LIMITED LIABILITY COMPANY (LLC)
Limited Liability Companies (LLC) are one of the most common types of commercial entities that entrepreneurs and corporations can establish in the UAE. With a quick and easy setup process and a broad range of available business incentives, LLCs are widely preferred by entrepreneurs and corporations that want to penetrate the UAE market and establish a solid footing in the Middle East region. The law on commercial entities in UAE requires Limited Liability Companies to have at least one or more local sponsors or Emirati partners. This means the local partner/sponsor(s) must own a minimum of 51 percent of the shares in the LLC. More recently and following the release of the UAE Federal Law No. 19 of 2018 on Foreign Direct Investment, the UAE Cabinet announced the positive list of activities covered by the FDI Law, which will allow 100% foreign ownership or greater ownership than 49%. Please contact us directly for further information on 100% ownership. At Outright, we understand that some foreign investors might be concerned about the 51% 49% shareholding arrangement, and the thought that another individual will hold shares in your company. As such, we have developed a secure and trusted nominee structure for LLC company formation that ensures the interests of our clients are fully protected in accordance with the law. If you choose to partner with Outright, we will be the Corporate Emirati partner of your LLC company, ensuring you can run your day-to-day business operations without any interference. This setup also removes any pressure for you to independently find and maintain a trustworthy and reliable local sponsor relationship. How is an LLC in the UAE Set Up and Structured? One of the key advantages of an LLC setup is that foreign partners have limited liability exposure due to their share in the total investment capital. The Emirate of Abu Dhabi requires no specific minimum share capital amount, and commercial law stipulates only that the capital should be adequate for the company’s needs. Exceptions to this rule include activities such as real estate and recruitment, since these can only be completed by 100 percent locally owned entities. Our company formation specialists will advise you on the best way to structure your business based on the activities you wish to undertake. Other Benefits: No required minimum capital investment No local corporate tax A trade license is issued for LLC entities that have a physical office or business space Any document written in a foreign language should be translated into Arabic by a legal translator and duly certified by the Ministry of Foreign Affairs and Ministry of Justice, for companies incorporated abroad.
FOREIGN BRANCH OFFICE
Setting up a Branch Office of a foreign company in Dubai is easy, and an attractive prospect as it can be 100% foreign owned, provided a local service agent (like PRO Partner Group) is appointed. A Branch Office is an extension of a foreign parent company registered outside of the UAE. It is a fully-fledged business, permitted to perform contracts or conduct other activities as specified in its license. A foreign Branch Office may only engage in activities similar to those of its parent company. Under Commercial Companies Act No 8 of 1984 and Ministerial Decision Number 69 of 1989, a Branch Office of a foreign company is not considered a separate entity. It simply represents the parent company and carries out business under its name. The purpose of the Branch Office is to promote and market the products of the parent company, offer services to its customers and enter into transactions and conclude agreements in the name of the parent company. The branch company is not allowed to partake in any activities disallowed to its parent companies.
More Information about Foreign Branches:
• Activities – As a Branch Office, you are entitled to undertake the commercial activities of your parent company, although some activities are restricted (for example trading. In which case you would be required to set up as an LLC).
• Liability and tax – The Branch Office is not a separate legal entity, and therefore the foreign parent company is 100% liable for the actions of the branch and the revenue of the branch will be taxable (in the country where the relevant foreign parent is resident) as the income of the foreign parent.
• Sponsor/National Service Agent – Each foreign Branch Office requires a local sponsor. The local sponsor has no equity participation or liability for the business, nor can the person represent the Branch Office or participate in its management.
• Bank Guarantee – As a foreign Branch Office, you will be required to deposit a refundable bank guarantee of AED50,000 for the duration of your license and this cannot be withdrawn or used as working capital.
TRADE REPRESENTATIVE OFFICE
If your foreign company is looking for exposure in the UAE market, you may want to set-up a Trade Representative Office. This type of representation is useful in promoting a foreign company and introducing your products to UAE companies as a non-trading ‘shop-window’. Bear in mind, your Trade Representative Office cannot export, import or sell in the UAE. A Trade Representative Office may only practice promotional business for the products and services provided by the parent company. More Information about Trade Representative Offices:
• Activities – A representative office does not engage in sales, services or any type of commercial activity. It only promotes/markets the activities of its parent company, gathering information and soliciting orders and projects to be performed by the head office of the parent company.
• Sponsor/National Service Agent – Each Trade Representative Office requires a local sponsor. The local sponsor has no equity participation or liability for the business, nor can the person represent the Branch Office or participate in its management.
• Bank Guarantee – As a Trade Representative Office you will be required to deposit a refundable bank guarantee of AED50,000 for the duration of your license and this cannot be withdrawn or used as working capital.
PROFESSIONAL SERVICE LICENSE
A professional business is defined as “work based on investing mental talents and acquired information”. A Professional License/Civil Company is a business for professionals in recognized fields such as doctors, lawyers, engineers and accountants. A Civil Company can only practice professional business and is 100% owned by professional partners. An activity practiced by a natural person or more, involving the use of the individual’s physical or intellectual powers and effort and/or using tools/instruments with a limited capital. More Information about Professional Service License:
• Activities – With a Professional Service License, you are entitled to undertake activities pertaining to your qualifications/area of expertise.
• Sponsor/National Service Agent – Each Professional Service License requires a local sponsor. The local sponsor has no equity participation or liability for the business, nor can the person represent the office or participate in its management.
• A civil company for engineering – Must have one partner who is a UAE National, who owns no less than 51% of the business and must be an engineer of the same type as the business’s activity.
FREEZONES - DUBAI
- WORLD CENTRAL- DWC
- DUBAI MULTY COMMODITIES CENTRE - DMCC
- DUBAI CREATIVE CLUSTERS AUTHORITY – DCCA
- DUBAI INTERNATIONAL FINANCIAL CENTRE – DIFC
- DUBAI WORLD TRADE CENTRE – DWTC
- DUBAI AIRPORT FREEZONE AUTHORITY – DAFZA
- MEYDAN FREEZONE
- DUBAI SILICON OASIS – DSO
- JEBEL ALI FREEZONE AUTHORITY - JAFZA