COUNTRY
UAE
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COMPANY REGISTRATION IN UAE
Company registration UAE is a popular option due to its strategic location at the crossroads of East and West, its business-friendly environment, and its tax-free status.
The UAE’s diversified economy and developed infrastructure make it an attractive destination for businesses looking to establish a presence in the Middle East. The country strongly focuses on foreign investment and offers a range of incentives for foreign companies, including 100% foreign ownership and exemptions from corporate and personal income taxes.
In addition, the UAE has a well-established legal system and a transparent regulatory environment, which provides high protection for investors. The country is also home to a large expatriate population, which provides a diverse and talented pool of workers for businesses.
There are 7 emirates in the UAE – Abu Dhabi, Dubai, Sharjah, Ajman, Umm Al Quwain, Ras Al Khaimah, and Fujairah.
KEY REQUIREMENTS FOR INCORPORATING A COMPANY IN THE UAE
Ownership
The UAE government has introduced new regulations allowing foreign investors to own 100% of their companies in specific sectors and locations nationwide. This means that for certain business activities and in certain locations, there is no longer a requirement for a local sponsor or partner to hold the majority share in the company.
However, it is important to note that this may not apply to all sectors and locations in the UAE, and there may still be certain requirements for local partnership or sponsorship depending on the business activity and location of the company.
Business Activities
The company must specify the business activities it will engage in and obtain the relevant licenses and permits from the relevant authorities in the UAE. Depending on the nature of the business activities, the company may need to apply for additional approvals from the relevant regulatory bodies.
Registered Office
The company must have a registered office address in the UAE for business setup. This address will be used for all official communications and legal notices.
Shareholders and Directors
For business setup in the UAE, the company must have at least one shareholder and one director. Shareholders and directors can be either UAE nationals or foreigners. However, there are certain business activities that may require the appointment of a UAE national as a shareholder or director.
Capital
The minimum share capital requirement for a company in the UAE depends on the type of company and the nature of its business activities. It is important to note that not all types of companies have a minimum capital requirement.
TIMELINE OF COMPANY REGISTRATION UAE
TYPES OF BUSINESS ENTITIES IN UAE
Limited Liability Company
The most popular type of business entity among people in the UAE is an LLC. In an LLC, the partners’ liability is limited to the amount of their equity stake in the business.
An LLC can engage in any commercial or industrial activity except for banking, insurance, or investing. There is no longer a requirement for a UAE national to hold 51% ownership of the company.
Foreign nationals can now own 100% of the company, which has made LLCs more attractive to foreign investors. A UAE-certified auditor is still required for LLC formation. The company must have at least two and can have a maximum of fifty shareholders.
Sole Proprietorship
As the name implies, a sole proprietorship is held by a single person who controls all aspects of the business and owns 100% of the earnings. A professional sole proprietorship can be owned by a person from any country. A sole proprietorship that is commercial or industrial must be owned entirely by UAE and GCC nationals.
When opening this form of business, an LSA, or local service agent, is assigned if the proprietor is not an Emirati. The LSA is designed to overlook the business’s government-related issues and license requirements. There is no minimum amount of startup capital required for a sole proprietorship.
Civil Company
In the UAE, those in recognized professions like law enforcement, medicine, accounting, and engineering can establish a civil corporation. Partners may possess 100% of the company, and the only permitted activities for a civil company are those related to professional businesses.
More precisely, such activities are described as being either physical or intellectual and being carried out by one or more natural persons with respect to a specified capital. Some guidelines must be fulfilled in order to incorporate a civil firm successfully.
Like in the case of a sole proprietorship, an LSA is necessary for the company incorporation process if the owner is a foreign national. If a foreign company invests as a partner in a civil company, it must be from the same type of commercial activity. Partners from any country can launch this business.
Partnership Company
Two or more partners jointly own the company under this type of corporate structure, and they divide profits and losses in accordance with a predetermined ratio. Partnerships can be divided into two categories.
- General partnership– The general partners, who must be UAE citizens, are responsible for the partnership’s debts.
- Limited partnership– Partners in a limited partnership are solely responsible for the debts of the entity to the extent of their capital contributions. Additionally, the limited partner is not permitted to participate in the partnership’s management committee or have his name appear in the partnership’s name.
Branch of a Foreign Company
A UAE national must work for the company in order to open a branch of a foreign company. The branch must engage in the same type of business as its parent organization. It has the ability to sign local legal contracts, send sales invoices to clients in the UAE and abroad, and lease offices within the property. A branch is not permitted to manufacture goods or export them to or from the UAE.
Representative Office
In the UAE, a representative office is a type of commercial activity that can be carried out by a branch rather than being a separate business organisation. It has its own requirements, one of which is the right to market and advertise the parent company’s operations without actually running them. A Local Service Agent (LSA), who might be a UAE national or a business owned by one or more UAE nationals, is necessary for a Representative Office.
Private Shareholding Company
In the UAE, a private shareholding company is known as a Private Joint Stock Company (PJSC), and it can be established by a partnership of a minimum of three investors with a minimum share capital of AED 2 million. The shares in a PJSC are not publicly traded, and the company is not listed on any stock exchange. The shareholders are only liable for the company’s debts to the extent of their shareholding. The PJSC is subject to regulation by the UAE’s Federal Law No. 2 of 2015 on Commercial Companies.
Public shareholding Company
A Public Shareholding Company is also known as a Public Joint Stock Company (PJSC) in the UAE. This type of company requires a minimum of five shareholders and a minimum share capital of AED 30 million. The shares of a PJSC are publicly traded, and the company is listed on a stock exchange. Shareholders’ liability in a PJSC is limited to the extent of their shareholding, and the company is subject to regulation by the UAE’s Federal Law No. 2 of 2015 on Commercial Companies..
DOCUMENTS REQUIRED FOR UAE COMPANY REGISTRATION
The specific documents required for UAE company registration may vary depending on the type of company and the location in the UAE. However, in general, the following documents are typically required:
- Application form for company registration
- Passport copies of all shareholders and directors
- Proof of residence for all shareholders and directors
- No objection certificate (NOC) from a current employer (if applicable)
- Memorandum of Association (MOA)
- Articles of Association (AOA)
- Tenancy contract for the company’s physical address
- Initial approval from relevant government authorities
- Bank reference letter
- Power of attorney (if applicable)
- Copies of educational certificates of all shareholders and directors (for certain types of companies)
It is important to note that these requirements may vary depending on the type of company and the jurisdiction. It is advisable to consult with a professional consultant such as Relin Consultants to ensure that all required documents are prepared and submitted accurately.
HOW TO START A BUSINESS IN UAE
Choose a company name
The first step in starting a business in the UAE is choosing a unique company name that does not conflict with existing company names. The proposed name must be approved by the Department of Economic Development (DED) in the emirate where the company will be registered.
Draft the legal documents
After choosing a company name, the next step is to draft the legal documents required to register the company. These include the Memorandum of Association (MOA) and Articles of Association (AOA), which outline the company’s purpose, share capital, management structure, and other details.
The applicant must also have a physical office address in the UAE to obtain a trade license. This can be either a rented office space or a virtual office, depending on the type of license required.
Apply for a residency visa
Once the legal documents have been drafted and the trade licence has been obtained, investors can apply for a residency visa in the UAE. An extended stay visa is available to investors who intend to launch a business in the United Arab Emirates.
To apply for a residency visa, the investor must visit the UAE to complete a medical examination and have a residence visa stamped into their passport. An in-country medical examination for the investor is necessary to process the Emirates ID application.
Register with the relevant authorities
The company must be registered with the relevant authorities, depending on the type of license required. For mainland companies, the registration is done with the Department of Economic Development (DED) in the emirate where the company will be registered. For free zone companies, the registration is done with the free zone authority.
The registration process involves submitting the legal documents, the trade license application, and payment of the necessary incorporation fees, including registration and licensing fees.
In addition, certain types of businesses require additional approvals from government bodies, such as the Ministry of Health or the Dubai Municipality, depending on the nature of the business.
PROS AND CONS OF REGISTERING A BUSINESS IN UAE
PROS
Banking confidentiality guaranteed by law
The UAE has strict laws that protect banking confidentiality, ensuring that the financial information of companies and individuals is kept private and not disclosed to the public.
Refer to UAE Corporate bank account opening for more information about opening a bank account in the UAE.
No public registry
Unlike many other countries, there is no public registry of company ownership or financial information in the UAE. This provides an additional layer of confidentiality and privacy for companies.
Tax exemptions
The UAE offers various tax incentives, which means that companies either pay minimal corporate tax or do not have to pay corporate or personal income taxes, providing significant savings in taxation.
No foreign currency restrictions
The UAE has a free-floating currency and no foreign currency restrictions, making it easy for companies to conduct international business transactions.
Full repatriation of company profits and capital
Companies in the UAE are allowed to fully repatriate their profits and capital without any restrictions, which means that companies can freely transfer their money to any foreign country without any limitations.
Low set-up costs
The costs to register a UAE company are generally lower compared to onshore companies, as there are no corporate or income taxes, and lower licensing and registration fees.
Holding Company Structure
Offshore companies can act as holding companies, allowing them to hold shares or assets of other companies, which can provide advantages in terms of tax planning and asset protection.
CONS
Challenging Regulatory Environment
Setting up a company in the UAE can be challenging due to the complex and comprehensive regulations and requirements set by the government. These regulations can be time-consuming to navigate and comply with, requiring businesses to invest significant resources and expertise to ensure compliance.
Higher Upfront Costs
The cost of registering a company in the UAE can be significant, including legal fees, government fees, and the cost of obtaining visas and other necessary permits. These upfront costs can be a major hurdle for new businesses, particularly for those with limited financial resources.
Intense Market Competition
The UAE is a highly competitive market with many established businesses operating in various sectors. As a result, new businesses may face significant challenges in competing with established players, particularly those with established market share and brand recognition.
WHY CHOOSE RELIN CONSULTANTS FOR UAE COMPANY INCORPORATION
Relin Consultants has a team of experienced experts with in-depth knowledge of UAE company laws and regulations and a proven track record in company incorporation and business setup. We provide comprehensive services, including company incorporation, trade license and visa processing, legal and financial services, and ongoing support and maintenance.
Our team will handle all the necessary paperwork and documents, ensuring a smooth and hassle-free registration process for your company.
We have an extensive network of local partners and contacts in the UAE government, which allows us to expedite the process and ensure compliance with regulations.
FAQs
Is starting a business in UAE easy?
Company formation in the UAE can be a complex and time-consuming process, as it involves navigating various laws, regulations, and procedures. The process can vary depending on the type of company, the business activities, and the location within the UAE. However, with the help of a professional consulting firm, the process can be made much easier.
How much does it cost to register a company in UAE?
The cost of company registration in the UAE can vary depending on the type of business, the location of registration, and other factors. However, on average, it can cost anywhere from AED 15,000 to AED 50,000 for company registration in the UAE. This cost typically includes fees for registration, licensing, and other administrative expenses.
How can I check if a company is legal in UAE?
There are several ways to check if a company is legal in the United Arab Emirates (UAE).
You can check the Home | Ministry of Economy – UAE website. The Ministry of Economy maintains a database of all legally registered companies in the UAE. You can search for a company by name or registration number to verify its legal status.
You can also see the Dubai Chamber of Commerce and Industry. The Dubai Chamber maintains a database of all registered companies in Dubai, including information on their legal status and registration details.
How long does it take to register a company in UAE?
The time it takes to register a company in the United Arab Emirates (UAE) can vary depending on the type of business, the location of registration, and other factors. However, on average, it can take 2 to 6 weeks for UAE company registration.
Is UAE tax-free for business?
The United Arab Emirates (UAE) has a relatively low tax regime for businesses compared to many other countries. However, it is not entirely tax-free.
As of 2023, a new tax law has been introduced in certain emirates that requires companies earning profits over AED 375,000 (approximately USD 100,000) to pay a 9% corporate tax. However, not all companies are subject to this tax.
What are the licences available in UAE mainland?
Licences available in the UAE mainland to start a business in UAE are:
- Commercial Licence: This licence allows companies to conduct business activities such as trading, manufacturing, and service provision.
- Industrial Licence: This licence allows companies to conduct industrial activities such as manufacturing, assembly, and processing of goods.
- Professional Licence: This licence allows individuals or companies to provide professional services such as consulting, accounting, and engineering.
- General Trading License: This licence allows companies to engage in general trading activities, including the import, export, and distribution of goods.
- Tourism Licence: This licence allows companies to operate in the tourism industry, including activities such as hotels, tour operators, and travel agencies.
- Freelancer licence: This licence is for those who work on their own, not under a company and conduct their own business, it is also known as a self-employed licence.
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