Legal business structures for establishing business in Dubai

Legal business structures for establishing business in Dubai: The Economic Development Department has laid down several acceptable legal structures meant for companies establishing in Dubai. However, rules & regulations to be followed by each will vary accordingly, while categorization is based upon firm ownership. As a foreign national, you might be interested to avail a freezone license, if the desire is to have 100% business ownership.

Sole Proprietorship

The sole proprietorship firm can be termed to be a legal entity that is operated and owned by any single person. He/she is expected to manage fully the profits and operations of the business and also be 100% liable to pay off debts and other financial obligations.

Things to consider

• The industrial or commercial type of sole proprietorship is owned by only GCC nationals or UAE nationals.
• Only one manager allowed in the sole proprietorship firm.
• Consultancy type sole proprietorship based owner needs to possess scientific qualification to carry out selected activities.
• Trade name is to be activity related.
• No minimum business capital requirement is present for sole proprietorship.
• The sole proprietorship is allowed to have branches to perform various types of activities mentioned in the parent firm’s license.
• It is possible to sell the firm along with its branches. However, commercial or industrial firm type could be sold only to GCC nationals or UAE nationals.

One-Person firm

A single person or corporate body owned limited liability firm is referred to as one-person company. The difference that exists between such legal form and sole proprietorship is that its liability is restricted to shares that are held by owning entity.

Few things to consider

• GCC or UAE national are eligible to start and own such legal firm type.
• 100% GCC or UAE national owned corporate body are eligible to own such firm type.
• The owner being a shareholder has liability limited to held share value.
• Trade name to include legal form (one-person company), owner name and tend to end with LLC.
• Share capital like recorded in MOA (Memorandum of Association).

Civil Company

This partnership is meant for those professionals in their recognized fields like accountants, engineers, lawyers and doctors.

Few things to consider

• Partners belonging to any nationality may get involved in this type.
• In case, GCC or UAE nationals are not included in the partnership then local service agent has to be hired by the firm.
• In case company carries out engineering activities, then one partner needs to be a UAE national who owns at least 51% of business share.
• In case, company is into consultancy practices, then professional partners who practice similar activities combined with 100% ownership are to own the firm.

Limited Liability Co.

There are 2-50 shareholders in this type of firm, where each are held liable only to his/her share extent within the company.

Few things to consider

• This company form is not to conduct any consultancy or professional activities except investment, insurance or banking.
• The LLC may conduct commercial or industrial activities.
• UAE accredited auditor to be hired by the LLC.
• UAE nationals are to possess 51% ownership, with profits accorded in varying ratio.

Partnership Company

In this form of business, 2 or more partners falling into limited or general partner category may share ownership.

Few things to consider

• In simple limited partnership, UAE nationals are to be general partners. But partners belonging to other nationalities are to be limited partners.
• No restriction is to be present on ownership share of limited or general partners.
• Limited partners not to intervene in administrative or management related issues pertaining to general partners. In case they, the chance of their being held liable for all business obligations becomes high.

Other forms are given below

Foreign company branch

Any firm that is registered abroad is allowed to open up its branch in Dubai, referred to as the Dubai headquarters, which comes under the UAE and Dubai business jurisdiction. The branch however will not allow any goods import and this activity is to be carried out by any locally appointed trading firm. The parent company will have 100% ownership of the branch.

Representative Office

This office is rather considered to be the activities carried out by the foreign company’s branch and not complete structure business. However, it has the necessary authorization to market and promote parent company’s business, but will not participate in business operations. These branches are to have a LSA (Local Service Agent).

LSA: A UAE national is to be a local service agent, devoid of any financial obligations or civil responsibility towards the business. His obligations entail ensuring of continuation of business of the branch in Dubai. However, his responsibilities do not include any legal interest related to the business, management, assets or profits of the branch.

Dubai based company’s Branch

The Dubai based company’s branch is required to carry out one or probably all activities mentioned in the license of the parent company. The company having multiple branches will have each branch to carry out different types of activities like mentioned within the parent company’s original license.

UAE based company’s Branch

Such branches are required to carry out any or all activities mentioned within the parent company’s license. The company having multiple branches will have each branch undertaking variety of activities like mentioned within the parent company’s original license.

Freezone company branch

In case the company owned has its main license issued in the UAE free zone, then branch license can be obtained from the DED for business expansion to mainland Dubai. In case, 51% ownership local shareholder is not present, then approval will be essential from the Economy Department along with local service agent.

GCC based company Branch

The GCC based company branch is to carry out any or all activities mentioned within the parent company’s original license. The company having multiple branches will have each branch will require performing different types of activities as given in the parent company’s original license.

SME License

100% UAE National owned businesses are provided with SME license and may take any legal shape.

Intelaq

UAE nationals can obtain this license for carry out home based businesses in Dubai. But license holder is not allowed to spore or hire staffs, however, can engage contractors.

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Originally posted 2021-09-29 07:00:21.