Formation of a company in Dubai - YB Case 2022
Registration period - 14, days
Comprehensive Evaluation of UAE Free Zones
Dubai

Formation of a company in Dubai

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Features of jurisdiction

Dubai is the UAE's second largest emirate and its most important port and commercial center. Massive efforts have been made to develop and diversify the city's economy. Dubai has more than 40 free economic zones. In order to attract international business, the city has made significant investments in transportation, telecommunications, energy, and industrial infrastructure. Companies in Dubai can benefit greatly from the absence of foreign exchange controls, trade barriers, or quotas, making it an ideal location for establishing a business in the UAE.

  • Demanded business sectors

    Because of its internal politics and geographical characteristics, the most popular areas of business activity in Dubai are: information technology, financial and business services, trade, tourism, logistics, and healthcare.

  • Remote registration is an option

    Remote company registration in Dubai is not permitted or possible.

  • Corporate taxation

    In Dubai, corporate tax is 0%.

  • Foreign investors' attitudes

    Dubai is open to foreign investment, making it a popular location for foreign entrepreneurs to establish a business.

  • Banks

    Abu Dhabi Islamic Bank, Emirates NBD, Mashreq Bank, Noor Bank.

  • Legal system

    Dubai's corporate legal system, like that of England and Singapore, is based on English common law.

Business support in Dubai's free economic zones

Dubai company registration procedure

The process of registering a company in Dubai takes approximately two weeks and includes the following steps:
  • First consultation
    Meeting with YB Case representatives in the office to clarify the client's details and requirements. Launching the company incorporation process in Dubai (initial consultation is possible remotely).
  • Reservation of title
    The future company's name must be unique and not contain any forbidden words. Name reservations are possible.
  • Applying for a Dubai company registration
    After receiving regulatory approval to open a company in Dubai, the charter and memorandum of the company are prepared and notarized, and the applicant signs all necessary documents, which are then submitted to the local regulator (Department of Economic Development).
  • An application for the registration of an enterprise in Dubai is being considered by the regulatory body
    After receiving all of the required documents, the regulator reviews the application and makes a decision on the company's incorporation in Dubai, UAE.
  • Obtaining an incorporation certificate
    Following the company's authorization in Dubai, the founders receive a certificate of incorporation containing the company's registration number. A special license may be required depending on the business activity.

Primary prerequisites

  • Dubai AED 300,000 is the required minimum paid-in capital.

  • Two shareholders are required (maximum 50).

  • Registered street address.

  • Two directors are required (no residency requirements).

  • Registration Company secretary agent.

  • Financial statements are due once a year.

  • Annual shareholder meeting (possibly remotely).

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Formation of a company in Dubai

Formation of a company in Dubai

Conducting business in the UAE has become a popular option for expanding a firm. Creating a business in Dubai is among the most lucrative places to begin a business in this Country. The emirate has a favorable business environment, which has become a major factor in attracting a large number of international venture capitalists to relocate their enterprises to this jurisdiction - and this tendency is gathering traction year after year. Another important aspect is that in most instances, Dubai allows foreigners to own 100% of the company's shares. All of these factors have contributed to Dubai's reputation as a profitable emirate for foreign entrepreneurs to establish a business.

The article contains a detailed examination of the procedure for establishing a company or firm in Dubai, the various types of businesses, and key aspects of legal requirements.

The Advantages of Creating a Company in Dubai

Another important reason why registering a company in the UAE has become a reliable solution is the emirate's well-thought-out legal framework and tax planning for international business. The jurisdiction's economy is divided into two sectors: onshore and offshore, as well as several free zones. Commercial activity is regulated by the federal government and each of the seven emirates.

There are several advantages to establishing a business in Dubai:

  • Business efficiency.
  • Individuals and legal entities are not subject to income tax.
  • Infrastructure that is efficient and effective.
  • Availability of dedicated personnel.
  • A strategic location for certain industries.

Forms for registering a company in the United Arab Emirates (Dubai)

The Companies Law is the primary law that governs the incorporation of onshore companies in Dubai, outlining all of the requirements that must be met both before and after incorporation. Each authority has its own registration requirements for offshore companies or SEZ firms.

When planning to open a company in the UAE, foreign investors must consider the terms of the Companies Law, which outlines the main stages of company formation. The first step in the registration process is to select the type of company (Free Zone, offshore or mainland).

Mainland corporation

Opening such a company option in Dubai will be a worthwhile business investment for foreigners who want to reach a multicultural audience and enter the markets of the UAE. This is a profitable registration option if you intend to conduct real-world activities on the jurisdiction's territory. Following that, we attempted to describe in detail the main structures and properties of companies on the UAE mainland.

Today, most international corporations prefer to locate in free zones. One of the most cost-effective and profitable options is to register a company in a free zone in Dubai. In Dubai, there are over 30 Free Zones that provide a variety of benefits such as a streamlined registration process, ongoing business support, and financial incentives.

Each SEZ offers services to the sectors and industries it serves. A profitable option for foreign businessmen is to open a company in Dubai in a free zone, which allows the owners to own 100 percent of the company, allowing them to manage it independently and profitably.

The SEZ also provides the following benefits:

  1. The company gains the right to be considered a UAE resident. This allows employees to obtain a UAE business visa as well as a Certificate of Tax Domicile of the Jurisdiction. The number of visas issued is determined by the type of business license and the size of the rented premises. DTA agreements can be accessed with a certificate.
  2. The corporation is not taxed on corporate or personal income, and there are no restrictions on capital withdrawal or profit transfer.
  3. A company in Dubai can export goods from the FEZ to other countries and import goods from other countries into the FEZ without paying customs duties.
  4. DTA agreements covering more than 50 countries are available.

The nature of business activity is one of the factors influencing the choice of a free economic zone for registering a company in the United Arab Emirates. If you require more detailed information on the existing free economic zones and the registration requirements for each of them, please contact our company's specialists.

In addition, registering an offshore company in the UAE has become a popular option for facilitating cross-border commerce. Offshore organizations are generally enrolled as IBC. They are permitted to establish a multi-currency account in the UAE and engage in transnational commercial operations. It is worth noting that such companies cannot provide services to UAE residents while maintaining a physical presence in the country.

Dubai company registration procedure:

  1. The company's corporate structure is chosen.
  2. The company's trade name has been approved by the relevant authority.
  3. Preparation of required constituent documents.
  4. Getting a license in Dubai.
  5. Visa or business migration card issuance.
  6. Establishing a bank account in the UAE.
  7. Permission for tax purposes.

Types of legal entities in Dubai's mainland

  1. Registration of a general partnership (General partnership) – this type is only available to UAE citizens. An important requirement is that the GP be established by two or more partners who are fully responsible for the partnership's activities. Partners have the option of including their names in the title. Individuals who wish to join the management must be UAE residents; only in this case will they be able to establish a general partnership in Dubai. Cancellation of a partnership is conditional on one withdrawing from the partnership or going bankrupt.
  2. LP (Limited Partnership) registration in Dubai – has general and limited partners. The limited partners are liable for the partnership's debts to the extent of their capital contribution. A limited partner may also not participate in management or include his name in the name of the LP.
  3. Registration of a public joint stock company in Dubai (Public JSC) – In order to vote for a JSC in Dubai, the framework should have at least 10 local founders. The minimum capital requirement is EUR 1 million, with a quarter of that amount due before operations begin. The majority of the stocks should be available to the general public. Shareholders are only responsible for the amount invested.
  4. Registration of a Private JSC – A private joint-stock company could only be formed if there are at least three shareholders. The required minimum capital is 450,000 EUR. There is no way for the general public to purchase shares. As a result, the legal documents of such a company must state that the shares are not available to the general public.
  5. Registration of an LLC in Dubai (limited liability company, similar to an LLC) – the minimum and maximum number of founders is two. There is no set minimum capital requirement. This type of company is managed by managers, who can number up to five people. They could be non-UAE residents. Except for banking and insurance, the LLC company in Dubai is permitted to engage in any activity involving the investment of funds on behalf of other individuals or organizations.

I'd like to point out that beginning June 1, 2021, companies on the UAE's mainland can be 100 percent owned by foreigners (subject to the necessary permission from the necessary authorities in each emirate); previously, the main feature of registering a company in the Emirates was that the share of participation by UAE citizens had to be at least 51%.

International investors used to establish companies in Dubai's free trade zone in order to maintain full legal and economic control over the organization in the UAE. However, this presented its own range of difficulties attributed to the reason that companies in the FTA get the permission to direct business with the appropriate license in the FTA in that they are enrolled or outside the UAE. To date, overseas firms have been granted the authority to form their businesses on the mainland with 100% ownership, leading to greater versatility in daily operations.

The new law has highlighted the possibilities for international investment in many sectors by expanding investment opportunities. Reducing restrictions, expanding owning possibilities, and simplifying the business enrollment process in the UAE will encourage more international corporations and business owners to engage in this region.

Non-resident businesses can also retain 100 percent ownership by opening a branch or representative office. After completing the registration process, the Dubai branch will be able to carry out the commercial activities of the parent company. These types of businesses necessitate the use of a local National Service Agent (NSA).

What documents are allowed to register a firm in Dubai's free zone?

The package of documents is essentially zone-specific, but there are some that are universal:

  • A finished special form.
  • Activities are described in detail.
  • A duplicate of the current trade license/registration certificate.
  • Color replicates of passports and sample signs of the new company's stockholder(s) and hired manager/director
  • Each shareholder will receive a letter of recommendation from the bank.

In addition to the above documents, you must provide the following to obtain an industry license in Dubai:

  • A duplicate of the development plan.
  • Existing business profile.
  • Information about the investor.

You will need the following items to open a branch in Dubai:

  • A certified copy of the parent company's certificate of incorporation, MOA, and AOA.
  • The parent organization's board of directors made the decision.
  • A three-month bank statement for the parent company.
  • Copies of parent company executives' passports and the original power of attorney.

Some entrepreneurs wish to set up a company in Dubai from afar. It should be mentioned, however, that the country's regulation forbids the registration process from taking place in the absence of a person. You can contact our company's specialists for more information and alternative options, and you can ask all of your questions about incorporating a business in the UAE during the consultation.

The benefits of establishing a company in Dubai

The method of allocating a firm name is the key characteristic when enrolling a firm: it should not infringe the country's public morality or civil order, it should be accompanied by the legal structure of the corporate, it must correspond to the necessary sort of activity and legal recognition, and it must not contain the title of any ruling body, emblems, or any outer organization.

To set up a business in Dubai, you should first apply for a license from the jurisdiction. There are three types of licenses: commerce, industrial, and professional.

Individuals or corporate persons may obtain a trading license if they intend to engage in any trading volumes in order to profitably buy and sell goods. There are general and special trade permits available. A special trading license in Dubai limits the scope of operations to trading only closely related goods.

Individuals or legal entities can obtain a professional license if they intend to practice certain professions or establish a company in Dubai to provide engineering consulting, other consulting services, medical and educational services, and so on.

What is the procedure for opening a bank account in Dubai?

To open a corporate account in Dubai, you must have the following documents ready:

  1. A detailed company record, such as proof of business and customer and/or supplier information, is included on an application form.
  2. Resident visas and shareholder passports are available.
  3. Emirates Shareholder IDs were scanned.
  4. Passport photocopy of the director.
  5. The category of trading volumes and the lawful source of funds must be disclosed.
  6. Сontracts already in place.
  7. Business partners' recommendation letters.
  8. A thorough business plan.
  9. Corporate documents for a company.

Permission to reside in the UAE

After opening a company, you could apply for a residency permit in the UAE. The procedure is divided into stages, and specialists can provide additional information. It is important to note that you do not need a permit to operate a business in the UAE Free Zone.

Conclusion

Due to its strategic location, WorldClass infrastructure, diverse and easily accessible market, and low logistics and operational costs, Dubai has become a place of business registration for both local and international organizations. Every year, an increasing number of foreign investors and businesspeople flock to the emirate to take advantage of its favorable business environment. Foreigners are now allowed to own 100% of a company in Dubai, thanks to recent changes.

Remote company registration in Dubai is not possible. We can provide detailed advice on business regulation in Dubai. If you have any further questions, please use the feedback form below or contact us via one of the methods listed in the contacts section.

COMMONLY ASKED QUESTIONS
What documents must I prepare in order to register a company in Dubai?
  1. It should be noted that the document package will differ depending on the type of business chosen. The basic set includes:
  • company name;
  • description of future activities;
  • business plan; notarized MOA and AOA;
  • information about key personnel;
  • information about the registered agent;
  • bank letter of recommendation for each shareholder.
Can a non-resident establish a business in Dubai?
Under certain conditions, foreign entrepreneurs can establish a business in Dubai.
Conditions for registering a company in the UAE (Dubai)
The process of forming a company in this jurisdiction can take up to 14 days. More information on this topic, as well as the cost of establishing a business in Dubai, can be obtained by consulting with our company's specialists.