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How to incorporate a company in Dubai

How to incorporate a company in Dubai

Dubai is one of the largest cities of the Middle East and attracts a large number of foreign investors. Given a wide range of benefits, every businessman wants to establish his company in Dubai. The Company incorporation process is quite simple, straightforward, and involves minimal complexity. The chief legislation that governs the company incorporation is Dubai Company Law. The registrar of companies acts as a unified authority to handle all the matters related to the company formation.

Type of Companies

There are various types of entities which can be incorporated in Dubai. These include-

1. Limited Liability company (LLC)-

This is the most popular form of company in Dubai. The maximum number of shareholders in an LLC in Dubai is 50 and minimum is 2. The major benefit of this type of entity is that the shareholders have limited liability and their personal wealth remains protected. Further, as per the recent amendment in the company law, a 100% expatriate ownership is allowed for a selected list of businesses.

2. Professional or Civil Company-

The professionals in the field of medical, accounting, legal, etc. can form such a type of company in the mainland of Dubai. It offers 100% foreign ownership without the need of a Local UAE sponsor.

3. Offshore Company

It refers to that arrangement in which the business configuration is formed and managed outside the jurisdiction of the company. There are a wide range of benefits that an offshore company offers which includes- Full exemption from corporate tax, complete foreign ownership, 100% repatriation of capital & profit, exclusion from all import and export duties, etc.

Procedure for Setting up a company

  1. At the outset, you should determine the nature of the business and the type of company, depending upon your needs and business requirements.
  2. After selecting the suitable form, you should look out for a local UAE national as a sponsor. The Federal Law No. 2 of 2015 (UAE Company Law) provides that a UAE national must have a 51% stake in a company, if it is set up outside the DIFC. However, this condition is exempted, if the jurisdiction of the Company falls within the DIFC.
  3. After the above step, you need to apply for a name with the Department of Economic Development. It is important to note that the UAE has some strict rules relating to the names of companies. The name shouldn’t be offensive; the words referring to Allah, religious groups, political groups, etc should be strictly avoided. If you want to name your company after a person, it must be the full name of partner or director of the company.
  4. Now, the applicant needs to draft the Memorandum of Association (MOA) and the Article of Association (AOA) of the Company. Along with the MOA and AOA, some other documents are forwarded to the Department of Economic Development. These Documents include – Business plan, passport of the managers, passport of the sponsor, bank reference letter, etc.
  5. After submitting the document, the registry will carefully assess each and every document, and only after satisfaction it grants a certificate of incorporation.
  6. Along with incorporation, the registry also issues a trade license. It is considered as one of the most important documents. There are mainly 3 type of trade licenses:
  • All the trading activities are covered through the Commercial License
  • Professional License covers professions, services, craftsman and artisans.
  • Industrial licences for establishing industrial or manufacturing.

In short

Before incorporating a company in Dubai, you should determine the structure of the business and the type of entity after considering their merits and pitfalls. The company registration fee with the Dubai Economic Development is approximately 300 EUR. So, it is advised that you should take each and every step after consulting with your legal attorney.

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