Steps towards successful company formation in Dubai
Why company formation in Dubai
The market-friendly policy framework, world-class infrastructure and overall favourable conditions for business growth make Dubai a leading destination for entrepreneurs and major business owners.
Among the major drivers for company formation in Dubai are:
- A hotspot for global import and export, facilitating significant supply chain traffic
- A strategic geographic location connecting many global resource centres
- Zero taxes on personal, capital and corporate income as well as full repatriation of capital and profits
- No restrictions on exchange rates and no blocked currencies
- Cutting-edge infrastructure, including a world-class telecommunication networks as well as a low-price efficient power grid
- A flexible recruitment process for a well-trained workforce with high capabilities
- Highly developed financial service sector conducive to all business activities
- Robust legal frameworks, particularly in the financial freezones, for asset security and transaction transparency
- A cosmopolitan lifestyle supported by world-class real estate infrastructure and top-rate educational and medical services
Types of business entities in Dubai
Investors and entrepreneurs have several options for company formation in Dubai given the type of business activity, legal framework, documentation and other considerations.
Dubai has over 18 free trade zones distributed across the Emirate. Each freezone has specific set-up and operational regulations related to the type of permitted activity. There are shared incentives for company formation in Dubai freezones:
- Full ownership without the need for a local sponsor or local service agent
- Facilitated customs regulations and substantial tax exemptions
- Access to highly skilled labour market
Most mainland or onshore companies still require local sponsorship for a wide variety of activities, although 100% foreign ownership has been brought in for a significant number of activities. Mainland Dubai company formation requires the approval of the Department of Economic Development (DED). There are no restrictions on the activities of mainland companies as they can trade within and outside the country. There are several options for mainland venture incorporation:
- Joint venture - A joint venture is incorporated by two or more individuals or legal entities, agreeing to share all business-related profits and losses.
- Public shareholding - In a public holding company capital is divided into equal shares between shareholders, and each shareholder is proportionally liable to its share. The minimum capital requirement for setting up a public shareholding in Dubai is AED 10M.
- Private shareholding - In contrast with public shareholding, private shareholding companies are owned by a relatively small number of holders and do not trade their stocks publicly. Private shareholding companies require a minimum of 3 members.
- General partnership - General partnerships are limited to Dubai nationals only. Partners in a general partnership equally share assets as well as liabilities.
- Limited liability - LLCs have a minimum of two members and a maximum of 50 members. As one of the most common business structures in Dubai, an LLC allows investors to protect their personal assets from debts or liabilities. Company formation in Dubai requires LLCs to have a minimum share capital of AED 200,000.
- Sole proprietorship - This is the simplest business entity form as it is established and owned by a single person exclusively. Individuals in a sole proprietorship are fully liable to the extent of their personal assets. Sole proprietorships are incorporated either for commercial or professional purposes.
Offshore companies are better suited for international businesses operating outside Dubai. They function as holding companies, or international trade channels. Offshore companies are an attractive option for company formation in Dubai due to:
- 100% foreign ownership
- One of the most cost-saving structures for initiating international business
- No physical space or visa requirements
- Flexible bank account setup process that allows for multiple currency exchange
Steps towards successful company formation in Dubai
Business owners need to take several steps to ensure a successful incorporation process:
- Identifying the correct specific economic activities as a first step, relevant legal and financial requirements are dependent on the activity and location chosen
- Selecting the legal form of the business. Different rules and regulations apply to different legal forms
- Registering the trade name
- Submitting the registration application form to the Department of Economic Development (DED)
- Notarising the Memorandum of Association (MOA)
- Obtaining the trade licence and submitting the necessary documents to the Chamber of Commerce
- Paying the designated fees and obtaining the payment vouchers
- Obtaining the municipality approval for the office location and undertaking the office inspection
- Obtaining the Establishment Card for the immigration and labour departments
- In the case of mainland companies investors may be required to find a local sponsor to act as a service agent, or local partner to act as a majority 51% shareholder. This will depend on the activity of the company.
- A certified copy of the tenancy contract or Ejari for the office lease
- Approval documents from the Department of the Legal Affairs, Ministry of Economy and other government entities if the company is undertaking an activity that requires government body approval
- Trade Name Reservation, Initial approval and Trade Licence application form
- Notarised partnership contract or MOA
- High resolution colour copies of shareholders/partners passports (and resident visas and Emirates IDs if applicable)
- Corporate constitutional documents for any corporate shareholders – these will need to be notarised, legalised, attested and translated, MOFA and MOJ stamped if coming from a foreign jurisdiction
- No Objection Certificate (NOC), land map or ownership certificates as well as any technical evaluation reports if required for specific activities and locations
- Approval of the Trade Name Board and office inspection
- Approval from Ministry of Labour and Immigration to allow the company to obtain labour quota, hire employees and issue UAE resident Visas
As a dynamic hub for international commerce, setting up a business in Dubai provides investors and companies with a secure platform and significant opportunities and benefits. Given the range of available company formation options, navigating the process of business set up in Dubai can be complex and time-consuming. At PRO Partner Group we use our extensive expertise and experience to manage all the required documentation, applications and requirements to set up your business promptly. This includes obtaining the company licence as well as staff and partner visa applications, PRO services, labour quotas, legal translation and document attestation services, and the opening of corporate bank accounts.
At PRO Partner Group we always make sure to provide you with honest answers on company formation, with full transparency, consistency, reliability, and we provide you with realistic and accurate timelines, so you are fully informed and updated at all times. If you need any assistance, please get in touch with us on +971 (0)4 456 1761 for Dubai or +971 (0)2 448 5120 for Abu Dhabi, email us at firstname.lastname@example.org or complete the contact form below and we will be delighted to assist you.