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Incorporation

Setting up a company in United Arab Emirates

When setting up a company you may want to consider these factors:

  1. Business factors

    • The industry and type of business
    • Nationality of the headquarters/individual(s) and
    • Presence of existing trade agreements or relationships
  2. Location

    Location will be another factor, since the UAE has different requirements depending on where the company is incorporated. Incorporating on the mainland requires a local sponsor to own 51% of the company on paper. This can be done through an agent or local sponsor service but is expensive (approx AED 50,000)

    The Free zone has reduced requirements on foreign ownership but has some limitations such as; the company must take offices within that Free zone; the company may only conduct business within the Free zone; it must have an appropriate level of minimum capital and it may only perform the activities on its trade license.

  3. Regional language

    Arabic is the national language of the United Arab Emirates. The Gulf dialect of Arabic is spoken natively by the Emirati people. As a British colony until 1971 and a hub for commerce, English is the primary lingua franca (trade language) in the UAE. As such, knowledge of English is a requirement when applying for most local jobs. Other widely used languages are Persian, Nepali, Bengali, Hindi-Urdu, Balochi, Pashto, Tagalog and Malayalam. Additionally, most world languages are represented by a mainly expatriate population drawn from a wide mix of nationalities.

  4. Types of visa in United Arab Emirates

    There are different types of work visas for the UAE, depending on the duration of the employment contract. In order to obtain a work permit for Dubai, expats need a residency visa, which allows them to remain in the emirate for up to three years.

Your Options

This article provides a general guideline on entering UAE for business purposes. In particular it looks at setting up a foreign company.

The late Sheikh Zayed, ruler of Abu Dhabi and the first President of the UAE, oversaw the development of the Emirates and steered oil revenues into healthcare, education and infrastructure. The UAE’s economy is the most diversified in the Gulf Cooperation Council, with its most populous city, Dubai in particular developing into a global hub for tourism, retail, and finance.

Nevertheless, the UAE’s oil reserves are the seventh-largest in the world, while its natural gas reserves are the world’s seventeenth-largest, and the country remains extremely reliant on petroleum and natural gas; more than 85% of the economy was based on the oil exports in 2009,while oil exports accounted for 77% of the state budget in 2011.

Limited Liability Company = LLC

This entity is defined as an association with a maximum of 50 partners and a minimum of two. Each partner’s liability is limited to the extent of its share participation in the capital of the company.

LLCs are no longer required to meet the minimum capital requirements of AED 300,000 (in Dubai) or AED 150,000 (in Abu Dhabi and the other Emirates). Instead, a new test of “sufficient capital” is judged by the Department of Economic Development of the relevant Emirate (including consideration of the size and planned activities of the company).  Foreign companies wishing to establish an LLC in the UAE should seek guidance on the current practice of the relevant Emirate regarding minimum share capital.

Registration Process for Limited Liability Company

Reserve a company name and Apply for registration at the Department of Economic Development (DED)

A name availability check, reservation, and payment can be done online at the website of DED.

To submit a registration application, the entrepreneur must first obtain preliminary approvals from the Licensing Section of the Dubai Department of Economic Development (DED) on its business activities, trade name, and identity of partners.

Agency: Department of Economic Development

Cost: AED 110 for initial approval + AED 210 for name reservation

Time: 1 day

 

Notarize the company’s Memorandum of Association at Department of Economic Development

The applicant notarizes the standard Memorandum of Association (MOA) at the Department of Economic Development (DED). Notarization takes no more than 1 day. A common practice is for the entrepreneur’s lawyer to obtain a preliminary approval from the notary beforehand, so that the client can arrive at a specified time and have the documents notarized immediately.            

Agency: Notary

Time: 1 day

Cost: Maximum notary fee is AED 10,000, plus 0.25% of the capital (for 3 copies of the Memorandum of Association), and AED 5 per each additional copy.

 

File company documents with the Department for Economic Development (DED); Obtain trade license and Register for membership at the Dubai Chamber of Commerce and Industry (DCCI)

To obtain the Trade License and Commercial Registration Certificate, the LLC must submit the following original documents to the Commercial Registry at the DED Trade License and Commercial Registration Department. These documents can also be submitted online due to the ongoing efforts by DED to render electronic registration available and convenient.

  • The prescribed application form, signed by the company manager(s) or their legal representative(s).
  • The memorandum of association (an original and a copy).
  • A letter issued by the DED, attesting to the company name approval.
  • The original letter of company approval, issued by the DED Committee of Limited Liability Companies.
  • Passport copy of each partner.

If Commercial Registry officials deem the documentation to be in order, the company name will be entered into the Commercial Register. The DED then forwards the following documents to the Federal Ministry of Economy to arrange for publication:

  • Notarized memorandum of association (copy).
  • The application for entry of the company name in the Commercial Register (copy).
  • Extract of the entry of the company name in the Commercial Register.

Publication takes several months, however, this time frame is not important because the authorities will accept a copy of the Ministry’s receipt of publication fee payment. After the publication, the Ministry of Economy issues its approval letter.

Before the newly formed company can begin operations, it must apply to the DED for a trade license. After the notary public at the Commercial Registry notarizes the memorandum of association, a license application form is completed in Arabic, signed by the authorized company signatory and filed with the DED in duplicate. The DED files one copy and forwards the other to the UAE Federal Ministry of Economy.

The trade license application must be filed with the applicable fee and the following documents:

  • The prescribed form for setting out the proposed company name in Arabic and English.
  • The original lease for the company’s office premises.
  • The prescribed form for obtaining the Dubai Municipality Building Department’s clearance on the suitability of the office premises.

All business activities fall into three categories of licenses:

(1) Commercial licenses, covering all kinds of trading activity;

(2) Professional licenses, covering professions, services, craftsmen, and artisans; and

(3) Industrial licenses, establishing industrial or manufacturing activity.

Upon the conclusion of this procedure, the DED issues the original Trade License and Commercial Registration certificates. Upon presentation of the receipts showing payment of the Ministry publication fee and the Chamber of Commerce membership fee, the DED will issue the original trade license and certificate of commercial registration for the limited liability company and the DCCI membership.

Alternatively, the online license application is available whereby the applicant submits the filled-in form, completes online payment and instantly receives the license certificate that can then be printed out.

Recently, DED has launched electronic memorandum of association and “120-day” hassle-free trade license initiatives. These reforms aim towards the transition towards online registration, making it easier to start a business.

Agency: Department for Economic Development

Time: 3 days

Cost: 5% of the value of the lease agreement + AED 1,000-3,000 waste fees + AED 480 for company registration + AED 350 fees for name board + AED 1,200 for Chamber of Commerce membership registration (total: the 5% plus AED 3,030-5,030

 

Open Bank Accounts

If a person owns or is a part of a company that is registered in Dubai then he can open a corporate bank account for it. Research indicates that setting up banking in the UAE has generally become easier over time.

There are certain conditions that you need to fulfill to be able to hold a bank account. For example, in Dubai the two most important ones are that the person should be able to provide the necessary documentation proof of their identity, the nature of their business and the kind of transactions that they wish to make with this bank account. These requirements vary for different UAE banking authorities.

Agency: Commercial Bank

Time: 1 day

Cost: N/A

 

Apply for the establishment card at the Ministry of Labor

Either the entrepreneur or the authorized representative of the company should go in person to apply for the “Establishment Card” at the Ministry of Labor. Provided the trade license is obtained and the fees are paid, the “Establishment Card” can be issued the same day.

Agency: Ministry of Labor

Time: 1 day

Cost: AED 2,000

 

Register native workers with the Ministry of Labor

According to Ministerial decree No 1215/2005, native workers must be registered with the Ministry of Labor.

The following documents are required for submission during this registration:

  • 3 copies of the employment contract
  • A copy of employer’s passport
  • A copy of the trading license
  • A proof that the worker is a UAE citizen

Agency: Ministry of Labor

Time: 1 day

Cost: no charge

 

Register native workers with the General Authority for Pension and Social Security

Registration requires the submission of the native workers’ updated salary certificates or labor contracts.

Agency: General Authority for Pension and Social Security

Time: 1 day (simultaneous with previous procedure)

Cost: no charge

Branch Office

The activities a branch office can perform depend upon the license issued by the respective authority (e.g the Dubai Department for Economic Development). As a rule, only activities which are at least similar to those of the parent company are approved. However, a branch office must not perform import, export and manufacturing activities. Therefore, in practice, the activities of a branch are generally limited to services and consultancy work. However, a branch office may perform import activities subject to the condition that the branch only imports goods that are manufactured by the mother company abroad.

Registration Process for Branch Office

Identify local services agent

One of the key features of a branch office and a representative office is that both are required to appoint a local services agent (LSA). The LSA must be either a UAE national or a company wholly owned by UAE nationals.

The LSA is not responsible for the branch or representative office, nor does it take part in any operations, management or ownership of the office. Technically, the role of the LSA is restricted to administrative functions such as the obtaining of licenses, permits, visas etc, in return for a fee.

The appointment of the LSA is effected through a written agreement, which must be signed by the parties before a notary public in the relevant Emirate. There is no prescribed form of agreement and it will therefore be a matter for negotiation.

Agency: Local Service Agent (LSA)

Time: depends on the LSA

Cost: depends on Negotiation

 

Trade Name Reservation and Initial Approval

An application must first be made to the relevant Emirate’s Department of Economic Development for a trade name reservation and initial approval of the proposed branch or representative office registration.

Agency: Department of Economic Development

Time: 1 day

Cost: AED 110 for initial approval + AED 210 for name reservation

 

Apply to the Ministry of Economy

Following initial approval pursuant to step b., an application must be made to the Ministry of Economy (MOE) (The UAE Commercial Companies Law, article 314).

The application form requires full details of the foreign company (including share capital, head office, overseas activities, home jurisdiction); the nature of the proposed activities (these must be consistent with activities in the home jurisdiction); and the name of the proposed general manager in the UAE. The form must be accompanied by the prescribed documents, which will include:

  • Trade name reservation certificate and initial approval
  • Corporate documents including a certificate of incorporation (or equivalent), memorandum and articles of association, a certificate of good standing (where one can be obtained in the home jurisdiction)
  • A board resolution authorizing the opening of the branch or representative office, appointing the general manager and resolving to grant a power of attorney in the general manager’s favor; and confirming that the company accepts responsibility for the liabilities of the office once established in the UAE
  • A power of attorney in favor of the general manager (authorized by the board resolution) and a copy of the general manager’s passport
  • Audited accounts of the parent for the last two years
  • A statement setting out the company’s main operations and activities – supporting its intended activities in the UAE
  • The notarized agreement with the LSA, and a copy of the LSA’s identification documents (or corporate documents if it is a corporate entity).

The MOE will then issue their own initial approval, at which point the following additional documents must be submitted in hard copy to the MOE:

  • Application form
  • Certificate of incorporation of the parent company
  • Initial approval of the MOE
  • Local bank deposit certificate.

The MOE will then approve the establishment of the branch or representative office. Business cannot commence, however, until the following further steps have been completed.

Agency: Ministry of Economy

Time: 60 minutes  (online)

Cost: AED 20,202 approx

 

Obtain License from the Department of Economic Development

The MOE will issue a formal approval to either the Abu Dhabi Department of Economic Development or the Dubai Department of Economic Development, as appropriate (collectively referred to as the DED here).

Once the DED has received this approval, the applicant will then need to make a further application to the DED. This requires similar items to those submitted to the MOE; in addition, the applicant will need to include the proposed office address in the UAE.

This application needs to be accompanied by:

  • The MOE approval obtained under step 3, together with approvals received from any other authorities applicable to the industry
  • A copy of the proposed lease in the UAE
  • Copies of certain of the documents submitted to the MOE under step 3
  • Undertaking from the foreign parent company
  • A letter from a UAE auditor confirming that it acts, together with a statement by the same auditor summarizing the financial statements of the company for the two years preceding the year in which the application was submitted.

The DED will then issue a commercial license to the branch or representative office, usually valid for one year and renewable annually.

Agency: Department of Economic Development

Time: 60 minutes (online)

Cost: AED 55,097 approx

 

Bank Accounts

A person who owns or is a part of an onshore or offshore company that is registered in the UAE then generally he can open a corporate bank account for it.

There are certain conditions that you need to fulfill to be able to hold a bank account. For example, in Dubai, the two most important ones are that the person should be able to provide the necessary documentation proof of their identity, the nature of their business and the kind of transactions that they wish to make with this bank account. These requirements vary for different UAE banking authorities. One should choose the bank that best meets your needs and offers the most convenient banking solutions for all kinds of issues

Agency: Commercial Bank

Time: 1 day

Cost: N/A

 

Become a member of the Chamber of Commerce and Industry

The final step is for the branch or representative office to register as a member with the Abu Dhabi Chamber of Commerce and Industry or the Dubai Chamber of Commerce and Industry, as appropriate. The procedure is largely the same. It will be necessary to complete an application, and provide copies of the commercial license and office lease agreement along with passport copies of the authorized signatories of the branch or representative office.

Agency: Chamber of Commerce and Industry

Time: 3 days also depending on the chamber where the office is based

Cost: AED 1,200 for Chamber of Commerce membership registration fee’s could be different depending on the Emirate the Branch, or Representative Office in based in.

 

Apply for the establishment card at the Ministry of Labor

Either the entrepreneur or the authorized representative of the company should go in person to apply for the “Establishment Card” at the Ministry of Labor. Provided the trade license is obtained and the fees are paid, the “Establishment Card” can be issued the same day.

Agency: Ministry of Labor

Time: 1 day

Cost: AED 2,000

 

Register native workers with the Ministry of Labor

According to Ministerial decree No 1215/2005, native workers must be registered with the Ministry of Labor.

The following documents are required for submission during this registration:

  • 3 copies of the employment contract
  • A copy of employer’s passport
  • A copy of the trading license
  • A proof that the worker is a UAE citizen

Agency: Ministry of Labor

Time: 1 day

Cost: no charge

 

Register native workers with the General Authority for Pension and Social Security

Registration requires the submission of the native workers’ updated salary certificates or labor contracts.

Agency: General Authority for Pension and Social Security

Time: 1 day (simultaneous with previous procedure)

Cost: no charge

Representative Office

By setting up a representative office, the parent company creates its own legal and physical presence in the market. Nonetheless the task of a representative office is restricted to mainly providing support to the parent company. It may perform the following duties:

  • Observing the market
  • Preparation of project studies
  • Marketing and promotion for the products and services of the parent company
  • Negotiation of contracts between local customers and the parent company
  • Customer advice
  • Services
  • Supervision of commercial agents
  • Training activities
  • Observation of public sector invitations to tender

Representative offices must not perform any commercial activities, import or export goods, or sign contracts on their own behalf or set up their own accounts.

Registration Process for Representative Office

Identify local services agent

One of the key features of a branch office and a representative office is that both are required to appoint a local services agent (LSA). The LSA must be either a UAE national or a company wholly owned by UAE nationals.

The LSA is not responsible for the branch or representative office, nor does it take part in any operations, management or ownership of the office. Technically, the role of the LSA is restricted to administrative functions such as the obtaining of licenses, permits, visas etc, in return for a fee.

The appointment of the LSA is effected through a written agreement, which must be signed by the parties before a notary public in the relevant Emirate. There is no prescribed form of agreement and it will therefore be a matter for negotiation.

Agency: Local Service Agent (LSA)

Time: depends on the LSA

Cost: depends on Negotiation

 

Trade Name Reservation and Initial Approval

An application must first be made to the relevant Emirate’s Department of Economic Development for a trade name reservation and initial approval of the proposed branch or representative office registration.

Agency: Department of Economic Development

Time: 1 day

Cost: AED 110 for initial approval + AED 210 for name reservation

 

Apply to the Ministry of Economy

Following initial approval pursuant to step b., an application must be made to the Ministry of Economy (MOE) (The UAE Commercial Companies Law, article 314).

The application form requires full details of the foreign company (including share capital, head office, overseas activities, home jurisdiction); the nature of the proposed activities (these must be consistent with activities in the home jurisdiction); and the name of the proposed general manager in the UAE. The form must be accompanied by the prescribed documents, which will include:

  • Trade name reservation certificate and initial approval
  • Corporate documents including a certificate of incorporation (or equivalent), memorandum and articles of association, a certificate of good standing (where one can be obtained in the home jurisdiction)
  • A board resolution authorizing the opening of the branch or representative office, appointing the general manager and resolving to grant a power of attorney in the general manager’s favor; and confirming that the company accepts responsibility for the liabilities of the office once established in the UAE
  • A power of attorney in favor of the general manager (authorized by the board resolution) and a copy of the general manager’s passport
  • Audited accounts of the parent for the last two years
  • A statement setting out the company’s main operations and activities – supporting its intended activities in the UAE
  • The notarized agreement with the LSA, and a copy of the LSA’s identification documents (or corporate documents if it is a corporate entity).

The MOE will then issue their own initial approval, at which point the following additional documents must be submitted in hard copy to the MOE:

  • Application form
  • Certificate of incorporation of the parent company
  • Initial approval of the MOE
  • Local bank deposit certificate.

The MOE will then approve the establishment of the branch or representative office. Business cannot commence, however, until the following further steps have been completed.

Agency: Ministry of Economy

Time: 60 minutes  (online)

Cost: AED 20,202 approx

 

Obtain License from the Department of Economic Development

The MOE will issue a formal approval to either the Abu Dhabi Department of Economic Development or the Dubai Department of Economic Development, as appropriate (collectively referred to as the DED here).

Once the DED has received this approval, the applicant will then need to make a further application to the DED. This requires similar items to those submitted to the MOE; in addition, the applicant will need to include the proposed office address in the UAE.

This application needs to be accompanied by:

  • The MOE approval obtained under step 3, together with approvals received from any other authorities applicable to the industry
  • A copy of the proposed lease in the UAE
  • Copies of certain of the documents submitted to the MOE under step 3
  • Undertaking from the foreign parent company
  • A letter from a UAE auditor confirming that it acts, together with a statement by the same auditor summarizing the financial statements of the company for the two years preceding the year in which the application was submitted.

The DED will then issue a commercial license to the branch or representative office, usually valid for one year and renewable annually.

Agency: Department of Economic Development

Time: 60 minutes (online)

Cost: AED 55,097 approx

 

Bank Accounts

A person who owns or is a part of an onshore or offshore company that is registered in the UAE then generally he can open a corporate bank account for it.

There are certain conditions that you need to fulfill to be able to hold a bank account. For example, in Dubai, the two most important ones are that the person should be able to provide the necessary documentation proof of their identity, the nature of their business and the kind of transactions that they wish to make with this bank account. These requirements vary for different UAE banking authorities. One should choose the bank that best meets your needs and offers the most convenient banking solutions for all kinds of issues

Agency: Commercial Bank

Time: 1 day

Cost: N/A

 

Become a member of the Chamber of Commerce and Industry

The final step is for the branch or representative office to register as a member with the Abu Dhabi Chamber of Commerce and Industry or the Dubai Chamber of Commerce and Industry, as appropriate. The procedure is largely the same. It will be necessary to complete an application, and provide copies of the commercial license and office lease agreement along with passport copies of the authorized signatories of the branch or representative office.

Agency: Chamber of Commerce and Industry

Time: 3 days also depending on the chamber where the office is based

Cost: AED 1,200 for Chamber of Commerce membership registration fee’s could be different depending on the Emirate the Branch, or Representative Office in based in.

 

Apply for the establishment card at the Ministry of Labor

Either the entrepreneur or the authorized representative of the company should go in person to apply for the “Establishment Card” at the Ministry of Labor. Provided the trade license is obtained and the fees are paid, the “Establishment Card” can be issued the same day.

Agency: Ministry of Labor

Time: 1 day

Cost: AED 2,000

 

Register native workers with the Ministry of Labor

According to Ministerial decree No 1215/2005, native workers must be registered with the Ministry of Labor.

The following documents are required for submission during this registration:

  • 3 copies of the employment contract
  • A copy of employer’s passport
  • A copy of the trading license
  • A proof that the worker is a UAE citizen

Agency: Ministry of Labor

Time: 1 day

Cost: no charge

 

Register native workers with the General Authority for Pension and Social Security

Registration requires the submission of the native workers’ updated salary certificates or labor contracts.

Agency: General Authority for Pension and Social Security

Time: 1 day (simultaneous with previous procedure)

Cost: no charge

Outsourcing Employment Through a GEO Employer of Record Service

Whether to incorporate in UAE, and what sort of entity to setup are just two of the many choices companies must make when expanding into a new market.

If the company intends to have staff in UAE they must also decide whether they will administer that employment internally or use a Global Employment Organization to handle payroll and Employer of Record responsibilities. A GEO Employer of Record solution is an attractive alternative where

  • the company is looking to setup an office quickly
  • the company wants to work within a defined budget
  • the company wants to limit its initial commitment in UAE
  • the company needs help with tax, employment, immigration and payroll compliance in UAE

The complexity of employment regulations in UAE makes the use of a GEO advisable coupled with local legal counsel to ensure full compliance with employment laws, for example the drafting of local contracts for workers.

Shield GEO provides a comprehensive service in UAE allowing companies to deploy their staff quickly with reasonable, clearly stated costs and timeframes. The company contracts directly with Shield to employ and payroll their staff on their behalf in UAE.

Shield GEO then becomes the Employer of Record. Shield GEO assumes the legal responsibility for these employees, sponsoring them on work permits, complying with local employment law and running their monthly payroll. Using Shield GEO is the fastest and most cost effective way to deploy local and foreign workers into UAE. Read more about outsourced employment through Shield GEO.

APPENDIX

UAE Business Terms

*Note Arabic is written from right-to-left

English Arabic
Articles of Incorporation التأسيس
Bank مصرف
United Arab Emirates الأمارات العربية المتحدة
Commercial Bank البنك توازي
Dubai دبي
stockholder; shareholder المساهمين . المساهم
Tax ضريبة
Wages; pay; earnings; salary الأجور؛ الدفع؛ أرباح . راتب
register تسجيل
revenue دخل
organization منظمة
Memorandum of Association مذكرة الرابطة
local services agent وكيل خدمات محلي
Departments
Ministry of labor وزارة العمل
Department of Economic Development دائرة التنمية الاقتصادية
Department for Economic Development دائرة التنمية الاقتصادية
Commercial Register السجل التجاري
Federal Ministry of Economy الوزارة الاتحادية لل اقتصاد
Ministry of Economy وزارة الاقتصاد
Chamber of Commerce الغرفة التجارية

 

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