Business Setups

Setting up your business in the UAE
starts with NHBC

Mainland

Adopting the right corporate structure for your UAE business will be a crucial element of its success.

There are several mainland setup options available in the UAE, to suit different business objectives.

Limited Liability Company (LLC)

A limited liability company is suitable for commercial/trading activities. In order to incorporate an LLC in Dubai an application must be made to the Dubai Department of Economic Development (DED) to obtain a commercial/trade licence, which requires the LLC to have business premises in Dubai. An LLC has a UAE domicile and nationality and can be owned by between two and fifty (foreign) shareholders whose liability will be limited to the extent of their share in the Dubai LLC’s capital.

There is no minimum share capital for a Dubai LLC, but its share capital must be adequate for its purposes.

In accordance with the Commercial Companies Law, at least 51% of the Dubai LLC must be held by a UAE national, or company wholly-owned by UAE nationals.  Despite having a minority shareholding, effective management control, distribution of profits and ownership of valuable assets can remain with the foreign partner(s) by entering into a specialised suite of agreements.

Civil Partnership

A Civil Partnership (also referred to as a “professional company”) is suitable for conducting consultancy or service-related activities. A Civil Partnership can be formed by two or more individuals. The partners do not enjoy limited liability and are jointly liable for any debts or losses of the Civil Partnership, unless otherwise stated in the Civil Partnership Agreement.

The Civil Partnership must appoint a UAE national, or company wholly-owned by UAE nationals, as its Local Services Agent. The Local Services Agent is appointed pursuant to a Local Services Agreement and provides local services, such as facilitating the issuance of residency visas and work permits for your employees, and handling the renewal of the professional licence each year in return for an annual services fee. The Local Service Agent does not assume any financial or legal liability for the Civil Partnership.

The partners maintain full 100% ownership and control of the business. However, a general manager may be appointed from among the partners to manage the Civil Partnership. If the manager acts outside the scope of his powers, he shall be personally liable for any loss suffered by the Civil Partnership as a result of his/her actions.

Sole Proprietorship

A Sole Proprietorship can only be formed by one individual (whether local or expatriate) to carry on business in the owner’s name. The owner is, however, personally liable for any debts or losses of the Establishment.  

An Establishment owned by an expatriate can only carry on professional or consultancy-related activities and must appoint a Local Services Agent (See Civil Partnership for more information). The Local Service Agent does not assume any financial or legal liability for the Establishment.

An Establishment owned by an Emirati may carry on commercial or trading activities. Given its unlimited nature, however, a limited liability company is often the preferred vehicle for carrying on such activities today.

Foreign Branch

A foreign company wishing to carryon professional activities in Dubai must establish a Branch of its parent company and obtain a professional licence from the Dubai Department of Economic Development (DED) and Commercial Registration Certificate (CRC) from the Ministry of Economy (MOE), which requires the Branch to have business premises in Dubai.

A Branch does not have a separate legal personality from that of its parent. To establish a Branch, the parent company must appoint a UAE national, or company wholly-owned by UAE nationals, as its Local Services Agent (See Civil Partnership for more information).

The National Agent does not, however, assume any financial or legal liability for the Branch. The foreign investors maintain full ownership and control of the business which is operated through a general manager who must be, or become, a UAE resident.

There are no capitalisation requirements, but the parent is required to show details of its own capitalisation and good standing and a bank guarantee might be required. Profits of the Branch can be repatriated without deduction.  

The Branch’s professional activities must reflect those of its parent company. The application must be supported by the parent company’s corporate documents, which must be notarised, attested and translated into Arabic.

Highlights

  • A customs duty and low VAT rate of only 5%
  • Unlimited trade with local and foreign markets
  • No trade limitations, no trade barriers, no trade quotas
  • UAE residency visa allowed (facilitates banking)
  • Availability of inexpensive workforce
  • Compulsory to lease suitable commercial premises
  • All banking transactions are facilitated