About the UAE and Market Entry
Company formation in Dubai
Choosing the right business set up
A common way for foreign companies to retain foreign ownership under the Commercial Company Law in the UAE is to incorporate a Branch or Representative Office (RO), which permits 100% ownership by the parent company. These forms do not have a separate legal identity and are therefore treated as an extension of the foreign company, which remains liable for their activities.
A Branch is permitted to engage in commercial activity in the UAE and to earn profits. It is licensed for the purposes set out in its commercial licence and may only engage in activities similar to those carried on by the foreign company in its home jurisdiction.
An RO is not permitted to earn profits within the UAE and its activities are limited to marketing or promoting the products and services of its foreign parent company in the UAE.
Both Branches and ROs must operate under the authority of a commercial registration and licence in the name of the foreign company, and both are required to appoint a National Service Agent (NSA), which has to be a UAE national individual or a 100% UAE national-owned corporate entity…
There are around 40 Free Zones operating in the UAE, with more under construction. Each Free Zone is designed around one or more commercial categories and only offers licences to companies within those categories.
The main attractions of establishing an entity in one of the UAE’s Free Zones is that there are no foreign ownership restrictions and companies are governfored by an independent Free Zone Authority (FZA), which is responsible for issuing operating licences and regulating the activities of companies within the Free Zone.
The UAE is now a major business hub and ideal for setting up a business or a representative office, there are now over 40 different “Free Trade Zones” in the UAE so identifying the best Free Zone through which to conduct business in the region can be a tedious task. It is also a common misconception that a Free Zone Company is an offshore company, however, in spite of their similarities; they do also have very differing characteristics…
Fujairah is the fifth largest of the seven emirates of the United Arab Emirates and is the only one with a coastline solely on the Gulf of Oman. There are two major Free Zones in Fujairah – the Fujairah Creative City and the Fujairah Free Zone. Both offer a wide variety of licence types and are highly cost effective in comparison to the Dubai-based Free Zones. This makes them an attractive option, particularly for start-ups and freelancers who do not necessarily require physical office space.
Fujairah Creative City focuses on a broad spectrum of business fields including media, events, consulting, education, communication and marketing, music and entertainment, design and technology. Fujairah Free Zone is adjacent to the Port of Fujairah and close to the Fujairah International Airport. It focuses on trading entities, service providers, logistics companies and manufacturers…
All mainland (onshore) UAE legal entities are required to be licensed by the Department of Economic Development (DED) and governed by the UAE Commercial Companies Law (CCL). The main advantage for foreign investors establishing a business in mainland UAE is that, unlike the Free Zones, there is no territorial restriction on business activities or the location of offices/premises. A mainland company therefore has the freedom to trade anywhere in the UAE or wider Gulf Cooperation Council (GCC) states, including all the Free Zones, and will have a far wider range of real estate options from which to choose…
An establishment or sole proprietorship is an entity owned by one individual with the trade license issued in his or her own name. The owner assumes all the financial responsibilities of the entity including all its financial liabilities.
Establishments that practice professional services and do not extend to any commercial business are exempt from the Commercial Companies Law (CCL) but are required to be licensed by the Department of Economic Development (DED).
Unlike a UAE Limited Liability Company (LLC), which requires that at least 51% of shares must be registered to a UAE/GCC national sponsor, a qualified foreign investor that sets up an establishment or sole proprietorship to practice a professional service is permitted 100% ownership in the company.
Establishments that are owned by foreign nationals are required to appoint a National Service Agent (NSA) to assist in obtaining licences, visas etc. NSAs have no direct involvement in the business. Sovereign is able to act as the NSA…
Offshore Companies in UAE should not be confused with UAE Free Zone companies. An Offshore Company is a legal business entity that is set up with the intention of operating outside its registered jurisdiction and/or the location of its ultimate ownership.
There may be many reasons to register an Offshore Company, but the general benefits of utilising an offshore corporate structure include:
- Providing a gateway for international market expansion;
- Access to a stable and business-friendly legal system;
- Access to a more flexible regulatory regime;
- Offering tax neutrality on international earnings in respect of (depending on jurisdiction) personal or company income, capital gains and inheritance taxes;
- Offering better access to global funding;
- Providing a vehicle to separate or protect assets, such as Intellectual Property, from operating entities…