For an investor, the process of business setup in Dubai starts with identifying the right legal structure for his proposed company. Depending on the capital, shareholding requirements and nature of the business activity, the entrepreneurs get a wide range of business types for company formation in Dubai. Be it a Limited Liability Company (LLC), Sole Proprietorship or a branch, the selection of legal structure is the most critical step and the advice of business setup consultants in Dubai help you make the right choice.
Here are the legal business types available in the UAE for you to set up your business.
1. Limited Liability Company
The Limited Liability Company (LLC) is among the most favoured forms of business setup in Dubai, which allows the companies to have 2-50 shareholders. The shareholders are liable to the extent of their share in the capital of the company. LLC business setup in Dubai allows the investors to conduct activities that come under the industrial, commercial, professional and tourism licenses.
However, foreign investors can’t have 100% ownership in an LLC as a UAE national should be appointed as the local sponsor. The Local Sponsor holds at least 51% shares in the LLC while the foreigner can have 49% shares. The Local Sponsor could be an individual who is a UAE citizen or a Corporate Sponsor (UAE National Company). Forming an LLC is now simpler as the best business setup consultants in Dubai provides affordable company formation packages.
2. Sole Proprietorship
As the name suggests, a sole proprietorship is a legal entity owned and operated by a single individual. By setting up a sole proprietorship in Dubai, an entrepreneur can carry out activities such as tailoring, saloon services, restaurants etc. The sole proprietorship is 100% owned by an individual and not a company and the owner controls the operations and profits. Investors other than UAE and GCC nationals are required to appoint a Local Service Agent (LSA) for setting up a business in Dubai under a sole proprietorship license. Entrepreneurs can consult with the best business setup consultants in Dubai for expert advice on setting up a sole proprietorship company.
3. One-person Company
A one-person company is an LLC owned by an individual or a corporate body. What distinguishes a one-person company from a sole proprietorship is that the liability is limited to the shares held by the owning entity. A one-person LLC can be set up and owned by a UAE national or GCC national. Also, a corporate entity that is 100% owned by UAE or GCC nationals can own a one-person LLC.
In a one-person company, the owner is a shareholder whose liability is limited to the value of shares he holds. The share capital must be recorded in the Memorandum of Association. Also, as per the rules for business setup in Dubai, the trade name of the company should have the owner name and end with ‘LLC’.
4. Civil Company
Recognised professionals such as doctors, lawyers, engineers and accountants can start a civil company in Dubai. A Civil Company can have partners of any nationality but if the partners don’t include UAE or GCC nationals an LSA has to be appointed. If the Civil Company formation in Dubai is into engineering activities, one of the partners must be a UAE national. The UAE national, in this case, would own at least 51% of the business. If the Civil Company is intending to conduct consultancy activities, it should be owned by professionals who practice the activity.
5. Partnership Company
In a partnership company, two or more partners share the ownership who can be categorised into a general or limited partner category. The UAE nationals should be general partners and the foreign partners should be limited partners. However, there is no restriction on the share of ownership of general or limited partners. Limited partners have no right to intervene in the management or administrative issues of the general partners.
6. Branch of a Foreign Company
Setting up a business in Dubai in the form of a branch gives foreign investors access to the UAE market with 100% ownership. A branch office is legally a part of but an extension of its parent company and is devoid of a legal identity distinct from its parent firm. This means the name of the branch should be the same as the parent company.
The UAE branch of a foreign company should only carry out activities that are similar to that of the parent company. The activities should also be permitted by the Department of Economic Development (DED). A branch office cannot import, export, manufacture or distribute the products of its parent company. The assistance of business setup consultants in Dubai is recommended for a speedy setup procedure.
7. Representative Office
A representative office of a foreign company is legally distinct from the branch office of a foreign company. As opposed to a branch office, the representative office of a foreign company can be set up only to promote the activities of the parent firm in the UAE. If the parent company is carrying out the sale or production of some products and sets up a representative office in Dubai, the office can only promote and market such products and facilitate contracts in the UAE.
8. Branch of a UAE-based Company
The companies in the UAE are allowed to open their branch within the country. The branch, however, must ensure that it carries out one or all of the activities specified in the trade license of the parent company. If a company has multiple branches in the UAE, each of them can conduct different activities as long as they were all in the trade license of the parent company.
9. SME License
An SME license is granted to businesses that are owned 100% by UAE nationals. A business with an SME license is allowed to take any form. Talk to expert company formation specialists in Dubai to know more about SME licenses.
10. Intelaq License
Home-based business setup in Dubai is gaining traction in the aftermath of the COVID-19 pandemic. Although the Intelaq license has been in existence even before the pandemic, it witnessed a surge in demand afterwards. However, only the UAE and GCC nationals residing in Dubai can apply for an Intelaq license. As per Dubai Economy statistics, there were more than 1,700 active Intelaq licences in Dubai as of August 17, 2020. The key activities permitted under the Intelaq license include consultancy & training; fashion & apparels design; interior design; real estate brokerage; organising parties and entertainment events, publicity & announcements, etc. Recently Department of Economic Development (DED) added food trading activities to the Intelaq license.
The Best Business Setup Consultants in Dubai
The process of business setup in Dubai is generally straightforward but investors need to ensure that they are aware of all the legalities and the steps involved in the process. Entrepreneurs, especially, expatriate businessmen, often seek the help of business setup consultants in Dubai as they stumble upon the intricacies in these steps. There are numerous activities and legal structures to choose from and one false step may lead to delays in obtaining a trade license in Dubai. Therefore, foreign investors who wish to set up a business quickly and without any hassle avail the services of the best setup advisers in Dubai such as Jitendra Business Consultants (JBC). JBC has a team of business setup consultants in Dubai who are well-versed in UAE labour laws and immigration laws. The company formation specialists with their legal know-how and experience in handling authorities make the process of company formation in Dubai hassle-free.