If your business in Abu Dhabi requires you to trade on the UAE mainland with local companies then you will need a Department of Economic Development (DED)-licensed company. Under the UAE Commercial Companies Law, any ‘onshore’ company must be at least 51% owned by UAE nationals or entities owned by UAE nationals. Many investors are concerned by these foreign ownership restrictions and are uncomfortable about relinquishing control of their company to a local partner.
To allay these concerns, Sovereign has developed, in conjunction with the Foreign Direct Investment (FDI) division of the DED, a ‘Corporate Nominee Shareholder Model’. This model enables the investor to maintain 100% effective ownership and control of their business in Abu Dhabi, whilst remaining in full compliance with UAE companies law.
Sovereign Corporate Services operates and controls a portfolio of 100% UAE national-owned Limited Liability Companies (LLCs) across Abu Dhabi, Dubai and the wider UAE. The relationships with these UAE national individuals are affirmed by Powers of Attorney and other legal agreements.
These LLCs can act as the 51% local partner, whilst the risk is mitigated for the 49% shareholder by way of various scheme of arrangement documents that pass all management control, financial control and the day-to-day running of the business back to them in return for a ‘fixed annual sponsorship fee’.
As the Corporate Nominee Shareholder, Sovereign will not take any commercial role in the new company and the annual fees will be fixed such that there will be no variation irrespective of increased turnover or profitability of the business.
The primary benefit of this corporate shareholder model is that the investor will not be dealing with an individual person as a shareholder but rather with an international, fully licensed and regulated company that has no emotional ties to the business and no local vested interests.
Sovereign has multiple signatories that are available all year round and, as a company, our corporate shareholder entities offer perpetual succession. As a result, a client’s business in Abu Dhabi will not be affected by the ill-health or death of a local individual partner.
Foreign individuals are permitted to hold the minority 49% shareholding in their own name, but Sovereign recommends the use of a foreign (offshore) company. This will ensure that the ownership is held outside the UAE and is therefore free from any Shari’ah law implications for inheritance and succession planning.
A Sovereign Corporate Nominee Shareholder can also act as a local agent in Abu Dhabi for structures where there is no requirement for a 51% local partner – for example, for a professional licence or branch.
Sovereign Corporate Services LLC (SCS) has entered into a formal, strategic partnership with Dubai FDI, the dedicated investment development agency within the DED. SCS has signed a Memorandum of Understanding (MoU) with Dubai FDI that sets out a commitment to attract foreign companies to establish and grow in the region and to optimise the services offered through the following co-operation points:
- Act as the ideal business partner to foreign companies
- Measure and track investment performance
- Develop businesses and implement investment attraction mechanisms
- Highlight success stories and maintain constant contact.
Abu Dhabi is an excellent location for international companies to set up their regional headquarters in the Middle East and with Sovereign’s help the process should be straightforward and swift.