Diversifying your Business Presence

The decision of setting up presence in a foreign country requires consideration of a range of business and commercial matters by any small-scale or big sized corporate entity. Firms undertake research, market study, appoint lawyers, conduct due diligence before arriving at any decision. For instance, Fortune 200 companies interested in entering the UAE often reach out top best lawyers in UAE and seek their counsel and assistance. These firms provide carefully plan and provide strategic advice on matters involving corporate structuring, banking, means to avoid shareholder disputes, procedures, to name a few. In this article, we clarify one of these areas which will be useful for firms and investors to understand what steps should one take when considering a new business setup in a new jurisdiction.

Experienced as well as traditional investors including multinationals well understand the economic and political risks, crisis or recession-related events that have led to a reflection of losses in their balance sheets concerning few jurisdictions. Leading accounting firms also advise their clients to seek legal advice where necessary. With the expansion of free zones in Dubai and across the UAE, businesses and investors often find it perplexing to obtain quality and authoritative information on business management, incorporation, and support services related to company formation in Dubai.

Incorporating a business in other jurisdictions such as Singapore, Hong Kong or Malaysia may be comparatively expensive, and that is one reason why international businesses and corporate entities are intending to enter the United Arab Emirates.  The ensuing paragraph differentiates between different forms of company vehicles available for registration in Dubai and the United Arab Emirates. As a disclaimer, we recommend that you consider reaching out to one of the top law firms in Dubai and obtain necessary advice. Please visit this blog to learn more articles on starting a new business.

While tradespeople, merchants and those interested in retail sales of their products may prefer limited liability form of company, investors interested in securing one hundred percent shares in their name or those intending to re-export their goods may prefer a free zone type of business. We now discuss the various forms of trade and entity types available for you to register in Dubai or UAE. These are:-

  • company formation in Dubai free zone;
  • a limited liability shareholdings;
  • a branch, and
  • a professional firm.

Mainland Company Formation in Dubai

We will first discuss the LLC (limited liability) form of company. An  L.L.C. legally speaking can be incorporated by a minimum number of two and a maximum of fifty (50) shareholders whose liability is limited to their shares in the company’s capital. Such companies provide a suitable structure for investors interested in developing a long-term relationship or business in the local market. Dubai LLC formation is comparatively easier, but we recommend that the memorandum and articles get vetted by a professional law firm in Dubai. LLC Companies now get regulated by the new UAE Commercial Companies Law (Federal Law Number 2 of 2015) and the old Companies Law (Law Number 8 of 1984) does not apply.

A LLC form of a company does not allow you to own 100 percent shares but requires a fifty-one percent local partner. The following are the steps needed to be followed to create a limited liability company in Dubai (these steps also apply for LLC formation in Abu Dhabi):

  1. Reserve a name for the enterprise and obtain prior approval the Dubai Economic Department;
  2. drafting of company’s constitutive documents (also, Memorandum and Articles of Association) and get the same duly notarised by a Notary Public in Dubai courts;
  3. obtain prior approval from the Economic Department and apply for entry in the Commercial Register;
  4. The company’s constitutive documents then have to be published in the Ministry of Economy and Commerce’s Bulletin;
  5. The trade license subsequently issued by the Dubai Economic Department;
  6. The company should register itself with the Dubai Chamber of Commerce and Industry
  7. It may also be worth to check with your attorneys on benefits of trademark registration in Dubai. For you to register a trademark in Dubai, there are procedures which your advisor should be able to guide. The law of trademarks in UAE affords a twenty-year protection, and the costs of registering a trademark UAE are not that significant. If you have invented a novel product or your product involves invention, you should also seek information on patent registration in UAE.

Abu Dhabi LLC formation or incorporating an LLC in Abu Dhabi or registering an LLC in Abu Dhabi is gaining momentum over the past few years. A limited liability shareholding entails that the liability of its shareholders is limited to their capital contributions. The Abu Dhabi Chamber of Commerce and Industry is the governing body that issues a trade license for such companies.

Free Zones
The UAE has several freezones specialized to cater specific industries. These include the Dubai International Financial Centre (DIFC) that caters to banking and financial institutions, Jebel Ali freezone (JAFZA) which houses some of the biggest manufacturing and assembling industries, Dubai Airport Free Zone (DAFZA) which is close to Dubai airport and provides excellent infrastructure facilities.

The opening up of Abu Dhabi Global Markets, the financial free zone in Abu Dhabi has opened doors for those engaged in financial and banking services. These include underwriters, bitcoin companies, capital markets, insurance companies, and those dealing in forex, gold and precious commodities. Applicants (depending on the nature of activity they choose) may fall under the regulation of the Financial Services Authority within ADGM. ADGM also boasts of excellent infrastructure and operates within the common law framework. Please visit our blog to learn more on company formation in ADGM or get in touch with one of our representatives.

Freezone incorporation in Dubai or the Northern Emirates is mainly beneficial for traders and industries that are engaged in re-exports of goods as freezone besides offering 100% ownership exempts imports and export duties as well. There are many freezones in Northern Emirates such as Sharjah Airport Free Zone (SAIF), Hamriyah Free Zone, the Ajman Free Zone, RAKIA, Ras Al Khaimah Free Trade Zone, Fujairah Free Zone, etc. Free zones also offer shared office services, P O Box facility and it is possible for firms to apply for telephone and fax facilities. Those considering industrial activities can make applications for warehouse, storage (including cold storage), land and port facilities. Free Zone companies can sell and trade goods in the mainland by either appointing a local agent or setting up a branch entity outside the freezone. You may find interesting articles on UAE Commercial Agency Law on this blog which deals with this aspect. A detailed comparison of freezones in the UAE is also available on our website.

If you are planning UAE Company set up, you should seek references of Dubai Lawyers.  At our Dubai law firm, our team indulges considerable time into studying the framework of the financial and capital market and statuses of the entities that are involved in setting a solid ground for due diligence reports that serve mergers and acquisitions that have big money at stake.  We offer incisive and valuable advice on company incorporation in Dubai.  Besides company formation in UAE, our team also provides global company formation services. Get in touch with us today.

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4 thoughts on “Diversifying your Business Presence

  1. Pingback: Diversifying your Business Presence – Company Formation in Dubai | STA Law | Lawyers in Dubai | Dubai Law Firms

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