Competitiveness Report 2012-2013, Dubai, especially has its well known by its international Transparency, and is ranked as the 28th least corrupt country in the 2011 Corruption Perceptions Index.
There are neither exchange restrictions nor control and the national currency, the Dirham, is linked on the US dollar, so this stability in the exchange rate is offering a secure atmosphere for all the different activities that can be starting in UAE.
1 .Memoranda and Articles of Association
2 .Strategic Advice
3 .Mergers and Acquisitions
4 .Corporate Restructuring
5 .Company Formation
6. Domestic and Cross Border Joint Ventures
7. Off-shore Companies
8. Venture Capital Transactions
9. Commercial Contracts
10 .Corporate Governance & Regulations
11 .Corporate and Legal Due Diligence and Reporting
Our awareness on the UAE legal framework and on the business atmosphere around the world makes us practical and very efficient in securing the business projects of our clients.
Legal features framing the business activity in UAE
Businesses conducting in the UAE imply by the foreign company the establishment of a “formal legal presence” (directly or through an agent) within the UAE through any of the following means:
entering into a commercial agency relationship
No physical presence in the UAE
|Commercial agency relationship with a wholly local owned entity or UAE nationalIf the commercial agent|
|Register or unregister commercial agency?|
|Register: If there is a contract with the Ministry of Economy and Commerce, the agent can obtain|
|the various protections afforded to agents under the UAE Commercial Agencies Law|
|(Federal Law No. 18 of 1981, as amended by Federal Law No. 14 of 1988 and Federal|
|Law No. 2 of 201014). These protections include:|
|Unregistered commercial agencies on the other hand are not subject to the above|
|restrictions. There is no formal procedure required for an unregistered commercial|
|agency to be valid other than parties negotiating and agreeing the terms of their|
Different kind of licenses exists to ensure the development of business activities in UAE, you can apply for:
1. Commercial licenses covering all kinds of trading activity;
2. Professional licenses covering professions, services, craftsmen and artisans;
3. Industrial licenses for establishing industrial or manufacturing activity.
Others business require specific authorization from authorities (ministries, Central bank etc) depending of the nature of the activities.
NB: Also, it is interesting to note for the small and medium enterprise that for Dubai Company there is no Capital requirements. Those are dependent on factors such as the size, nature and goals of the business.
Incorporating a local entity; overview on the advantages and inconvenient
Entities formed under UAE civil law:
|100% foreigner owned|
|Entity has a non commercial activity example: professional services) and|
|is not a separate legal entity from its foreign owner(s)|
|The provisions of the Companies Law do not apply to entities formed under the UAE Civil Code|
Entities incorporated under the Companies Laws:
|Here 51 percent of the capital of a company must be owned by a UAE national but some rights aregranted to protect the interests of a foreign minority shareholder in the constitutional documents, forinstance:|
The Companies Law requires companies to adopt one of the following forms:
1. Limited Liability Companies (Article 227 of the Companies Law, shareholders now have the
right to determine the share capital of their limited liability companies, provided that such
company will have sufficient capital to achieve its objects)
2. Private Joint Stock Companies;
3. Public Joint Stock Companies ; ( offer their shares for public Subscription / for businesses involving banking, insurance or investment activity on behalf of third parties)
4. Joint Participation Ventures (or Private Unlimited Companies);
5. Limited Partnerships (or Simple Commandite Companies);
6. Partnership Limited with Shares (or Share Commandite Companies); and
7. General Partnerships (or Joint Liability Companies)
Registering a branch or representative office of a foreign company;
|may be wholly owned by foreigners.|
|However, Article 23(1) of the UAE Commercial Code requires non-UAE nationals engaging in “commercial business” in the UAE to partner with a UAE national who owns 51 percent of the capital of the company.|
|When, branch and representative offices are wholly owned by foreigners, they may typically only engage in non-commercial business — e.g. activities which involve the promotion of the skills and expertise (consultancy etc.)|
|Further, a branch office must only engage in those activities that are carried out by its parent company.|
|A representative office may only conduct marketing and administrative functions on behalf of its foreign parent.|
|A representative office typically gathers information on the local market establishes relationships and solicits orders to be performed by the parent company.|
|The parent company will generally be required to engage a commercial agent if it wishes to conduct sales activities within the UAE.|
|In addition to obtaining a trade licence similar to that required for a locally incorporated.|
|A representative office must appoint a UAE national to serve as the national agent (and sponsor pursuant to a national agency agreement|
|Branch or representative office and as a result, the national agent will not have any managerial authority with respect to the company|
And the last option is the establishment of a Free Zone Company (cf. UAE Free Zone).
Our lawyers can intervene in your project and guide you to be in conformity with the UAE law. We can provide cost efficient business solutions to facilitate our client’s objectives. We suggest you a brief overview to help you to determine if Dubai company formation is the optimum solution to fulfill your international business objectives.
UAE Free Zone
Do you plan to set up your company within a Branch or Free zone Company with one or more than one shareholder? The UAE is a trend for the business areas in Offshore and Onshore destinations
The UAE is providing in each emirate through the government declaration, various benefits in those Free zones:
The UAE is a federal State, which provides in its constitution, the repartition of the power concerning the control of the free zones and the competence of each individual Emirates under federal structure to set up “free zones”.
The UAE aim to encourage foreign direct investment into the UAE. Free Zone entities. So, “free zones” have the power to enact their own laws and regulations in specific areas, which in some cases override federal and Emirate law on the subject matter. For instance, DIFC, is a model, of independent body of law related to matters like corporate law,contracts law and employment law, as well as its own court system
In Dubai for instance you can find:
1 .Jebel Ali Free Zone (JAFZA)
2 .Dubai Airport Free Zone (DAFZA)
3 .Dubai International Financial Centre (DIFC)
4. Dubai Knowledge Village (KV)
5. Dubai Media City (DMC)
6. Dubai Internet City (DIC)
7. Dubai Flower City (DFC)
In Other Emirates
8. Hamriyah Free Zone (HFZA)
9. Sharjah Airport Free Zone (SAIF)
10. Ras Al Khaimah Free Trade Zone (RAK)
The process to set up a Free Zone Company requires a maximum of 4-6 weeks, and this enable you to a more global and attractive vision of your business on an international level. The biggest advantage of the Free zone is found in maintain of 100% ownership for an international entrepreneur.
Legal context surrounding the business establishment in the UAE
As the UAE is an Eldorado for the national but also the international entrepreneurs, it is important to note, that depending on the nationality of the ownership, different requirements will apply by law for all companies:
“The Commercial Companies Law” adopted through the Federal Law No. 8 of 1984, in its articles 313 to 316 provides broadly that: generally in any commercial company there will be not less than 51% ownership in any commercial company hold by the local and this law enounces seven categories of business organization which can be established in the UAE. The different requirements (shareholders, directors, minimum capital levels and incorporation procedures) are set out.
Our Law Firm services?
To be able to hold 100% ownership you must be either a UAE national either your company must be 100% owned by UAE nationals (appointed as local service agent). This local agent is seen as a “sponsor” to obtain all administrative formalities (labour card, visas etc) and he is paid in lump sum
and/or a percentage of profits or turnover. He does not have a management role in the company.
As lawyer, we intervene in all the stages of the business registration in order to advice you in the optimization of your profit and to reach your goal .We can draft for you different legal documents, as for instance:
1 .Legal attestation,
2. Certificate of Incorporation,
3. Memorandum and Articles of Association
4. Board Resolution
5. Power of Attorney in favor of the Dubai LLC manager
Those entire documents will be necessary for example to establish an LLC with 49% shareholder for a foreign corporate entity .Also those documents must be notarized and legalized in the country of incorporation of the parent company. In addition, these documents must then be legalized at the Ministry of Foreign Affairs in Dubai and then translated into Arabic. These requirements contribute to the complexity and costs of Dubai company incorporation but our Legal Team will intervene to facilitate the whole process as we are experiment in these area, we will assure you the best result in order to set up your business quickly and with full legal protection.
Summarization for the establishment of a Free Zone Entity (FZE)
|Wholly owned by a foreigner|
|Branch or a representative office of a foreign company, a free zone company or a free zone|
|Capital minimum requirements vary from free zone to free zone|
|Free Zone Establishment? Or Free Zone Company?|
|FZE may be owned by a single individual or company, whereas a FZC typically requires two or more owners|
|Limitation on the activity of a Free Zone Entity?|
|Conduct business solely within its relevant free zone and is limited to performing solely those activities|
|Specified in its licences|
|Free zone entities with service licenses have been known to provide services outside of their free zone|
|Which licenses can be hold by a FZE?|
|Trading license or service license or manufacturing/industrial license|