity can either conduct commercial activities or professional activities in the Emirate where it is registered.

2.Joint Venture

A Joint Venture in the UAE is also referred to as ‘Consortium’. It is formed by two or more individuals or legal entities who cordially decide to share all the profits and losses of the business. The carrying out of a joint venture may be done only under the private name of one of the partners, who must be a UAE national.

3.General Partnership

It is an agreement between two or more partners whereby each of them is equally liable for the company’s obligations to the full extent of their assets. This opportunity is not extended to non-nationals as probably the majority of their assets are usually located outside the UAE. General Partnership in the UAE is limited to the UAE nationals only.

4.Public Shareholding

A Public Shareholding company in Dubai is a company with a capital divided into equal shares. In such companies, a shareholder’s liability is limited to the number of shares held by him. Minimum capital required to form a Public Shareholding Company is AED 10 million. It is also called as a Public Joint Stock Company (PJSC)

5.Private Shareholding

Private Shareholding Company refers to possession of a big business corporation in two diverse behavior —first, referring to ownership by non-governmental organizations and second, referring to ownership of the company’s stock by a relatively small number of holders who do not trade the stock publicly. It is incorporated by minimum of three members.

6.Partnership en Commendam

A Partnership en Commendam is also called as a Simple Limited Partnership. A Simple Limited Partnership is formed between a minimum of two partners – one general partner and one limited partner. The general partners are liable for the company's liabilities to the extent of all their personal and business assets; the limited partners are liable for a share of company liabilities equal to their share of the company capital.

7.Limited Liability Company

Limited Liability Company is the most preferred form of business entity in the UAE. An LLC in the UAE can be set up by at least 2 but not more than 50 persons. A shareholder’s liability is hedged against the value of his shares. In Dubai, the required minimum capital for this type of business setup is AED. 300,000. This figure can be different for different activities and jurisdictions.

8.Professional Company

Professional Company is regarded as a company that practices a profession as its main object and that partners rely on their livelihood on the intellectual effort they exercise more than on profiting from the business of others. On this basis, the Professional Companies in Dubai are set up between professionals or partisans and carry out non-commercial activities.

Process of Company Formation in the UAE

UAE offers three different types of business structures to an organization to conduct business in this area:

On-Shore or Mainland: This type of a corporate structure requires a UAE National/ Emirati to act as a local sponsor or local service agent for the companies to do business locally as well globally from UAE. There are several types of On-Shore businesses that can be incorporated. 

Off-Shore: In an offshore company, expatriates own 100% of the business. It is used as an asset, international trade, property or holding companies for other firms inside or outside the UAE. This structure is suitable for international businesses who wish to operate from outside of UAE.

Free-Zone:  In Free Zone companies as well expatriates can own 100% of the firm and work inside UAE without the need to have a local sponsor or local service agent. Free Zone designed for International Business; however, the business can be conducted within the UAE with some restrictions.

The other types of structures or entities for company formation are LLC, Branch and representative office, professional firms, shareholding companies and Joint venture.

The company formation or registration procedures are different in the case of the business structures and their legal form. However following are the step by step process that one can follow as a guideline:

  • Select a company name to apply for its registration to DED (Department of Economic Development)
  • Draft an application for approval and legalization from authorities.
  • Choose a commercial place to conduct business activities.
  • Arrange the required documents, legalized certificates, draft legal application and apply for final approval
  • After collection of trade license, apply for investor visa and ID.
  • To start your business activities in UAE, open bank account and collect the final documents from DED including the certificate of incorporation.

Benefits of setting up a company in the UAE

UAE is an ideal location international business due to its environment of activities, support, and efficiency in offering service. Following are some of its benefits:

  • Free enterprise system for company formation
  • Talented workforce and relatively easy recruitment procedures.
  • Top Class telecommunication system will be available in company Setup in Dubai.
  • Highly developed transportation facilities after Dubai Company Setup.
  • Host for top international exhibition and conference.
  • Elegant residential accommodations and commercial structures.
  • Sophisticated financial and services sector.

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