Business in UAE

⊗ Limited Liability Company

In this type of corporate structure, the liability of the shareholders is limited to the extent of their capital contribution. To establish an LLC in UAE, one has to obtain sponsorship from a UAE national or a wholly-owned UAE company to act as a national agent or sponsor. There is no requirement of a minimum capital however, a generally accepted practice is that an LLC should have at least AED 100,000. No income tax is levied on corporates except when the company is involved in economic activities such as oil, gas, etc. For registration of a company, a physical office space is required and a minimum of 1 director or manager is required. Even though there is no constraint on the repatriation of funds, the company has to maintain a legal reserve of 10% of the LLC’s net profits.

⊗ Dual License Branch Office
A dual license branch office is a branch office of a free zone company in the mainland area. Such branch offices have to hold additional licenses in furtherance of a free zone license. The purpose of this additional license is that it reduces the cost and duration to incorporate a separate company. A mainland office is considered a branch office of the free zone company and not a subsidiary so, there is no requirement to appoint a local sponsor. The office is not registered with the UAE Ministry of Labour therefore, it is not eligible to issue labor cards or permits. Further, its staff should be a holder of free zone resident visas. ⊗ Branch Office A branch office is an extension of the parent company hence, it is not considered as a separate legal entity. Any local or foreign company can have a branch office either on the Mainland or in the free zones of the UAE.

⊗ Joint Stock Company

In a Joint Stock Company in UAE, the capital is divided into negotiable shares of equal value. The partners of the company have limited liability. Further, there are two types of Joint Stock Companies in UAE viz., Private Joint Stock Companies and Public Joint Stock Companies. A Joint Stock Company should have a minimum of 2-15 directors, elected for a tenure of 3 years. The majority of the board, including the chairman, should be UAE nationals. For incorporation of a public joint stock company, a minimum share capital of AED 10,000,000 and a minimum of 10 founders are necessary. Whereas for the incorporation of a private joint stock company minimum capital of AED 2,000,000 is required along with a minimum of 3 founders.

⊗ Trade Representation Office

A trade representative office is an extension of the parent company so it does not have a separate independent entity. It has limited functions such as collecting information for projects completed by the company and acting as a marketing and administrative center in UAE. For establishing a representative trade office, a UAE national agent is appointed or a wholly-owned company of UAE nationals. There is a restriction on a trade representative office that it cannot purchase any UAE property in its name. For establishing a trade representative office, a non-refundable deposit of AED 50,000 is deposited which cannot be used as working capital.

⊗ Free Zone Companies

Free Zones are companies established in zones where special laws related to customs, tax, ownership, etc prevail which are distinct from mainland UAE. Two Types of corporate structures can be established in a Free Zone Area viz., Free Zone Company and Free Zone Establishment. – Free Zone Company or LLC : A free zone LLC can have up to 5 shareholders. Shareholders can be either natural or legal persons. The legal requirements to be followed are the rules and regulations framed under the respective Free Zone. – Free Zone Establishment : A free zone establishment has a single shareholder with limited liability. It can be incorporated by both a natural as well as a legal person. The legal requirements to be followed by a free zone establishment are rules and regulations framed by the respective Free Zone.