LLC Formation in Dubai

LLC Formation in Dubai

How can I set-up a Limited Liability Company (LLC) in Dubai? What are the procedures of setting up an LLC Company in Dubai?   Limited-Liability Company (LLC) In a limited-liability company, the minimum number of shareholders is two and the maximum is 50. The liability of shareholders is limited to their shares in the capital. The company may carry on any type of activities except insurance, banking, or money investment. In UAE, The minimum capital requirement law was abolished on 10th August 2009. The memorandum of association must include the following: Trade name of the company, its objectives, head office, duration, names of shareholders, their nationalities, addresses, and places of residence; and Amount of capital, share of each shareholder, and a statement of capital paid in kind (if any), names and nationalities of the company managers, distribution of profits and losses which may not necessarily be in the same proportion as the capital, and the adopted method of notification. In Dubai, Capital Deposit rule has been cancelled. i.e. Limited Liability Company can be formed without Bank Deposit Certificate and Auditor Certificate. In Abu Dhabi, minimum capital requirement is Dh150,000. The manager of the company will be allowed to operate the account as soon as the incorporation is completed. The Manager of the company can be more than one and he/they shall have all administrative and financial powers. A shareholder may transfer his share in the company or part of it to another shareholder or to a third party. Management is handled by no more than five designated managers, who are not necessarily members of the company. Non-UAE nationals may own up to 49 per cent of an LLC. In distribution of profit and loss, foreign investor can have 80% and 20% local UAE sponsor. It is imperative that each limited-liability company appoints auditors to satisfy the requirements of the Commercial Companies Act. The law does not permit this form of company to issue share certificates. Evidence of ownership in the company is related and evidenced by the percentage contributed, assigned, or transferred in the share capital. Silent Partner A larger portion of Dubai Limited Liability Companies use the local UAE sponsor as a "silent partner." In this arrangement, the local UAE sponsor is usually paid an annual "sponsorship fee" in return for giving up management control of the company to the foreign investor. To prepare your LLC Agreement call +97150-7447833 read more Steps of forming a Limited-Liability Company (LLC) Name reservation from Department of Economic Development (DED) or Ontime office at Business Village near Clock Tower or Tas'heel Centre at Al Tawar Centre, Qusais. Fees: Dh260 including service charge. Foreign/English words and short words/Abbreviation will be charged extra fee of Dh2000 per year at the time of license renewal. First time fees should be paid along with first license fees. Note: Trade Names that cannot be reserved: Name of country, Name of Continent, Famous regions and Towns, Colour (blue, red etc.). Initial Approval for activity from Department of Economic Development (DED). Initial approval fee Dh110 to be paid at DED. Documents required for initial approval: Filled form, Passport Copies of Partners, Naturalization book's (Jinsiyya) copy of Local Partner, No Objection Letter from the sponsor for expatriate partners (NOC is not required for visit/Tourist visa holders and their visa copy should be attached). If UID Number is not mentioned in the Visit/Tourist/Transit visa, it has to be collected from Immigration Department on payment of Dh130. Some activities require initial approval from concerned departments (eg. Municipality, RTA, National Media Council etc.) Preparing Memorandum of Association (LLC Agreement) Attestation of Memorandum of Association from Notary Public. As per the new rule, the court agreement must be typed by legal translator or get seal and signature of the legal translator on the agreement if it is typed from normal typing centre. Tenancy Contract (It is suggested to contact the counter of the Planning Dept. of Dubai Municipality, at the Department of Economic Development, on Telephone No. 04-2020105, or the Municipality’s Telephone No. 04-2063788, before leasing the premises in order to ensure that it is suitable for the business). Get approval on Tenancy contract from Planning Dept. of Dubai Municipality at DED. Submit Initial approval, Name reservation certificate, Attested Memorandum & Tenancy Contract at Department of Economic Development. Payment voucher will be issued same time or can be printed from DED Website after two days. Special approval required for certain business activities from the concerned authorities Tourism CompaniesFor Inbound Tou rism Dh100,000 to be deposited in Bank For Outbound Tourism Dh200,000 to be deposited in Bank These deposits are irrevocable till the license cancelled. Travels For Travel Agency Dh100,000 to be deposited at Department of Tourism & Commerce Marketing. This deposit is irrevocable till the license cancelled. Building Contracting CompaniesFor Building Contracting Company License, Dh10,000 to be extra at the Department of Economic Development when the license issued first time. Office area should be minimum 1500 square feet. Engineering Consultants: Minimum office space 1000 square feet required. General TradingFor General Trading License, Dh15,000 to be paid extra at the Department of Economic Development when the license issued first time. Customs Broker Dh50,000 to be deposited at Dubai Customs. This deposit is irrevocable till the license is cancelled. RTA Activities (following fees to be paid for RTA initial approval) Rent a Car: Dh5000   Bus Rental: Dh1000 Passenger Transport by rented Buses: Dh1000 Telephones & Telecommunications Equipment Trading Dh5500 to be paid at Telecommunications Regulator Authority (TRA). This is one time fee. Security Service: Property guard & Surveillance Services, Party security & private guarding services Initial approval from Department of Protective Systems, Dubai. Tel. 04-2048312 Oilfield & Natural Gas related activities Initial approval from Ruler's Court Money Exchange Initial approval from Central Bank of UAE and Department of Protective Systems Jewelry Initial approval from Department of Protective Systems Supermarket For supermarket, minimum 2000 square feet area is required. Electrical Fitting Contracting: minimum 360 square feet area is required.

Setting up a business in Dubai

Setting up a business in Dubai

In Dubai, the authorities have deliberately sought to create an environment which is well ordered without being unduly restrictive. As a result, Dubai offers businessmen operating conditions that are among the most liberal and attractive in the region. There are many options open to international companies seeking to establish a business relationship with Dubai. Having a presence can provide considerable business advantages in the Middle East. Businessmen in the region prefer to deal with someone they know and trust and personal relationships are much more important in doing business in the Arab world than they are in western Europe or America. Licensing The basic requirement for all business activity in Dubai is one of the following three categories of licences: Commercial licences covering all kinds of trading activity; Professional licences covering professions, services, craftsmen and artisans; Industrial licences for establishing industrial or manufacturing activity. These licences are all issued by the Dubai Department of Economic Development. However, licences for some categories of business require approval from certain ministries and other authorities: for example; • Banks and financial institutions from the Central Bank of the UAE; • Insurance companies and related agencies from Insurance Authority; • Manufacturing license; from the Ministry of Finance and Industry; • Pharmaceutical and medical products from the Ministry of Health; • Contracting and Building Maintenance and some other activities from Municipality (click here for the list of activities required Municipality Approval); • Transportation and vehicle rental activities from Road and Transport Authority (click here for the list of activities required RTA approval); • Printing, publishing and advertising activities from National Media Council; • Cargo Clearing, Cargo packaging, Canal dredging contracting and Fishing cages manufacturing activities from Dubai Maritime City; • Travel and tourism activities from Department of Tourism and Commerce Marketing (DTCM). • Gymnasium Club activity from Dubai Sports Council. • Social Club registration and licensing to be completed from Community Development Authority. • Tents, awnings and Tarpaulin manufacturing from Environment Protection Section of Dubai Municipality. More detailed procedures apply to businesses engaged in oil or gas production and related industries. Practicing some trade activities (e.g. jewellery and insurance) requires the submission of a financial guarantee issued by a bank operating in Dubai. In general, all commercial and industrial businesses in Dubai should be registered with the Dubai Chamber of Commerce and Industry. Tourism Companies For Inbound Tourism Dh100,000 to be deposited in Bank For Outbound Tourism Dh200,000 to be deposited in Bank These deposits are irrevocable till the license cancelled. Travels For Travel Agency Dh100,000 to be deposited at Department of Tourism & Commerce Marketing. This deposit is irrevocable till the license is cancelled. Building Contracting CompaniesFor Building Contracting Company License, Dh10,000 to be extra at the Department of Economic Development when the license issued first time. General TradingFor General Trading License, Dh15,000 to be extra at the Department of Economic Development when the license issued first time. Customs Broker Dh50,000 to be deposited at Dubai Customs. This deposit is irrevocable till the license is cancelled. RTA Activities (following fees to be paid for RTA initial approval) Rent a Car: Dh5000   Bus Rental: Dh1000 Passenger Transport by rented Buses: Dh1000 Telephones & Telecommunications Equipment Trading Dh5500 to be paid at Telecommunications Regulator Authority (TRA). This is one time fee. Security Service: Property guard & Surveillance Services, Party security & private guarding services Initial approval from Department of Protective Systems, Dubai. Tel. 04-2048312 Oilfield & Natural Gas related activities Initial approval from Ruler's Court Money Exchange Initial approval from Central Bank of UAE and Department of Protective Systems Jewelry Initial approval from Department of Protective Systems Supermarket For supermarket, 2000 square feet area is required. Ownership Requirements Fifty-one per cent participation by UAE nationals is the general requirement for all UAE established companies except: Where the law requires 100% local ownership; In the Jebel Ali Free Zone; In activities open to 100% AGCC ownership; Where wholly owned AGCC companies enter into partnership with UAE nationals; In respect of foreign companies registering branches or a representative office in Dubai; In professional or artisan companies (eg. consulting, educational service) where 100% foreign ownership is permitted.   Legal Structures for Business In the past, each emirate followed its own procedures governing the operations of foreign business interests. In practice, however, Dubai and the other emirates followed the same general system, whereby foreign companies operated in one of three ways: with a local sponsor, through a partnership with a UAE national or company, or through a private limited company or public shareholding company incorporated by Ruler's decree. Since 1984, steps have been taken to introduce a codified companies law applicable throughout the UAE. Federal Law No. 8 of 1984, as amended by Federal Law No. 13 of 1988 - the "Commercial Companies Law" - and its by-laws have been issued. In broad terms the provisions of the Law are as follows: The Federal Law stipulates a total local equity of not less than 51% in any commercial company and defines seven categories of business organisation which can be established in the UAE. It sets out the requirements in terms of shareholders, directors, minimum capital levels and incorporation procedures. The seven categories of business organization defined by the law are: General partnership company Partnership-en-commendam Joint venture company Public shareholding company Private shareholding company Limited liability company Share partnership company Limited Liability Companies 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. In UAE, The minimum capital requirement law was abolished on 10th August 2009. While foreign equity in the company may not exceed 49%, profit and loss distribution can be prescribed. Responsibility for the management of a limited liability company can be vested in the foreign or national partners or a third party. The following steps are required in establishing a limited liability company in Dubai. Select a commercial name for the company and have it approved by the Licensing Department of the Economic Department; Get initial approval for the activity from Economic Department; Draw up the company's Memorandum of Association and have it notarised by a Notary Public in the Dubai Courts; Seek approval from the Department of Economic Development and apply for entry in the Commercial Register; Once approval is granted, the company will be entered in the Commercial Register and have its Memorandum of Association published in the Ministry of Economy and Commerce's Bulletin. The licence will then be issued by the Department of Economic Development; The company should then be registered with the Dubai Chamber of Commerce and Industry. Note: Trade Names that cannot be reserved: Name of country, Name of Continent, Famous regions and Towns, Coloure (blue, red etc.). Foreign words and short words will be charged extra fee of Dh2000 per year. Branches and Representative Offices of Foreign Commercial Companies The Commercial Companies Law also covers the formation and regulation of branches and representative offices of foreign companies in the UAE and stipulates that they may be 100% foreign owned, provided a local agent is appointed. Only UAE nationals or companies 100% owned by UAE nationals may be appointed as local agents (which should not be confused with the term "commercial agent"). Local agents - also sometimes referred to as sponsors -- are not involved in the operations of the company but assist in obtaining visas, labour cards, etc and are paid a lump sum and/or a percentage of profits or turnover. In general, branches and offices of foreign commercial companies are not licensed to engage in importing activity except for re-export or in the case of products of a highly technical nature. To establish a branch or representative office in Dubai, a foreign commercial company should proceed as follows: Apply for a license from the Ministry of Economy and Commerce, submitting an  agency agreement with a UAE national or 100% UAE owned company. Before issuing the licence, the Ministry will: forward the application to the Department of Economic Development to obtain the approval of the Dubai government; forward the application specifying the activity that the office or branch will be authorised to undertake in the UAE, to the Federal Foreign Companies Committee for approval; Once this has been done, the Ministry of Economy and Commerce will issue the required Ministerial licence specifying the activity to be practiced by the foreign company; The branch or office should be entered in the Economic Department's Commercial Register, and the required licence will be issued; The branch or office should also be entered in the Foreign Companies Register of the Ministry of Economy and Commerce; Finally the branch or office should be registered with the Dubai Chamber of Commerce and Industry. read more Branches and Representative Offices of Foreign Professional Companies Branches and representative offices of foreign professional firms may be 100% foreign owned provided UAE nationals or 100% UAE owned companies are appointed as local agents. Such agents are not involved in the operations of the firm but assist in obtaining visas, labour cards etc and are paid a lump sum as remuneration. The Department of Economic Developmentt is the authority in charge of licensing such branches or representational offices. read more Professional Firms In setting up a professional firm, 100% foreign ownership, sole proprietorships or civil companies are permitted. Such firms may engage in professional or artisan activities but the number of staff members that may be employed is limited. A UAE national must be appointed as local service agent, but he has no direct involvement in the business and is paid a lump sum and/or percentage of profits or turnover. The role of the local service agent is to assist in obtaining licences, visas, labour cards, etc. Setting up Business in the Jebel Ali Free Zone The Jebel Ali Free Zone was established in 1985 with the specific purpose of facilitating investment. Accordingly, the procedures for setting up in the zone are relatively simple. While Jebel Ali was established to complement and contribute to Dubai's growth and development, its legal status is quite distinct. Companies operating there are treated as being "offshore", or outside the UAE for legal purposes. The option of setting up in Jebel Ali is therefore most suitable for companies intending to use Dubai as a regional manufacturing or distribution base and where most or all of their turnover is going to be outside the UAE. Jebel Ali Free Zone Incentives 100% foreign ownership; Exemption from all import duties; 100% repatriation of capital and profits; Freedom from corporate taxation, as applied throughout Dubai, with the added bonus of a renewable 15 year guarantee in the Free Zone; Abundant inexpensive energy; Simple and efficient recruitment procedures ensuring the availability of a competitive skilled and experienced workforce; A high level of administrative support from the Free Zone Authority. Licences Companies approved for operation in Jebel Ali Free Zone will be granted one of the following types of licences: Trading, Industrial, Service or National Industrial. These licences are renewable annually for as long as the company holds a valid lease from the Free Zone Authority. Trading licences will be granted to companies holding a valid licence issued by the Dubai Economic Department or an equivalent authority in the UAE, and to companies incorporated outside the UAE. In each case, the permitted activities on the Free Zone licence must conform to those on the existing licence. Trading licences are also issued to Free Zone Establishments (FZE). Industrial licences are issued to companies incorporated outside the UAE and to Free Zone Establishments. Service licences are only granted to companies holding a valid UAE licence. National Industrial licences are issued to industrial companies registered within or outside the UAE, provided they meet the conditions of having at least 51% AGCC equity and their local production accounting for at least 40% value added. Such companies must obtain the provisional approval of the UAE Ministry of Finance and Industry. A National Industrial licence grants its holder the same rights as those of national and AGCC companies, and products exported to AGCC states will be exempted from customs duties. If a company wishes to practise more than one of the above mentioned activities, it must obtain a separate licence for each category of activity. Companies holding a Free Zone licence are permitted to operate in the Jebel Ali Free Zone and outside the UAE. Operation within the UAE can be undertaken either by a commercial agent, representative, distributor, or the mother company licensed by the relevant UAE authority. Any company holding a Free Zone licence can itself purchase goods or services within the UAE. read more Setting Up a Branch of a Foreign Company Any company wishing to set up a project in Jebel Ali Free Zone must first complete a simple questionnaire. From the information provided, the Free Zone Authority can make a first assessment of whether the company's needs can be met. After consideration of this questionnaire, the company will be provided with: A licence application including an appendix with details of the documents required concerning the company's legal status; A proforma of information required for planning; and A consumer request for electricity supply. On receipt of these documents, the Free Zone Authority will consider the proposal. If provisional approval is given, the company will be asked to prepare and submit the documents called for in the appendix to the licence application. After the checking of these documents, a meeting will be called to discuss and finalise the project details. If everything is satisfactory, the Authority will issue conditional approval for the project. Thereafter, a lease agreement and, if required, a personnel secondment agreement will be prepared by the Authority for signature by the company. At the time of signing, the applicant will be required to provide the insurance policies called for in the agreements and should pay the agreed rental and licence fee prior to collection of the licence. If the company wishes the Free Zone Authority to sponsor employees on its behalf, applications for entry permits may be submitted once the licence has been issued. The bank guarantee called for in the personnel secondment agreement will be required at this stage together with visa charges. If the company's project involves the erection of a structure, detailed plans must be submitted after the lease has been signed. When the plans have been agreed, a building permit will be issued. Administrative work, such as importing equipment or engaging labour for installation of equipment, may proceed in parallel with construction work. But application for entry permits for operatives to be sponsored by the Free Zone Authority will not normally be accepted until a completion certificate for the construction has been issued. Joint Venture Companies A joint venture is a contractual agreement between a foreign party and a local party licensed to engage in the desired activity. The local equity participation in the joint venture must be at least 51%, but 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. In practice, joint ventures are seen as offering a suitable structure for companies working together on specific projects. Public and Private Shareholding Companies The Law stipulates that companies engaging in banking, insurance, or financial activities should be run as public shareholding companies. Foreign banks, insurance and financial companies, however, can establish a presence in Dubai by opening a branch or representative office. Shareholding companies are suitable primarily for large projects or operations, since the minimum capital required is Dh. 10 million (US$ 2.725 million) for a public company, and Dh. 2 million (US$ 0.545 million) for a private shareholding company. The chairman and a majority of directors must be UAE nationals and there is less flexibility of profit distribution than is permissible in the case of limited liability companies. Setting Up a Free Zone Establishment A Free Zone Establishment - or FZE - is an establishment formed and registered in Jebel Ali and regulated solely by the Free Zone Authority. Such establishments must have a capital of at least Dh 1 million and liability will be limited to the amount of paid-up capital. A FZE need only have a single shareholder and is an independent legal entity. Any company, organisation or individual wishing to form a Free Zone Establishment must submit a completed application form to the FZE Department of the Free Zone Authority. A decision on whether permission has been granted will be given within 30 days of receipt of the application and any other information and documentation required. If permission is granted, the Authority will record all relevant details in the FZE Register and issue a Certificate of Formation. This will specify the date of registration after which the FZE will be free to conduct any such business as is permitted in its Special Licence. NOTE: GCC nationals can set-up business in Dubai without local partner as a sole proprietorship. Partnership with foreigners is subject to the following conditions: -------------------------------------------------------------------------------------------------------- GCC nationals and foreigners can form partnerships without Emirati sponsorshipDubai has allowed partnerships between GCC investors and foreigners without Emirati sponsorship, on condition that investors finance projects through capital inflows. GCC nationals can have foreign business partners without third local party in Dubai for any project worth a minimum of Dh10 million and based on foreign knowledge and finance. Investments should come under the categories of enabled sectors like industrial, services, tourism or other businesses that add critical value to the emirate’s economy. Another compulsory condition for this new initiative is that investors move the business headquarters to Dubai and engage experienced professionals. One more of these businesses conditions is there should focus on the quality of the employees rather than quantity. All workers should fall under the skilled worker category. However, such new businesses can’t be set up before submitting a concrete business proposal to be approved by the DED committee. Approvals for starting these businesses is speedy and won’t take more than two weeks.