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.
Key steps to set-up a Branch or Representative Office in UAE:
- Speak with one of Sovereign’s consultants who will advise on the correct legal structure based on the activities that a business intends to undertake in the UAE and its intended markets. A client may further choose to obtain a legal opinion to confirm Sovereign’s advice.
- Appoint a National Service Agent (NSA), which must be either a UAE national or a company wholly owned by UAE nationals. Sovereign Corporate Services has created a number of 100% UAE-owned LLCs that it fully manages and controls through power of attorneys and other legal agreements. These companies can act as the NSA.
- The required documentation for registration and approval will include but is not necessarily limited to:
- Certificate of incorporation (or equivalent), memorandum and articles of association, and a certificate of good standing (where one can be obtained) from the parent company’s home jurisdiction;
- A board resolution to authorise the opening of the Branch or RO, to appoint a general manager and to grant a power of attorney to the general manager; and to confirm that the company accepts responsibility for the liabilities of the office when established in the UAE;
- Audited accounts of the parent company for the last 2 years;
- A statement setting out the company’s main operations and activities;
- Certified passport copy for the General Manager;
- 2 x Certified proofs of address for the General Manager;
- 1 x CV for the General Manager;
- 1 x Professional / bank reference letter for the General Manager.
- All documents are required to be notarised and attested in both the applicant’s home country and at the relevant UAE consulate. The notarisation process should be commenced as early as possible because it can take a significant time.
- All documents must also be translated into Arabic by an official translator before they can be presented to the authorities in the UAE.
- All requested documents to be submitted to Sovereign, which will then manage the application process from start to finish. The licensing authority will be the Department of Economic Development, with the approval of Ministry of Economy.
Advantages of a Foreign Company office in Dubai/UAE:
- Foreign companies can retain 100% foreign ownership in the UAE;
- Foreign company is not required to show more than 2 years of incorporation and business experience in its home country (some Free Zones require longer);
- The company may legally conduct the approved activity in its licence anywhere in the UAE, including Free Zones;
- No restrictions on the location where the company can rent/buy office premises;
- The government has permanently waived any paid up capital requirements.
- As the NSA, Sovereign has multiple signatories who are available all year round, unlike individual local partners who frequently travel in the summer months.
Disadvantages of a Branch or Representative Office in UAE:
- A Branch is restricted in respect of its business activities, especially to trading in the UAE mainland. If the parent company conducts any activity that involves trading, it can only incorporate an RO for the purpose of marketing or promoting its products and services, or to facilitate commercial agreements between the parent and its customers. However most service activities can be conducted through a branch.
- Longer time to establish than a Free Zone company, typically 8 to 10 weeks;
- External approvals are often required from UAE government ministries and a bank guarantee of AED 50,000 (approx. US$15,000) will be required by the Ministry of Economy.
Branch of a foreign company in Dubai – FAQs
- What language should the company documentation be in for application to Department of Economic Development (DED) and Ministry of Economy (MoE)?
The local authorities only accept documents and application forms completed in English and Arabic. All documents must therefore be translated into Arabic by an official translator.
- Do I need to rent an office to obtain the licence for a Branch or RO in the UAE?
A copy of a proposed lease of office space in the UAE will need to be submitted to the DED once it has received approval from the MoE.
- Do I need to appoint a local services agent to incorporate a Branch or RO in the UAE?
Both a Branch and an RO are required to appoint a National Service Agent (NSA), which must be either a UAE national or a company wholly owned by UAE nationals. The appointment of an NSA is made by written agreement, which must be signed by the parties before a notary public in the relevant Emirate.
- What is the NSA’s role?
The NSA is not responsible for the Branch or RO and does not take part in any operations, management or ownership of the office. Its role is restricted to liaising with government offices on administrative functions such as obtaining licences, permits and visas. The NSA is generally paid an annual fee for providing such services.