Dubai keeps attracting more and more foreign investors due to the excellent facilities and infrastructure it offers, but also because the UAE is considered a tax-free country. However, great attention must be paid attention when opening a company in Dubai because each step must be planned carefully and they will need a local agent to handle the company registration procedure.
Both local and foreign entrepreneurs can choose the types of companies they are interested in and register them in accordance with the legal requirements imposed in Dubai. It should be noted that these requirements are slightly different for local and foreign investors coming to Dubai.
Our company formation specialists in Dubai explain below the main requirements imposed for setting up various types of business forms.
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The Company Law in Dubai
The creation of various types of companies in Dubai falls under the provisions of the Company Act which covers a wide range of business forms.
Foreign investors interested in opening companies in Dubai should know that the requirements for a specific business form will depend on where the company is located – in mainland Dubai or one of its free zones.
In case a foreign entrepreneur decides on a Dubai onshore company, he or she will need a local partner or sponsor. In the case of a free zone company, full foreign ownership is allowed.
Our local consultants can offer more information on the requirements imposed by the Company Act when it comes to foreign investors interested in setting up companies in Dubai.
Types of business licenses in Dubai
Foreign investors can set up several types of companies in Dubai depending on their business objectives. Before deciding on the type of company they must select the category of business license as the Dubai Department of Economic Development regulates three types of business licenses. These are:
- the commercial license,
- the industrial license,
- the professional license.
The commercial license is available for types of companies involved in trading activities, among which sales. The industrial license applies to companies involved in manufacturing, processing and packaging activities. The professional license applies to personally offered services such as consultancy and is suitable for sole proprietors in Dubai.
The same business license categories apply in case the entrepreneur decides to open a company in one of Dubai’s free zones.
Available types of companies in Dubai
Before registering a company in Dubai you must select the appropriate type of business entity. There are four main types of companies in Dubai, however, each category has its own subdivisions. The categories of companies to be registered in Dubai are:
- companies,
- partnerships,
- branch offices,
- free zone companies.
You can also watch the video below for information about the types of companies available for registration in Dubai:
Among the companies, the Dubai limited liability company is the most employed. The other types of companies available for registration in Dubai are:
- the civil company,
- the joint venture company,
- the private shareholding company,
- the public shareholding company.
Partnerships are divided into general, simple limited partnerships and partnerships-en-comandite, but there is also the notion of a partnership company. Partnership companies, however, are usually limited to Dubai citizens.
Dubai branch offices can be divided into:
- branches of foreign companies,
- of civil companies,
- of Dubai and UAE companies,
- of GCC companies,
- of free zone companies.
Requirements for opening a limited liability company in Dubai
The most employed type of company in Dubai is the limited liability company. It can take the form of a private or public company and is subject to various requirements. The shareholding structure of such business type depends on whether the company will be registered in Dubai or one of its free zones.
Those who want to open limited liability companies in Dubai must comply with the following requirements:
- the company must have at least 2 shareholders if registered in Dubai, and at least 1 if set up in a Dubai free zone;
- in terms of share capital, a Dubai-based company does not need a minimum amount, however, in a free zone the amount of money required is established by each free zone authority;
- the Memorandum and Articles of Association are the documents which need to be prepared for the registration of a limited liability company;
- the company will need a registered address in Dubai or in the free zone it will operate in;
- the company will also need to have a bank account set up with a local bank;
- the business license must be obtained in accordance with the activities to be undertaken.
No matter the chosen business form, a local agent must be appointed to register the company with the Dubai Department of Economic Development. This procedure can be successfully completed by our Dubai company formation representatives.
Setting up sole traders and partnerships in Dubai
The sole proprietorship is the simplest type of company in Dubai and does not impose any special requirement other than having a residence permit in the case of a foreign citizen. The operations of the sole trader can be completed by the owner of the business who will receive all the profits of the business, however, he or she will be fully liable for the company’s debts and obligations.
The partnership can be a great solution for foreign entrepreneurs with specific professions who want to relocate to Dubai. The creation of a partnership, whether general or limited, is based on drafting a partnership agreement. There are no share capital requirements for establishing sole proprietorships or partnerships in Dubai.
Being the simplest types of companies available in Dubai, but not offering full protection of the owners, these are rarely employed.
Business forms available for foreign companies in Dubai
Foreign companies interested in establishing a presence in Dubai can choose between the branch office and the subsidiary. While the first type of company will be required to complete the same activities of the parent company, the subsidiary offers greater flexibility in terms of activities to be carried out.
Both subsidiaries and branch offices can be set up in Dubai mainland, as well as in Dubai free zones. The subsidiary will take the form of a limited liability company most of the times.
Another business form which allows foreign companies to prospect the Dubai market is the liaison office. However, this must be changed into a branch office or subsidiary of the parent company in order to carry out commercial activities.
For details about the requirements for setting up a company, you can contact our company registration in Dubai agents.
If you plan on opening a company in Dubai and need guidance in choosing the right business form, our local consultants are at your disposal with detailed information. You can rely on us for a wide range of company incorporation services in Dubai, among which preparation and filing of the incorporation documents, business licensing, and bank account opening and accounting services.