Business Registration

UAE

Document

1- Sole Establishment

A business owned and operated by a single individual is known as the sole proprietorship. The sole proprietor is in complete control of the company's operations and profits, bearing unlimited liability for all financial obligations, including debts. Here's a comprehensive explanation of sole establishment:

Features:

  1. Manager Appointment:
    2. - A sole proprietor can appoint one manager as per the Department of Economic Development (DED) business regulations.
  2. Trade Name:
    3. - The trade name must be related to the commercial activity of the firm.
  3. Branches:
    4. - A sole trader can have more than one branch, each undertaking one or all of the activities included in the main business license.
  4. Branch Limitations:
    5. - A sole proprietorship cannot have a branch outside the Emirates.
  5. Local Service Agent (LSA):
    6. - If the trader is a National of a country other than the UAE or GCC, they require a Local Service Agent (LSA).
  6. Ownership:
    7. - A corporate body cannot own a sole proprietorship.

Advantages:

  1. Foreign Ownership:
    2. - Foreign professionals can retain 100% foreign ownership in the business.
  2. Practice Anywhere:
    3. - The company can legally practice professional services anywhere in the UAE, including Free Zones.
  3. Location Flexibility:
    4. - The company can be set up at any location without any restrictions.
  4. Capital Requirements:
    5. - The government has wholly waived any paid-up capital requirements.

Terms and Conditions:

Below are the terms and conditions to set up a sole proprietorship company in Dubai:
  1. Education Qualification:
    2. - The sole proprietor must have obtained an education qualification for the same activity that he/she has selected.
  2. Manager Limitation:
    3. - There is a limitation to the number of managers that can be appointed on a professional license.
  3. Business Capital:
    4. - The capital of the business is not a constraint for a sole proprietorship.
  4. Trade Name:
    5. - The business name must be related to the commercial activity of the company.
  5. Branches:
    6. - A sole proprietorship can have more than one branch, each may undertake one or all the activities included in the main business license.

Who can form a Sole proprietorship in UAE?

Unlike a UAE Limited Liability Company (LLC), which requires that at least 51% of shares must be registered to a UAE/GCC national sponsor, a qualified foreign investor that sets up an establishment or sole proprietorship to practice a professional service is permitted 100% ownership in the company. Establishments that are owned by foreign nationals are required to appoint a National Service Agent (NSA) to assist in obtaining licenses, visas, etc. NSAs have no direct involvement in the business. Sovereign can act as the NSA. A sole trader from Dubai may carry out commercial or technical activities throughout the Emirates. Therefore the obtained license will represent these activities. Even if there is no minimum amount to open a sole proprietorship in Dubai a person must calculate the amount required to do their business.

Process of Sole Proprietorship Company Setup in Dubai:

  1. Trade Name Selection:
    2. - Select and finalize a unique trade name that correlates with the business.
  2. Initial Approval:
    3. - Obtain initial approval from the Department of Economic Development for business registration in Dubai.
  3. Document Submission:
    4. - Collect approval from various other departments to ensure legal compliance, and submit documents with the application form.
  4. Office Space:
    5. - Finalize an office space as physical office space is mandatory for mainland companies, and submit the tenancy contract for verification.
  5. License Application:
    6. - Apply for a license after business registration.

Documents Required:

Below are the documents required to set up a sole proprietorship company in Dubai:
  1. Business Application Form
  2. Licensing Application Form
  3. Passport Copy of the Sole Proprietor
  4. Details of the Local Sponsor (if applicable)
  5. No-objection letter by the sponsor (if applicable)
  6. Proof of Registered Address of the Company
All documents must be attested from the relevant UAE consulate and translated into Arabic by an official translator before submission to UAE authorities.

Registration Process:

The registration process for setting up a sole proprietorship business in Dubai involves:
  1. Initial Approval:
    2. - Obtain initial approval from DED, acknowledging the UAE government's non-objection to the company formation in Dubai.
  2. Trade Name Approval:
    3. - Submit three trade name options to receive approval for at least one name.
  3. Signing Local Agreement:
    4. - Prepare and sign the local agreement with the Local Service Agent, ensuring both parties are present.
  4. Office Space:
    5. - Finalize an office space as physical office space is mandatory for mainland companies, and submit the tenancy contract for verification.
  5. License Collection:
    6. - After completing the above steps, receive a payment voucher, make the payment, and collect the trade license for the sole establishment.

2- Partnership Company

Setting up Company in Dubai has become a very profitable proposition nowadays. There has been a drastic development in the infrastructure of Dubai during the past years. This led to economic growth in the country. Dubai is not only successful in offering ample business opportunities to entrepreneurs but also has a seamless process for registering a Limited Partnership Company.

It has always been welcoming various kinds of businesses in the Dubai Free Zones like, the Sole Proprietorship, Limited Liability Company, and Joint Venture business to start their establishment in the country and expand it further. Now, for a business to business set up in Dubai one needs to choose a legal structure first and Dubai offers many such corporate entities to the entrepreneurs, one such thing is a Limited Partnership Firm.

Formation of Limited Partnership Company in Dubai:

As per the Department of Economic Development (DED), A Limited Partnership is formed between a minimum of two partners, one is a General partner and another is a Limited partner. Sometimes it is called 'silent partner" as the partner does not take part in any of the business activities or share any profit or losses of the business. Limited Partners are liable for a share of company liabilities equal to their share of the company capital. The company can have more than one branch and every branch can take over one or all activities which is included in the primary business license.

Difference between a General Partnership and a Limited Partnership Company in Dubai

The main difference between General Partnership and Limited Partners is that the General partners must be UAE nationals whereas Limited Partners can be nationals of other countries. The company name along with the company should have names of the General partners but the name of the Limited Partner should not be mentioned in the name of the company. A limited partner should not interfere in management functions or involve third parties even if he/she has the authority to do so. Although a limited partner can participate in internal administration. They have full right to verify the profit and loss account and the balance sheet and also company books and documents if this would not cause damage to the company.

Key Steps to Set up Limited Partnership Company in Dubai

The key steps to set up a Limited Partnership Company in Dubai are:

  1. Choosing a catchy trade name.
  2. Approval from the General Directorate of Residency and Foreigners Affairs for any foreign investor is required.
  3. Provisional approval is needed which is a certificate that enables the partner to apply for a business license.
  4. An authorization is needed from other relevant authorities which depends on the nature of your business.
  5. 5. The partner may apply for a business license via the website of the Department of Economic Development (DED), or in person at a DED customer service Centre.

What are the Documents Required to Set up a Limited Partnership Company in Dubai?

Like all other businesses, Limited Partnership also has certain rules and regulations for a company formation in Dubai:

  1. Besides the other details, the liability contract shall include the name of every partner, along with his surname, date of birth, country, nationality, the portion paid out, and capital share.
  2. The limited partner is only responsible for its capital share to the borrowers of the company.
  3. A limited partner cannot interfere in other matters relating to the company's administration even after getting the authorization.
  4. He/she can request a copy of the loss/profit reports and the balance sheet and verify the data is authenticated.
  5. If the limited partner fails to maintain the previous criteria then he/she will be responsible for all the obligations arising from his business in all companies.
  6. The limited partner may be held accountable for all his money for all obligations of the corporation.
  7. If the limited partners carried out any of the banned administration business based upon an explicit or implicit authorization from the partners, such partners should be held responsible for the obligations resulting from such acts.

A limited partnership shall issue resolutions in the consensus of all partners and limited partners unless the contract states a majority, and the majority number shall be considered unless otherwise stated.

What are the Documents Required to Set up a Limited Partnership Company in Dubai?

After submitting a commercial license issuance application form, these documents are required:

  1. The certificate of a trading name is required.
  2. A certificate of preliminary approval is required.
  3. The UAE identification card of the applicant is needed.
  4. The registration extract is required for each concerned who is a citizen of the Emirates.
  5. The lease arrangement is needed for the place of business.
  6. If the partner has a representative for presenting the application for a license, an approved power of attorney is required by a notary public.
  7. A photocopy is required along with the business sign, further carrying the calligrapher's seal and signature and the measurements of the board.
  8. A NOC is required by an appropriate authority if the business needs permission to carry out its economic activity.
  9. Approval is required from the General Directorate of Residency and Foreigners Affairs for any foreign investors.
  10. The founding agreement of the partner must be authenticated by a notary public.
  11. The proof is required showing that the partnership's founding agreement has been published in the Ministry of Economy bulletin.
  12. The registration certificate from the Economy Ministry.

What is the Cost Involved in the Limited Partnership Registration Process?

The fees vary according to business activity:

  1. Due to withdrawal of any partner
  2. Due to a bankruptcy a partner
  3. Due to the insanity of a partner
  4. And due to the death of a partner

However, the partnership firm can continue if the rest of the partners agrees to this.

3. Limited Liability Company (LLC) in Dubai

Limited liability company in the UAE is the most preferred form of a business entity by individuals.

The liability of the partners in an LLC is limited to the extent of their investment in the company.

LLCs can conduct any commercial or industrial business activity in the jurisdiction.

What are the Features of an LLC company in the UAE?

  1. Professional or consultancy activities cannot be conducted by this form of the company except banking, insurance, or investment
  2. An LLC can conduct any industrial or commercial activity
  3. 51% ownership should be with the UAE national and the remaining 49% can be owner-owned
  4. LLC formation requires a UAE accredited auditor
  5. Minimum 2 and maximum 50 shareholders can invest in the company

4. Private Shareholding Company

This type of business is also called a Private Joint Shareholding Company in the UAE.
It can be formed through a minimum partnership with at least 3 investors.

Such legal structures are compatible with all sorts of commercial and industrial activities besides the professional business.
A GCC national can own up to 100% of the shares.

Features of a Private Shareholding Company in the UAE

  1. An approval from the Ministry of Economy must be obtained to establish a private shareholding company.
  2. The company must appoint one manager
  3. A company can have more than one branch. Each may undertake one or all of the activities included in the main business license
  4. At least 51% of the shares must be owned by a UAE national

5. Public Shareholding Company

A public Share Holding Company is defined as a legal entity.
A Public Shareholding Company is also called a Public Joint Stock Company (PJSC) in the UAE.

During the company incorporation process, the trade name must not be from any partnering investors, except if the name is a patent of a shareholder or if the name is entitled to store belonging to the shareholder.

Features of a Public Shareholding Company in the UAE

  1. Partners can practice any industrial, commercial or professional business activities in accordance with DED business regulations
  2. The company must have a maximum of 5 appointed managers as per DED business regulations
  3. A Public Share Holding Company must have at least 5 founding members who are UAE Nationals, owning between 30% and 70% of the capital shares
  4. A company can have more than one branch. Each may undertake one or all of the activities included in the main business license.

6. Civil Company

Recognized professions such as a doctor, accountant, engineer, and lawyer can open a civil company in the UAE.
The company can have partners owning 100% shares and the activities allowed for the civil company can be only from a professional business.

More specifically, such activities are narrated as physical or intellectual, practiced by one or more natural persons under a defined capital.
To open a civil company some rules must be followed for successful incorporation.

Features of a Civil Company in the UAE

  1. If a foreign company invests as a partner in a civil company, it must be from the same type of business activity
  2. Like in the case of a sole proprietorship, an LSA is required for the company incorporation process if the owner is a foreign national.
  3. Partners from any nationality can start this business
  4. If the company is involved in engineering activities, one partner should be a UAE national who owns no less than 51% of the business.

7. Branch of a Foreign Company

In simple terms, a branch office is a dedicated outlet of a company. Though physically apart, the branch office does not constitute a separate legal entity. As a functional means to expand and grow business reach across countries, branch offices serve as an operational vessel to establish company presence in new regions and enhance prospects of sales and revenue.

  1. A branch office is incorporated by filing an application with the help of a local service agent through the Ministry of Economic and Commerce.
  2. Approval must be secured from the respective authority after a permit letter is issued regarding business activity from the Ministry of Economic and Commerce.
  3. The local Economic Department will register the branch office after which the business license will be handed to the company.