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A limited liability company can be formed by a minimum of two and a maximum of 50 persons whose liability is limited to their shares in the company’s capital. Most companies with expatriate partners have opted for this form of company. In Dubai, the minimum capital is currently AED 300,000 (US$ 82,000), contributed in cash. But now it is not mandatory to show this amount deposited in bank account during registration of the company. While foreign equity in the company may not exceed 49%, profit and loss distribution can be mutually agreed upon. Responsibility for the management of a limited liability company can be vested in the foreign or national partners or a third party.
The Commercial Companies Law also covers the formation and regulation of branches and representative offices of foreign companies in the UAE and stipulates that they may be 100% foreign owned, provided a local agent is appointed.
Only UAE nationals or companies 100% owned by UAE nationals may be appointed as local service agents. Local agents - also sometimes referred to as sponsors - are not involved in the operations of the company but assist in obtaining visas, labour cards, etc and are paid a lump sum and/or a percentage of profits or turnover. In general, branches and offices of foreign commercial companies are not licensed to engage in importing activity except for re-export or in the case of products of a highly technical nature. To establish a branch or representative office in Dubai the following documents are required:
A UAE national should be appointed as a "Service Agent",While Starting a Professional firm in UAE. The Service Agent is not a shareholder in the company (which differs from their role in an "LLC"), and the shareholding of the entity can be 100% foreign. The local service agent will have no direct involvement in the business.
In setting up a professional firm, 100% foreign ownership, sole proprietorships or civil companies are permitted. Such firms may engage in professional or artisan activities but the number of staff members that may be employed is limited. A UAE national must be appointed as local service agent, but he has no direct involvement in the business and is paid a lump sum and/or percentage of profits or turnover. The role of the local service agent is to assist in obtaining licenses, visas, labour cards, etc…
An industrial license is issued to a natural or juridical person to practice any investment activity, the object of which is to discover natural resources or transform raw materials in terms of its structure or appearance into manufactured products or to transform the semi-manufactured products into fully manufactured products by using mechanical power and segregate the products, filling, assembling or packing them.
A branch office, legally regarded as part of its parent company, is a full-fledged business, permitted to perform contracts or conduct other activities as specified in its license. A branch office may only be engaged in activities similar to those of its parent company. Foreign companies may establish a branch or representative office in the UAE. Branches and representative offices may, subject to obtaining the necessary licenses, carry out promotional activities and facilitate contracts only.
Activities required related ministry/Authority prior approval
Free zones in UAE
Business wishing to operate in Dubai should be aware that several zones, known as ‘free zones’, have been established to ease foreign investment in Dubai. However, business operating within a free zone are restricted over the types of dealings they may conduct outside the designated free zones. Businesses wishing to conduct business in the mainland UAE must comply with the requirements of the Companies Law and other relevant laws applicable to the respective industry. Below is an overview of the most popular methods used by foreign companies to operate in Dubai within a free zone.
Companies incorporated and operating within the free zones are not subject to many of the restrictions imposed by the Companies Law and other UAE laws and regulations. Entities operating within the free zone may be wholly owned by foreigners, who benefit from a guarantee that tax will not be applied for a certain period, notwithstanding any subsequent change to federal or local laws.