UAE Company Incorporation Guide

Introduction

The United Arab Emirates (UAE) is a popular destination for international companies looking to establish a local presence. Setting up a team as part of a global expansion journey requires going through the process of establishing a local company. This UAE company incorporation guide serves as an introduction to common considerations and steps.

Company Types

Foreign companies setting up a legal entity in the UAE often choose between a branch office, subsidiary or joint venture office. The most common option is a limited liability company (LLC).

Limited Liability Company (LLC): An LLC in the UAE is a privately held small business entity and considered an independent legal entity on incorporation. It requires a minimum of two and a maximum of fifty shareholders. Unlike public joint stock companies, LLCs cannot publicly trade their shares. An LLC must have at least one director and one manager, who can be the same person.

Branch Office: Foreign companies engaged in manufacturing and trading activities abroad can set up branch offices in the UAE. Branch offices are not allowed to carry out manufacturing activities on their own but can subcontract those to a local manufacturer. Before commencing operations, the branch office requires approval from the UAE’s Ministry of Economy. Commercial activities of any nature are not allowed for a branch office.

Joint Venture (JV): A new business entity created through a partnership between foreign and UAE investors, in which the partners jointly share the profits, losses, management responsibilities, and operation expenses. The advantages of joint ventures are that the foreign company can utilize the well-established contact network, distribution, marketing channels, and the available financial resources of the UAE partner. A JV also offers the investors to jointly manage the risks involved with the new business and limit their individual exposure by sharing the liabilities.

Incorporation Requirements

Paid-up capital: The UAE government abolished the requirement for a minimum paid-up capital for LLCs in 2020. However, the Ministry of Economy may require a specific amount of capital depending on the nature of the business.

Foreign Percentage Ownership: Foreign companies can set up wholly owned subsidiaries in sectors where 100% foreign ownership is permitted under the UAE’s foreign investment law. Once a company has been duly registered and incorporated as a UAE company, it is subject to UAE laws and regulations as applicable to other domestic UAE companies.

Local Service Agent: A local service agent is required to represent the branch office or subsidiary in the UAE. The agent must be a UAE national or a company wholly owned by UAE nationals.

Office: A local office or a virtual office capable of accepting letters/post is mandatory before incorporation. The local office address acts as the registered office of the entity in the incorporation documents.

Complete Legal Paperwork

In order to register a company a legal firm, corporate secretary or corporate service provider will assist with the preparation of company incorporation paperwork. This will include articles of incorporation, constitution, first AGM meeting, share certificate, member consent forms, consent to act as director and other legal documents to support the incorporation. The provider will then continue to manage any new company resolutions that are required over the course of the company lifecycle.

Company Incorporation

Once the legal paperwork has been executed, the service provider will provide a copy of the official certificate of incorporation issued by the Department of Economic Development. In the UAE, the Federal Tax Authority issues a tax registration number (TRN) unique to the business entity. The Department of Economic Development maintains a website portal to manage the company account information.

File Mandatory Registrations

Once the company paperwork has been completed and the company registered, a trade license will be issued. With the trade license, the company can begin the process of registering with the required UAE agencies. These include:

Tax Registration Number (TRN)

Emirates ID and Labor Card

Commercial Registration Certificate

Industry-specific licenses

Setup Bank Account

The final step is to decide the bank to work with. UAE has a highly developed banking infrastructure that startups and hyper growth companies alike benefit from. The process of establishing a bank account can be an unexpectedly long process that many companies do not sufficiently plan for. This can include extensive application documents, notarized director documents, KYC documentation and in person signatures. Common local banks in UAE include First Abu Dhabi Bank (FAB), Emirates NBD, Dubai Islamic Bank (DIB), Abu Dhabi Commercial Bank (ADCB) and Mashreq Bank.

This article does not constitute legal advice.