UAE offers multi-jurisdictional corporate setting-up opportunities.
An entity can be registered in UAE as Limited Liability Company (L.L.C) and/or Branch of Foreign Company and/or Sole Establishment and/or partnership Firm under the UAE Commercial Companies Law 2015 (“the Companies Law”), or in one of the numerous free zones or offshore zones available which operate under self-regulated legal regimes.
Limited Liability Company (LLC):
An LLC can be formed by a minimum of two and a maximum of fifty shareholders whose liability is limited to their shares in the company’s capital. In the case of an LLC, at least 51% of the share capital of the company should be owned by UAE National(s). Although the maximum foreign equity participation in a LLC is 49%, profits can be distributed in different proportions as agreed by the promoters/shareholders of the company.
Although the rules and regulations for establishing an LLC are generally similar in all the seven Emirates of the UAE, the requirement of minimum capital and costs involved for registering the company may vary from one Emirate to the other. The type of documentation, costs and time required for registration of the company will therefore depend upon the proposed structure and location of the business.
Branches of Foreign Companies:
The Commercial Companies Law also covers the formation and regulation of branches and representative offices of foreign companies in the UAE and stipulates that they may be 100% foreign owned, provided a UAE National Agent is appointed in accordance with provisions of the Law. A branch office, on registration, carries on business under the name and form of the parent company. The branch office does not have a separate legal identity of its own but is considered as part of its parent company.
Under the local laws of the various Emirates, foreign nationals are permitted to open Civil/Professional Companies in their own name or in partnership with UAE Nationals or foreign nationals to practice a vocation or a profession such as legal consultancy, medical services, accountancy, engineering consultancy and other similar activities. Such establishments can, as per current regulations, be 100% foreign owned and do not require a UAE National as a partner. However, it may be noted that for carrying out certain specific professional activities, it is necessary to comply with the related laws and regulations which include obtaining prior approvals from the concerned Government and Local Authorities and appointing a UAE National as a Partner or Service Agent.
The common advantages of establishing an entity in the UAE Free Zones include 100% foreign ownership, no corporate or personal income taxes for 25 to 50 years, the freedom to repatriate both capital and profits, full exemption of import duties on goods used in re-export trade and for industrial purposes and the waiving of currency restrictions.
An entity can be established in the Free Zone either as (a) Branch of a foreign company including a company registered in the UAE or (b) Free Zone Establishment (FZE) or (c) Free Zone Company (FZC). Given below is a brief summary of the relevant procedural formalities:
Such companies are required to have a registered agent approved by the respective Free Zone Authority. The offshore companies do not require an office space and the office address of the registered agent is used as the registered office address of the offshore companies. No UAE resident visas are granted for the employees/directors. A bank account can be opened with some of the banks in the UAE. Such companies are allowed to carry on general trading and consultancy services overseas (Consultancy activity is not approved in Jebel Ali Offshore; however the same is approved in other offshore jurisdictions), act as investment and holding companies and also allowed to own Freehold properties in designated areas of the UAE but not allowed to carry on any business with the persons/companies’ resident in the UAE.
Offshore entity in UAE can be registered in three Jurisdictions and they are Jebel Ali Free Zone (JAFZ), RAK International Corporate Centre (RAKICC) and Ajman Free Zone (AFZ).