A procedural way to incorporate a business in Dubai is through a Limited Liability Company or LLC.
A Limited Liability Company in Dubai is the most common form of business. It can be formed by a minimum of 2 and a maximum of 50 shareholders, whose liability is limited to their shares in the business capital. Most companies with foreign partners opt for an LLC, because of the fact that this is the only option that gives maximum legal ownership, i.e. 49%, to an penetrate and expand for a local business.
It is mandatory to have a UAE National as a Partner in the LLC (with 51% shareholding), the prospective investor has the option to choose the one UAE national (as a sponsor) as a partner in the company. LLC is flexible and differential profit-sharing arrangements are also possible. This provides the foreign investor with a great edge as 51% of legal equity is with a local partner.
The Department of Economic Development is the regulatory authority for LLC set-up in Dubai.
Advantage of a Limited Liability Company (LLC) in Dubai
Dubai LLC offers unrivalled access to the wider UAE economy. No specific minimum capital needed. Investors can manage the business without any day-to-day interference from the local partner. Convenient to open corporate bank accounts along with easy availability of credit facilities.
This business entity is ideal for a business looking to offer consulting services with an Emirati national as a reliable joint venture partner. The Dubai LLC formation cost depends on the type of activity you choose for your business.
The corporate income tax rate in the UAE is 0%. In addition, the Emirates allow full repatriation of capital and profits.
Other Factors
For setting up a company in the UAE, a local sponsor (who must be a UAE national) to act as your company agent. In a free zone, however, there is no such prerequisite. The importance of the local partner in Dubai can be measured by the fact that the government has mandated by law to have a sponsor for foreigners for doing any activity from entering into the country to end the business in UAE. Sponsor is required for any new business in the UAE. In case of professional services for business there is a need of professional Local Agent to handle all of Governments Services.
These are the steps and Checklist for Incorporation as under –
1. Decide on a Trade Name: - Choose a suitable name that is unique as well as relatable to your business.
2. Choose a Location: - Choose a location that suits you according to the type of your business. Company operations have to be carried out through a physical/virtual office or warehouse.
3. Get a Local Sponsor
4. Get Required Documents:
5. Obtain License and Pay Fees
The Documents/Checklists required to be submitted in Department of Economic Development (DED) and other authorities according to the type of LLC to be formed in Dubai are as follows :-
1-Duly filled registration application form with Passport copies of all shareholders and managers of the LLC
2-Passport copy of the local sponsor and NOC from sponsor (if manager or partner has residence visa in UAE)
3-Memorandum of Association (duly attested from a public notary) Registration of trade name and initial approval from DED.
4-Bank reference letter of each shareholder Location plan and tenancy contract attested by Dubai Municipality’s Planning Department and Civil Defense Department
All the documents must be attested and notarized from the applicant’s home country and UAE consulate. The notarization procedure takes sufficient time and it should be done soon after taking a decision about business setup in Dubai.
