All You Need to Know About Company Formation in Dubai and UAE: 2019

Starting a business in Dubai implies understanding the difference between the formation of free zone and offshore companies. Next, you must choose a license based on the activities and services you want to provide. Finally, you must prepare all legal documents, open a corporate bank account and start the visa process.

The above tasks may seem like a lot of work, and in fact they can be. That's why the business setup consultants of the Business Link UAE will manage all the heavy work, which means you don't need to visit countless government authorities to do the job. And it all starts with a free and no obligation consultation where we will guide you through all the latest information on how to start a business in Dubai. Business setup in Dubai is made easy with UAE consultancy. Contact us today to start your business dream.

Opening a company in the UAE is prestigious! Today, the United Arab Emirates is a global economic center that has rapid development, a stable economy, favorable tax preferences and unsophisticated legislation, which attracts investors and entrepreneurs from around the world. The consulting company Business Link UAE offers a full range of UAE business registration services. Our team of lawyers and professional economists with extensive experience will help you open a company in Dubai and other emirates.

The UAE business registry is a demanding procedure complex. The qualified Business Adviser professionals are ready to help you. By trusting us, you will save your valuable time and money, since our company is located in the United Arab Emirates and provides services directly without any intermediary. That is why we have reasonable prices.

Once you have decided to open a company in the United Arab Emirates, you must first choose a location. It is noteworthy that each of the seven emirates has its own regulations and terms for records. In addition, there are free zones that have their own rules.

A local company is registered in the emirates territory of the country to operate within the emirates. According to national legislation, said company can only register if one of the partners is a citizen of the UAE and owns 51% of the shares.

If you want to open a company in Dubai with a 100% foreign participation, we recommend that you choose one of the free economic zones. And still, if you want to open a local company in the UAE, you must know its characteristics:

• A foreign citizen may own only 49% of the company's shares, while 51% will be owned by a local sponsor;
• The sponsor will receive an annual reward and will not participate in the company's operations.
• A company can participate in any type of activities within the UAE and abroad;
• A company provides a residence visa and a tax certificate;
• The location of the main office depends on the registry emirate;
• No audit requirements;
• No restrictions on the minimum authorized capital (1 AED is sufficient)
• Possibility of opening an account in any bank of the UAE.

Experience has shown that the registration of a local company in the UAE is only required in exceptional cases. Most of the activities can be carried out through a company registered in a free zone.

DUBAI COMPANY TRAINING OF A RESIDENT COMPANY (LLC)

• Opening a company in the UAE with a relevant local sponsor in the following cases:
• Cooperation with government organizations;
• Participate in public tenders
• UAE pit trade;
• Carrying out activities and providing services with the need for assistance and presence in assets in the other emirates;

When the activity of a company requires a large space and more visas, since the costs of office in the local land are lower than those of the free zones.

Generally, a local sponsor is required to open a restaurant, school, kindergarten, construction, travel or insurance company.

But there are exceptions. Companies targeting professional activities, such as legal, auditing and consulting, do not require a local sponsor. In such cases, a foreign entrepreneur who works in the emirates and outside a free zone has a 100% interest. Official support from a sponsor is required only during visa processing for employees and dealing with local authorities.

Civil Company Formation in Dubai – How to Set it up in UAE?

UAE in general and Dubai in particular offers a plethora of lucrative advantages to business community. State of the art infrastructure, strategic location, impeccable ethos, transparency, amazing government support and host of incentives are some of those bright spots that beckon business entities from across the globe. Although Dubai offers several types of company formations the one which thrills certain section of aspirants is civil company formation.

So, what is civil company formation in Dubai? But before that, let us understand the dynamics and metrics of setting up any kind of business in Dubai.

Dubai offers three main jurisdictions for enterprising entities – Mainland, Free Zone and Offshore. While the first option requires a local partner who by default will hold 51% stake in the company, the second option allows 100% ownership with a bouquet of incentives such less corporate tax and personal tax as well and 100% repatriation of profits. However, mainland business opportunities in both the cases are simply off limit.

Offshore option is chosen by businesses for the same set of reasons, similar to free zone, but with a different set targets and goals.

Once an appropriate jurisdiction is selected the next step is to apply for a relevant license. Business entities need to understand that licenses for mainland are issued by Department of Economic Development, and for free zone and offshore, respective authorities are responsible.

Department of Economic Development issues three different types of business licenses:

• Commercial license
• Industrial license
• Professional license

And the types of companies that can be registered under these licenses include:

1. Limited Liability Company
2. Civil / Professional Company
3. Joint Venture Company
4. Private Shareholding Company
5. Public Shareholding Company

Of all the above mentioned company formations, Civil Company offers the best of both worlds, i.e. 100% ownership and access to mainland business opportunities. The question is how to start civil company in Dubai? The answer is really simple. Get a professional license in Dubai. However, a point to note - professional license setup in Dubai is only meant for professionals such as  doctors, accountants, lawyers, legal consultants, management consultants and engineers, and these business entities must hold professional qualification/s in their field of expertise.

Nonetheless, a local service agent, basically a UAE national is still required as a liaison between the said entity and the government department/s. This agent applies for various approvals, license, permits, visas etc. Business Link UAE with a dedicated and qualified staff provides a one stop solution for professional license in Dubai as well as professional company formation in UAE.

Mentioned below are some of the salient features of Professional / Civil Company formation:

1. Professional / Civil Company can only be created for professional services.
2. The owners / partners must be qualified professionals in their chosen area of expertise.
3. 100% ownership allowed. Access to mainland for business opportunities allowed.
4. Services of a local agent still mandatory.
5. Non professional activities such as trading / manufacturing activities disallowed.

Business Link UAE, a company formation consultant in Dubai can help you start professional company or any other type of business setup in Dubai, UAE.

All You Need to Know About Local Partner and Services Agent in Dubai

There has been a repeated confusion concerning the terms used in connection with the Local (Emirati) Sponsor, a mandatory requirement when establishing a business outside the free zones in the United Arab Emirates.

The mix-up merges two expressions into one (“sponsor”) without a proper distinction, which creates the impression that there is always an Emirati in full control of the business.

In fact the word “sponsor” is neither a job title or position nor a job description of the involved Emirati. However, it can be considered a status that a Local Partner or Local Service Agent gains after forming a company or after being appointed as a Service Agent for a certain entity.

Whether a Local Partner or a Local Service Agent is required depends on the kind of activity and the company structure that the entity will have.

In Dubai, trading and industrial activities require a Local Partner (who holds 51% of the company shares) and are usually structured as a Limited Liability Company (LLC).

However, a professional license in Dubai can’t use the LLC structure and can only be a civil company. In Dubai, all sorts of commercial activities can use the LLC structure.

The main difference between the entities under the CCL (Commercial Companies Law) and those under the Civil Code is that the activities which may be practiced in the CCL are of a commercial nature, whereas in the Civil Code they involve the use of intellectual faculties, acquired information or the use of skills.

Civil activities may not use the Limited Liability Company structure. Moreover, as mentioned earlier, the activities civil entities may be engaged in will be restricted to all those of a civil nature alone.
Professional companies may be 100% foreign owned. However, it is necessary to appoint a local Emirati Service Agent from the same Emirate.

Under the Civil Code, service or professional companies are de-fined as companies where two or more agree to be bound to carry out work and to be liable to third parties against payment of consideration, whether they share their work equally or unequally.

According to Dubai rules on licensing professionals and trader and in order to establish a business which practices services or professional activities, the business will be formed as a “Business Partnership”. Most of the services related to professional activities require a professional license.

A Local Service Agent has to be appointed while 100% of the company shares can be owned by foreigners. The Local Service Agent will deal with the government officials and Ministries on behalf of the company and facilitates the renewal process.

With a Dubai local Sponsor/Local Service Agent, it is common to arrange side agreements that redefine the conditions between the parties in favor of the actual owners/managers of the company.
For the last few years, there has been a discussion whether or not certain activities should be exempt from the requirement to have a Local Partner and a correspondent law is in the pipeline.

How to Obtain Trade license in Dubai Mainland?

What is Trade/Commercial License in Dubai?

Trade license is also known as commercial license in Dubai and is must to have by those entrepreneurs who want to do any kind of trading business in UAE. The Department of Economic Development plays an important role for getting trade license in Dubai that permits entrepreneurs to do trading business in UAE. If you go for any kind of business that comes under commercial activity, then you are required to get commercial license from the DED Department.

If your business goal is to buy and sell goods in all over UAE, then setting up a Limited Liability Company (LLC) in Dubai Mainland can be one of best business decisions. This is most widely preferred business license by companies with foreign ownership who wish to import, export and distribute products in Dubai, UAE.

According to UAE companies’ law, you need to appoint an UAE national for commercial license company formation in Dubai Mainland that will acts as a local sponsor for your business.

The complete procedure of getting Trade/Commercial license in Dubai

1. Identification of your business activity/business category
2. Trade name selection and reservation
3. Find trusted local sponsor
4. Initial approval application submission to DED (The Department of Economic Development)
5. Find correct business premises or office for your company activity
6. Preparation of all required legal documents like MOA (Memoranda of Association), Ejari documents etc
7. Final submission of all these documents to Dubai government department of economic development in order to obtain trade license in UAE

With more 15 years of experience in UAE as a company formation consultant, Business Link UAE is also here to provide complete assistance for commercial license setup in Dubai.