Incorporation of Local Companies

Licenses

All business activities in UAE will fall under one of the following three categories of licenses:

  • Commercial licenses covering all kinds of trading activity;
  • Professional licenses covering professions, services, craftsmen and artisans;
  • Industrial licenses for establishing industrial or manufacturing activity.

 

It is also feasible to set up the following:

  • Branches
  • Representative Offices of Foreign Commercial Companies

 

Local Partners/sponsors

The local partner/sponsor will usually be a silent partner and is required by law to own 51% of the company’s capital. The local partner/sponsor is not involved usually involved in the operations of the company but will assist in obtaining visas, labour cards, and issuing the license. In most cases, they will be paid a lump sum and/or a percentage of profits or turnover.

 

Only commercial licenses require a “local sponsor”.

 

Service Agent

Professional licenses and branch or representative offices of foreign companies require a “Service Agent”. These can either be sole establishments or civil works companies.

The service agent of a sole establishment need not hold any percentage of the company establishment capital. For a civil works company, the agent must hold at least 1% of the company’s capital.

Some categories of businesses require approval from ministries, for example, banks, and financial institutions from the Central Bank of the UAE; manufacturing from the Ministry of Finance and Industry; and pharmaceutical and medical products from the Ministry of Health; the branch of a foreign company from the ministry of Economy and Commerce.

More intricate procedures apply to businesses engaged in oil or gas production and related industries.

 

Legal Structures for Trade activity

Federal Law No. 8 of 1984, as amended by Federal Law No. 13 of 1988 – the Commercial Companies Law – and its by-laws govern the operations of foreign business. In broad terms, the provisions set 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
  • Simple Limited Partnership.
  • Private Joint Stock Company.
  • Limited Liability Company
  • Partnership Limited with Shares.

 

The required documents, procedures and costs to set up a local company:

Please note that we would require the following documentation to proceed with the registration of a local company and obtaining a Commercial Trading License in Dubai, Abu Dhabi ,Sharjah and Ras Al Khaima .

 

  1. Copy of your passport with entry stamp.
  2. Copy of your visa.
  3. Non objection letter from the sponsor ( Travel agency or UAE sponsor).
  4. If you have the nationality of the GCCs then you will start the the activity directly, no need for sponsor and of course no need for the Non objection letter from the sponsor.
  5. If you do not have the nationality of the GCCs we will provide you with local sponsor .
  6. Registration and incorporation form.
  7. Reservation Trade name, the charges are depend on the trade name whether it local or foreign. The charges for local name is 210AED and for foreign trade name 2000 AED.
  8. Issuing initial approval, the charge is 110AED.
  9. Drafting Memorandum of Association and its attestation at the court, the court charges for this service amount to 1300AED.
  10. Renting an office.
  11. 5% of the annual rent value paid to the municipality of Dubai as “market fees”, for example, if the annual rent value is 50.000 AED,then the market fees will be 2500AED.
  12. Issuing planning approval for the office.
  13. Approval of the Ministry of Economy, the charge is 3000 AED.
  14. Approval of Dubai Trade and Industry Chamber .the charge is 1200AED
  15. Approval of Real Estate Regulation Department.
  16. Accommodation fee for every partner 1000AED.
  17. Submit all the mentioned approvals and documents to the Department of Economic Department and issuing payment order and payment receipt.

The above mentioned costs are only the governmental charges which should be paid to the different concerned departments to issue the local license and such charges can vary from case to case according to the activity of the company.

 

Time Frame

Once we receive all of the required documentation and the stipulated payment, we will prepare the required documents, obtain necessary approvals and applications, and submit the same to the concerned department for approval and issue of the license Please note that it will take approximately 5 days to complete the entire registration procedure and obtain the relevant license.

It is important that we are able to make payments as efficiently as possible to the various departments in order to proceed with the registration and obtain the initial approval. Therefore we would require the total fees to be paid in advance. If you would like to engage ALRowaad to assist with the visa application & stamping procedure for employees, an additional service fee of 2000 [per visa] will be applicable. We can assist with the entire visa application, collection, medicals and visa stamping procedures for the investors at Ras Al Khaimah Free Trade Zone.

 

Incorporation of 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 service agents. Local agents – 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.

 

The required documents for set up a branch or representative office.

To establish a branch or representative office in the UAE the following documents are required:

  • The Parent company registration certificate duly notarized and attested by the UAE embassy as well as translated into Arabic.
  • Board of Directors resolution for establishing a branch also duly notarized and attested by the UAE embassy as well as translated into Arabic.
  • Main company’s Memorandum / Articles of Association, duly notarized and attested by the UAE embassy as well as translated into Arabic.
  • Power of Attorney to the representative ( Al Rowaad Advocates )
  • Financial statements for the last two years.
  • Local service agency agreement.
  • Details of local service agent.
  • Company profile.
  • Registration and licensing application as well as proof of reserved trade name.
  • Photocopy of the director’s passport, and non-objection letter from the director’s current sponsor, duly notarized and attested by the UAE embassy.
  • Photocopy of the national agent’s passport & UAE naturalization identification.
  • Approval from the Ministry of Economy and Commerce (commercial and industrial activities only).
  • Power of attorney issued in favor of the director.
  • Main company’s Memorandum of Association.
  • Photocopy of the main company’s certificate of Incorporation duly translated into Arabic.
  • Initial Approval receipt.
  • All documents submitted before in order to get the Initial Approval.
  • Photocopy of office lease including the plot number.
  • The original appointment contract of the national agent duly authenticated by the Notary Public (does not apply to Banking Liaison Office).
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