Wednesday, 10 April 2013

What are types of Business license entities in Dubai/UAE?

What are types of Business license entities in Dubai/UAE?

The principal forms of business structures are:

   ·         -Limited Liabilities Company.
   ·        - Professional License.
   ·         -Industrial License

The main key differences between LLC License & Professional License

The difference between the two forms of license is as following:-

a)  L.L.C.: Owners have limited personal liability for the debts and actions of the LLC. Other features of LLC are more like a partnership, providing management flexibility and the benefit of pass-through taxation. A Limited Liability Company can be formed by a minimum of two and a maximum of 50 persons whose liability is limited to their shares in the Company's capital. The time required to form a company will be approximately 1-2 weeks from the date of receipt of all the documents. and procedures and the breakdown of the cost can be given upon request.

 b)  Professional License: A Professional License is a type of company formation structure in Dubai whereby the foreign investor or foreign owner has 100% ownership of the company. It is compulsory to appoint a local UAE agent not the sponsor for this type of company also, with the only exception being that the local UAE sponsor does not own any equity in the company. Professional firms are those which consist of professionals and practitioners and practice non-commercial activities. In setting up a professional firm, 100% foreign ownership, sole proprietorships or civil companies are permitted. The firms, which are registered as professional companies or firms may only practice specific activities and not extend that to any commercial business.

These activities include the following services:-

·        - Legal practice and consultancy
·         -Auditing, Organizing and keeping accounting records and books
·         -Civil engineering and architecture consultancies.
·         -Managerial and economic consultancies and studies
·         -Technical services
·        -Medical and curative services
·        - Educational services

No, limited liabilities companies are restricted to trading and industrial activities, and civil business companies are established for practicing professional activities.

What are the formalities for registration of the Business?

·         Initial approval from economic department
·         Trade name approval
·         Court Document (depend on company share capital)
·         Typing LLC contract (Arabic & English)
·         Ministry of economic fees
·         Sponsorship Fee

Do I need a local sponsor?

Yes, to operate any kind of business we need local sponsor for commercial license and Agent for Professional license in U.A.E.
How many partners can we have in the Company?
We can have minimum of 2 partners and maximum of 42 partners in the co. (U.A.E. Sponsor 51% + Expat 49%

Do I need an office for registration?

Yes, to operate any type of business and to get trade license, tenancy contract of the office is required

Why Sponsor have 51% Shares in the Company?

 Federal Law stipulates a total local equity of not less than 51% in any commercial company and defines seven categories of business organizations which can be established in the UAE. It categorises and defines the requirements in terms of shareholders, directors, minimum capital levels and incorporation procedures. It further lays down provisions governing conversion, merger and dissolution of companies.

The seven categories of business organizations defined by the law are:

·         General Partnership Company
·         Joint venture Company
·         Public Shareholding Company
·         Private Shareholding Company
·         Limited liability Company
·         Share Partnership Company

Of the entities listed above, most foreign businesses choose the limited liability company
as foreigners can exert significant control over them and it requires a relatively small
amount of minimum capital to start up. Previously limited liability companies in Dubai
were required to have a minimum share capital of AED 300,000 and those in other
Emirates required a minimum of AED 150,000. However, following an amendment to
Article 227 of the Companies Law,8 shareholders now have the right to determine the
share capital of their limited liability companies, provided that such company will have
sufficient capital to achieve its objects.9 Such an entity may, however, be inappropriate to
achieve certain business goals. For example, businesses involving banking, insurance
or investment activity on behalf of third parties may only be conducted by a public joint
stock company, and limited liability companies may not offer their shares for public
subscription, which is a central feature of the public joint stock company.

The key limitation on entities incorporated under the Companies Law is that 51 percent
of the capital of a company must be owned by a UAE national.10 However, it is possible
for the constitutional documents of a limited liability company to contain the following
provisions designed to protect the interests of a foreign minority shareholder:

• the foreign shareholder may appoint all of the directors;

• the foreign shareholder may appoint the general manager;

• the foreign shareholder may veto major decisions of the company;

• the foreign shareholder may be entitled to all of the assets of the company on winding
   up; and

• the foreign shareholder may be entitled to more than 49 percent of the company’s profits.11

How much time does it take to establish a Company?

It takes approximately 5-7 working days depending on the availability of required documents from you.
You need to renew your trade license after every one year based on Annexure-2. Normally the license is issued for one year and the same has to be renewed every one year. But if you have a tenancy contact valid for to 2 year you can also get your license valid for 2 years.

What is the Benefit of registering the L.L.C. COMPANY from A Free Zone Company?

·        You are eligible to trade any were comparing to Free Zone you can only trade with the free zone its self, if you trade out of free zone you are subjected to 5 % of the custom duty

·        You can operate without the interference of the local ?

All business activities carried out in Dubai are tax free at corporate and personal level. Docs, required for formation of Co.

-Passport Copy of the investors.
-Min 3 names to be provided for registering Trade name.
-Tenancy contract of the Office which need to be attested from the Land department 

What are the benefits of business setting up in Dubai?

United Arab Emirates       0% 

Income Tax Rate

United Arab Emirates      0%
Corporate Tax Rate

United Arab Emirates       0%
Sales Tax / VAT Rate

No taxes of any sort and no tax department

No filing of accounts

No tax exchange agreements with ANY country

No public record of directors or shareholders

Highly flexible banking system geared to the requirements of high net worth international investors

Winston Wambua

For more information please contact me on

Mobile +971553350517


Skype: Winston.wambua

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