Setting Up a Branch Office in Abu Dhabi

Known for its sophisticated infrastructure, investor-friendly regulations, and strategic location, Abu Dhabi, the capital and cultural centre of the UAE, offers a wealth of commercial opportunities.

If you’re considering expansion into this lucrative market, a branch office is a cost-effective and efficient means of market entry without the expenses associated with incorporating a new business entity or the operational limitations of a representative office.

Setting up a Branch Office of foreign company in Abu Dhabi is easy and an attractive prospect for clients, in that it can be 100% foreign owned, provided a local National Service Agent (NSA) or Local Service Agent (LSA) - like Sovereign PPG - is appointed. A Branch Office, is an extension of a foreign parent company registered outside of the UAE, it is a full-fledged business, permitted to perform contracts or conduct other activities as specified in its licence. A Foreign Branch Office may only be engaged in activities similar to those of its parent company.

Under Commercial Companies Act No 8 of 1984 and Ministerial Decision Number 69 of 1989, a Branch Office of a foreign company does not have a separate entity. It clearly represents the parent company and carries on business under its name. The purpose of the Branch Office is to promote and market the products of the parent company, enter into transactions and conclude agreements in the name of the parent company, and offer services to its customers. A Branch Company is not allowed to do any activities which parent company does not perform.

More Information about Foreign Branches:

Foreign branches in the UAE have additional requirements.

Activities – as a Foreign Branch Office, you are entitled to undertake the commercial activities of your parent company, although some activities are restricted (for example Trading, you would be required to set up as an LLC).
Liability and tax – the Foreign Branch Office is not a separate legal entity and therefore the foreign parent company is 100% liable for the actions of the branch and the revenue of the branch will be taxable (in the country where the relevant foreign parent is resident) as the income of the foreign parent.
Sponsor/National Service Agent / Local Service Agent – each Foreign Branch Office requires a local sponsor. The local sponsor has no equity participation or liability to the business, nor can the person represent the Branch Office or participate in its management.
Bank Guarantee – As a Foreign Branch Office you will be required to appoint an auditor from a list of approved auditors and deposit a refundable bank guarantee of AED50,000 for the duration of your licence and this cannot be withdrawn or used as working capital.

Should a foreign branch in Dubai fail to submit these requirements within 30 days of being issued their foreign branch license will attract a penalty of AED 100,000.

Please note that these requirements do not apply to local branches.

Features of a branch office in Abu Dhabi

A branch office doesn’t have its own legal identity. Instead, it acts as an unincorporated extension of its parent company in a foreign jurisdiction. It’s permitted to engage in business activities that generate profit, but they must closely match those of its parent company.

The parent company retains full control and ownership of the branch and as such is also responsible for all liabilities and obligations incurred by the branch. This includes financial debts, legal responsibilities, and compliance with local regulations.

How to set up a branch office in Abu Dhabi

The process of setting up a branch in Abu Dhabi typically takes between 4-8 weeks depending on the complexity of the business activities and the accuracy of the documents submitted. The following is a brief overview:

1. Choose a jurisdiction: Decide whether to set up your branch office in mainland Abu Dhabi or within one of its free zones. Each jurisdiction has its own set of regulations, benefits, and constraints. Free zones offer certain tax exemptions and a simpler setup process, but generally can’t conduct business outside of the free zone without a local distributor or agent. The mainland, on the other hand, offers broader market access and a greater selection of business acitivities but is often more expensive and tends to involve more regulatory oversight.

2. Prepare required documents: Documentation requirements will vary depending on the scope and complexity of the business but as a minimum, you’ll have to present the following:

Certificate of Incorporation
Memorandum and Articles of Association
Board Resolution authorising the establishment of the branch
Power of Attorney for the appointed representative

These documents need to be notarised and legalised in the parent company’s home country and then attested by the UAE Embassy.

3. Reserve a trade name: Since the branch office is an extension of the parent company, the trade name will likely match, although it’s important to ensure that it doesn’t conflict with any other registered trademarks in the emirate and must be approved and reserved through the Department of Economic Development in Abu Dhabi (ADDED).

4. Initial approval: Submit an application to the DED for initial approval. This includes submitting all the required documents and the details of the business activities the branch will undertake.

5. Obtain approvals from regulatory bodies: Depending on the nature of the business, you may need to obtain additional approvals from specific regulatory bodies. For example, financial institutions will need approval from the Central Bank, and healthcare providers may need approval from the Health Authority.

6. Secure office space: Before you can obtain final approval and begin operating, you’ll need to lease office space and obtain a tenancy contract. This legitimises your business presence and serves as proof of your business address.

7. Final approval and licensing: Once you’ve met all regulatory requirements and obtained initial approval, submit the final application to ADDED, pay the relevant fees and you’ll receive the branch office licence which allows you to legally begin operating.

Advantages of Sovereign PPG being your National Service Agent

As your service provider, we will use our experience to handle all the necessary paperwork to establish your business in a timely manner. This includes applying for visas, licenses, obtaining labour quotas, translation services and assisting with the opening of corporate bank accounts
100% Management Control
100% Financial Control
100% control of profits
Fixed annual fee
Simple 3 month exit strategy (with no penalties)
Full Management Team on hand 24/7
Suitable for entrepreneurs, SMEs and MNCs entering the UAE market
Honest answers, transparent, reliability and realistic timelines enabling you to be fully informed at all times

How Can Sovereign PPG Help?

Establishing a branch office in Abu Dhabi provides a cost-effective way to expand your business footprint into the UAE and the broader GCC market. However, without a thorough understanding of local regulations and business practices, the process can be complex and time-consuming.

At Sovereign PPG, we can assist you with this, guiding you through every step of the process, from gathering documentation and initial registration with the relevant authority to obtaining your branch office registration and ensuring compliance with all local and international regulations.