Establishing branch office of Foreign Firms.

The company which chooses to open a branch in the U.A.E. May freely carry out the activities indicated in the trade license it obtains. However, licensing is governed by legal rules and regulations. According to the Law, there are certain activities, which can only be carried out by UAE nationals such as banks, finance, insurance and commercial agencies. There are also other licensing procedures and conditions governing the work of the Department of Economic Development, which issues from time to time certain regulations and administrative decrees. A foreign company, which opens a representative office in UAE, may launch promotional campaigns for its products and services. The office may also facilitate contracts between the company and its local clients. However, the office is not licensed to conduct business operation of whatsoever kind such as obtaining credit facilities, making offers, etc.

a) Appointing a “Service Agent”.

It is conditional for offices and branches of foreign companies to appoint a local service agent. Such an agent, as already explained in the chapter on commercial agencies, is not an agent in the proper sense of the word. Article 314 of the Commercial Companies Law, defines the legal status of the legal service agent.According to this article, such an agent shall have no responsibility towards the company’s financial dealings and shall not interfere in its management.

b) Responsibilities of “Service Agents”

The role of a service agent is confined to providing services such as obtaining visas and residence permits for the staff, licensing procedure with the Department of Economic Development and formalities for obtaining the certificates of the Chamber of Commerce. Also the agent may undertake other services related to government departments such as submission to tender documents, keeping the foreign company informed about tender notices, follow up the company’s affairs and activities and notifying it with the outcome.

c) The remuneration of “Service Agents”

In consideration of his services, the agent is usually paid an agreed lump sum amount from the foreign company. If the agent is body corporate, it should be a private proprietorship or company wholly owned by UAE nationals.

d) Procedures to obtain a license

It is not permitted for foreign companies licensed to operate in the UAE to start their activities before obtaining the Trade License from the Department of Economic Development. Setting up a branch of a foreign company shall be according to the following steps:

1.    The application shall be submitted to the Department of Commercial Affairs of the office of the Ministry of Economy & Commerce in Dubai. The application should include the following data:

1. Name, type of company and address of its main office in the original country.

2. Type of activity, specialization or type of operations required to be practiced in Dubai.

3. Main operations carried out by the company and its previous expertise in the field of activity, which is required to be practiced in Dubai.

4. Name of the local service agent in Dubai and his address if he is a juridical person    (company, then the legal form, capital, names of the shareholders (or partners if it is a firm),their nationalities and addresses should be stated provided that all of them are UAE

nationals.

5. The Department of Commercial Affairs at the Ministry of Economy & Commerce after registering the application giving it a number and making sure that the required documents are complete, shall refer it to the Department of Economic Development.

2. If the application is rejected, it shall be returned to the Department of Commercial Affairs to   be kept there and the concerned parties shall be notified of the rejection.

3. If accepted, the application shall be referred to the Committee of Foreign

    Companies in the

4. Ministry for approving the content of the application and to determine activity.This     committee shall prepare its recommendations and refer them to the Minister of Economy & Commerce for issuing his decree. The Dept. of Commercial Affairs at the Ministry shall then issue the documents of the license. Completion of inscription procedures in the commercial register at the Dept.of Economic Development according to the usual procedure for licensing.

4. Registration of the company’s branch with the Dubai Chamber of Commerce &

   Industry in accordance with the accepted procedure.

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