Whatever type of business
you are setting up, you will need a license to do business
in the United Arab Emirates. The three types of licenses are
|1. Commercial license (all kinds of trading)
2. Industrial license (manufacturing or industrial)
3. Professional license (professions, services and craftsmen)
Before starting to setup a company, you need
to decide how the ownership of the company will be. The two
types of business ownership in the UAE are discussed below.
In this type of ownership, 51% of the company will be owned
by a UAE national and the other 49% you may own, with the
business being situated anywhere in the UAE. There are seven
categories of business organisation that can be established,
which are - general partnership company, partnership-en-commendam,
joint venture company, public shareholding company, private
shareholding company, limited liability company and share
partnership company. General partnership companies are limited
only to UAE nationals, while the establishment of partnership-en-commendam
and share partnership companies are not presently encouraged.
Public and Private Shareholding
By law, banking, insurance, and financial activities
should be setup as public shareholding companies, but
for foreign companies in this category can setup a presence
by opening a branch or representative office.
Large projects or operations are suitable
to be shareholding companies as the minimum capital
requirement for a public shareholding company is Dhs.
10 million (US$ 2.725 million) and Dhs. 2 million (US$
545 thousand) for a private shareholding company. This
type of company must have a chairman and majority of
the directors as UAE nationals and there is less flexibility
of profit distribution than is permissible in the case
of limited liability companies.
A joint venture is a contract agreement between a UAE
party and a foreign party for the engagement in a desired
business. The local party in the joint venture must
have at least 51% of the company, while the profit and
loss distribution can be prescribed. There is no need
to license the joint venture or publish the agreement.
The foreign partner deals with third parties under the
name of the local partner who (unless the agreement
is publicised) bears all liability.
Limited Liability Companies (L.L.C.)
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. Such
companies are recognised as offering a suitable structure
for organisations interested in developing a long term
relationship in the local market. The required amount
to setup a llc is currently Dhs. 300,000 (US$ 82,000).
The foreign equity in the company may not exceed 49%,
profit and loss distribution can be prescribed.
In order to start up a company that is solely owned by you,
requires that you setup one at one of the free trade zones
throughout the UAE. The majority of IT companies have setup
their middle eastern branches in the Dubai
Internet City (DIC), while many media related companies
have setup their branches in the Dubai
Media City (DMC). A list of the various free zones in
the UAE can be found here.
Alternatively, expats can have a company setup by a UAE national
and sign legal documents at the courts that the actual ownership
of the company is for them. This agreement normally involves
paying the UAE national an agreed amount of money each month