The UAE government is actively working to create all of the necessary conditions for attracting foreign investment; as a result, company registration in this region has grown in popularity among businessmen. To ensure the success of your new business and the establishment of strong business relationships with local companies, you must thoroughly research all of the requirements and conditions for doing business in this territory.
The United Arab Emirates (UAE) is a federation of seven emirates. The federation is situated at the crossroads of major trade routes between the West and the East, which is another significant advantage for those looking to register a company in the UAE. The Emirates is a modern business hub and the entry point to the Middle Eastern market.
The main advantages of doing business in the UAE
The formation of a company is the first step in establishing a business in the UAE. The following are the primary benefits of establishing a company in the United Arab Emirates:
- The UAE is ranked eighth among the world's top ten most appealing markets for forming a retail company.
- The country's government is working hard to attract foreign investors.
- In terms of the ease of starting and running a business, the country ranks 11th in the world.
- The requirement for a different workforce.
- Large economic ecosystem providing economic solutions in licensing, fintech, venture capital, innovation programs, UAE fintech regulation, and UAE fintech start-up funding.
- Banks provide assistance in a variety of financial matters.
- The UAE has government corporations in various sectors of the economy whose operations are governed by the government.
- Available resources that allow for the profitable registration of a mining company in the UAE.
- Modern business centers in the UAE's free zones.
Commercial company types/forms in the UAE
The following are the main ways to register a business in the United Arab Emirates, which are governed by a legal framework based on international best practices:
- company from the mainland
- Company in a free zone
There are also enterprises that require the presence of shareholders from the UAE in their composition:
- Limited-liability trading companies;
- Limited by shares companies, both formal and informal.
One of the most common commercial business structures is the formation of a limited liability company in the UAE with the presence of foreign investors. Some cases of LLC formation in the UAE may necessitate the transfer of cash or other assets in the form of share capital.
The preparation of a Memorandum of Association, which must include the following information, is required for the registration of a company in the UAE:
- on the cost of share capital;
- on business activity;
- on the distribution of shares among shareholders;
- on directors;
- and on other conditions.
The primary stages of company formation in the UAE
- Booking of the title.
- Preparation and presentation of constituent documents to the relevant emirate department.
- Providing details about the office (lease agreement, documents confirming the registration of the office).
- Establishing a corporate account with a UAE bank.
- Registration of a trade license in the Emirates.
- The state registration fee must be paid.
Minimum requirements for establishing a business in the United Arab Emirates
- There is one director and one shareholder present.
- Only an LLC is permitted to trade in the UAE.
- The minimum capital for onshore businesses based in an FTZ ranges from 0 to 40,800 USD. Outside of the FTA, the lowest amount for establishing an onshore firm in the UAE is 81,675 USD. The minimum level required to establish a publicly traded company in the United Arab Emirates is $2,722,420 USD.
- The submission of an audited financial statements report (this applies to all forms of enterprises).
- When establishing a bank account in the UAE for a non-resident firm, the KYC prerequisites are more complicated than for a local company.
- Businessmen are granted a residence permit in the UAE for a period of two to three years.
Checklist of documents required for company formation in the UAE
- The UAE Embassy confirms a full audit of the company's top management.
- Confirmation from the UAE Embassy regarding the verification of statutory documents.
- Confirmation of authorized capital contribution when opening a bank account in the UAE.
- A lease/purchase agreement for office space in the Emirates has been approved.
- An agreement on the provision of services with an Emirates resident - he must own 51 percent of the shares (this applies to mainland companies).
- A certified agreement with a local company acting as the enterprise's agent in the FTZ.
Registration of a company on the UAE's mainland
A mainland company is a business that has completed the registration process in one of the Emirates' economic development departments. The first step in starting a business in the UAE mainland is to register a business enterprise with the DED, which will then issue a business license to operate. These businesses can engage in any type of commercial activity. Certain activities, however, are prohibited by DED rules, and others require an additional activity permit issued by regulatory authorities.
Foreign investors can establish a business in the UAE in a variety of ways:
- establish a partnership in which UAE nationals own 51% of the shares;
- establish a Sole Establishment company in the United Arab Emirates in which the founder owns 100% of the shares.
Certain commercial activities are restricted to UAE citizens only.
Registration of a company in a UAE free zone
There are geographical areas in the UAE in which there is a tax structure and regulatory requirements for employment and trade (that is, those approved on the continent do not apply) - these are free trade zones (FTZ).
Why is it mandatory to enter a business with an FTA:
- residence permit in the UAE;
- authorization of a firm with 100 % foreign possession in the UAE is allowed.
- There are no commercial barriers or quotas.
- There are no limitations on foreigners' employment.
- Infrastructure and facilities for industrial and commercial purposes are available.
Establishment of a UAE free zone company
Certain Free Zones facilitate the construction of a minimum paid-in share capital when forming an Emirates Free Trade zone business. The terms of each FTA determine the size of the authorized capital.
The corporate structure of a company registered in one of the UAE FTAs can be:
- A new company with individual investors.
- Corporate shareholders own a subsidiary.
Registration of companies in such zones will be an excellent option for those who provide consulting services, are involved in various types of investments and international trade, and those who own intellectual property.
Offshore enrollment in the United Arab Emirates
Although an overseas company is also recorded in an FTA, it differs from process monitoring in that it is not actually allowed to operate within the UAE, only beyond it.
Shareholders of offshore companies could indeed open bank accounts and, if necessary, manage them, along with investing within and without the UAE. Shell companies could only buy real estate in certain areas of Dubai. The income generated by the investment process can really be kept in the company's bank accounts.
There are no approved conditions for such capital adequacy tried to register an offshore company in the UAE. Offshore companies frequently hold the business operations of other companies that operate both inside and outside of the country.
This sort of business, like any other, has advantages, such as an infinite number of founders, the presence of only one director and one shareholder, the ability for a non-resident of the Emirates to manage the company, tax advantages, and the absence of mandatory reporting.
Criteria for company licensing in the UAE
To conduct business in the Emirates, the company must first obtain a state license for the specific type of activity. The length and cost of the procedure for obtaining such a permit will be determined by the company's type of activity. Offshore companies do not require such licenses because they are free to conduct business anywhere in the world.
To trade in consumer items, a business license will suffice; no extra permits. However, if the company sells medicines, medical equipment, or chemicals, they will need to obtain the necessary permits. The license must be renewed on an annual basis.
With its robust economy, the UAE comprehensively supports and attracts investors looking to establish a company abroad. The Emirates also have free zones, which allow foreign investors to fully own a business. In addition, many digital startup owners want to register their businesses in the UAE.
If you are interested in this topic or want to establish a company in the Emirates, contact YB Case specialists for a consultation on the regulation of trading activities in this country. Our company's experts will not only answer your questions but will also provide comprehensive assistance in registering a company in the UAE free trade zone.
The required package of documents may differ depending on the type of business chosen and where the enterprise will be registered - on the country's mainland or in free zones. The following are the bare minimum:
- Name suggestion.
- Business strategy.
- Shareholder and director information.
- Charter and Memorandum
- Information about the local secretary or agent.
- Confirmation of the local address.