Companies that undertake certain activities are exempt from the 51% requirement, including oil companies with concession agreements, companies involved in the oil and gas industry, companies that produce electricity and gas, companies involved in treatment of water and transmission and distribution. Foreign banks are exempt from having to appoint a sponsor. Companies established in free zones are exempt from the 51% requirement, if the relevant free zone has special provisions regulating the company.\u00a0<\/em><\/strong><\/p>\n1.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Permanent Establishments<\/u><\/p>\n
There are seven different methods by which this can be achieved:<\/p>\n
I.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0General Partnerships<\/u>: This entity may only be established between UAE nationals. A general partnership may be established between two or more general partners who are jointly and unlimitedly, to the extent of their personal assets, responsible for the company\u2019s liabilities.<\/p>\n
II.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Limited Partnerships<\/u>: This entity is comprised of at least one jointly associated partner liable for the partnership\u2019s obligations to the full extent of their assets, along with at least one inactive partner liable for the partnership\u2019s obligations limited to this partner\u2019s capital contributions. This entity usually has one active partner who manages the company and a silent partner who does not participate in day-to-day management.<\/p>\n
III.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Joint Participation (Ventures)<\/u>: This entity is an association between at least two partners who will share the profit and loss in one or more commercial businesses conducted by one of the partners in his or her own name.<\/p>\n
IV.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Public Joint Stock Companies<\/u>: This entity comprises any company whose capital is split into publicly subscribed negotiable shares of equal value or any company in which a UAE public body holds any share capital. There is a minimum capital requirement of AED 10 million and that capital must adequately achieve the objectives of the company. This entity requires a minimum of 10 founding members. It is important for foreign companies to understand that anyone who signs the initial memorandum and articles of association will be regarded as a founding member and therefore liable..<\/p>\n
V.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Private Joint Stock Companies<\/u>: This entity requires a minimum of three founding members who, between them, fully subscribe to a minimum capital of AED 2 million. The shares of private joint stock companies may not be offered for public subscription.<\/p>\n
VI.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Limited Liability Companies<\/u>: This entity is defined as an association with a maximum of 50 partners and a minimum number of two partners. Each partner\u2019s liability is limited to the extent of its share participation in the capital of the company. LLCs are no longer required to meet the minimum capital requirements.<\/p>\n
VII.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Partnerships Limited with Shares<\/u>: This entity is formed by general partners who are jointly liable to the extent of their personal assets and participating partners who are liable to the extent of their share participation in the company. General partners must be UAE nationals. The minimum capital required to form a partnership limited with shares is AED 500,000, and participating partners are prohibited from being involved with the day-to-day management of the partnership. They may, however, participate in its internal administrative affairs.<\/p>\n
2.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Branch Offices vs. Representative\/Liaison Offices<\/u><\/p>\n
A branch office has the same legal identity as its parent company and conducts business under the name of its parent company. While each Emirate has its own licensing rules for branch offices, this type of entity can carry out a variety of activities (as approved by the Department of Economic Development of the relevant Emirate). Branch offices are regarded as fully-fledged businesses permitted to perform contracts or conduct other activities as specified in its license.<\/p>\n
3.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Free Zones<\/u><\/p>\n
In contrast, the UAE allows foreign businesses to operate within \u201cfree zones.\u201d Free zones allow for up to 100% foreign ownership and are subject to reduced or different trade barriers, tariffs, and quotas. However, free zone companies may only operate within the free zone boundaries and are generally limited to performing solely those activities listed in their license(s). If a free zone company chooses to operate outside these boundaries, it must adhere to the requirements of the UAE Commercial Companies Law in compliance with the licensing procedure in the applicable Emirate. Generally, free zones are designated by the government to a specific commercial sector. For a non-exhaustive list of free zones in the UAE, see below.<\/p>\n
Different types of licenses that can be issued in a Free Zone are:<\/p>\n
\u00b7\u00a0 \u00a0 \u00a0 \u00a0 General Trading License<\/p>\n
\u00b7\u00a0 \u00a0 \u00a0 \u00a0 Trading License<\/p>\n
\u00b7\u00a0 \u00a0 \u00a0 \u00a0 Industrial License<\/p>\n
\u00b7\u00a0 \u00a0 \u00a0 \u00a0Service License<\/p>\n
Listings of\u00a0\u00a0UAE free zones are included below.<\/p>\n
Abu Dhabi\u00a0<\/strong><\/p>\n\u00b7\u00a0 \u00a0 \u00a0 \u00a0 Twofour54 Media Free Zone<\/p>\n
\u00b7\u00a0 \u00a0 \u00a0 \u00a0 Masdar City Free Zone<\/p>\n
\u00b7\u00a0 \u00a0 \u00a0 \u00a0 Abu Dhabi Airport Free Zone (under development)<\/em><\/p>\n\u00b7\u00a0 \u00a0 \u00a0 \u00a0 Khalifa Port and Industrial Zone (under development)<\/em><\/p>\nDubai\u00a0<\/strong><\/p>\n\u00b7\u00a0 \u00a0 \u00a0 \u00a0 Jebel Ali Free Zone (JAFZA)<\/p>\n
\u00b7\u00a0 \u00a0 \u00a0 \u00a0 Dubai Airport Free Zone (DAFZA)<\/p>\n
\u00b7\u00a0 \u00a0 \u00a0 \u00a0 Dubai Internet City (DIC)<\/p>\n
\u00b7\u00a0 \u00a0 \u00a0 \u00a0 Dubai Multi Commodity Center (DMCC)<\/p>\n
\u00b7\u00a0 \u00a0 \u00a0 \u00a0 Dubai Media City (DMC)<\/p>\n
\u00b7\u00a0 \u00a0 \u00a0 \u00a0 Dubai Gold and Diamond Park (DGDP)<\/p>\n
\u00b7\u00a0 \u00a0 \u00a0 \u00a0 Dubai Cars & Automotive Zone<\/p>\n
\u00b7\u00a0 \u00a0 \u00a0 \u00a0 Dubai Health Care City (DHCC)<\/p>\n
\u00b7\u00a0 \u00a0 \u00a0 \u00a0 Dubai International Financial Centre (DIFC)<\/p>\n
\u00b7\u00a0 \u00a0 \u00a0 \u00a0 Dubai Maritime City<\/p>\n
\u00b7\u00a0 \u00a0 \u00a0 \u00a0 Dubai Logistics City<\/p>\n
\u00b7\u00a0 \u00a0 \u00a0 \u00a0 Dubai Knowledge Village<\/p>\n
\u00b7\u00a0 \u00a0 \u00a0 \u00a0 Dubai Outsource Zone (DOZ)<\/p>\n
\u00b7\u00a0 \u00a0 \u00a0 \u00a0 Dubai Techno Park (DTP)<\/p>\n
\u00b7\u00a0 \u00a0 \u00a0 \u00a0 Dubai Silicon Oasis Authority (DSOA)<\/p>\n
\u00b7\u00a0 \u00a0 \u00a0 \u00a0 Dubai Studio City (DSC)<\/p>\n
\u00b7\u00a0 \u00a0 \u00a0 \u00a0 Dubai Textile City (DTC)<\/p>\n
\u00b7\u00a0 \u00a0 \u00a0 \u00a0 Dubai Flower Centre (DFC)<\/p>\n
\u00b7\u00a0 \u00a0 \u00a0 \u00a0 Dubai Carpet Free Zone<\/p>\n
Sharjah\u00a0<\/strong><\/p>\n\u00b7\u00a0 \u00a0 \u00a0 \u00a0 Sharjah Airport Free Zone (SAIF Zone)<\/p>\n
\u00b7\u00a0 \u00a0 \u00a0 \u00a0 Hamriyah Free Zone (HFZ)<\/p>\n
Ras Al Khaimah\u00a0<\/strong><\/p>\n\u00b7\u00a0 \u00a0 \u00a0 \u00a0 Ras Al Khaimah Free Trade Zone (RAKFTZ)<\/p>\n
\u00b7\u00a0 \u00a0 \u00a0 \u00a0 Ras Al Khaimah Media Free Zone<\/p>\n
\u00b7\u00a0 \u00a0 \u00a0 \u00a0 Ras Al Khaimah Investment Authority (RAKIA)<\/p>\n
Fujairah\u00a0<\/strong><\/p>\n\u00b7\u00a0 \u00a0 \u00a0 \u00a0 Fujairah Free Zone (FFZ)<\/p>\n
\u00b7\u00a0 \u00a0 \u00a0 \u00a0 Fujairah Creative City<\/p>\n
Ajman\u00a0<\/strong><\/p>\n\u00b7\u00a0 \u00a0 \u00a0 \u00a0 Ajman Free Zone (AFZ)<\/p>\n
Umm Al Quwain\u00a0<\/strong><\/p>\n\u00b7\u00a0 \u00a0 \u00a0 \u00a0Ahmed Bin Rashid Free Zone<\/p>\n
4.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Civil Company<\/u><\/p>\n
It is currently possible in Dubai and Sharjah to create a civil company. These entities are establishments which are sole traders operating under a license. Civil companies are usually not intended to trade (e.g., engage in the purchase and sale of goods, contracting, transport, banking and finance, and other similar transactions) and are typically used by the professions. Civil companies may not be formed within the Emirate of Abu Dhabi.<\/p>\n
5.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Commercial Agency Agreement<\/u><\/p>\n
Foreign companies may engage in a commercial agency arrangement which is defined as any arrangement whereby a foreign company is represented by a UAE agent to distribute, sell, offer, or provide goods or services within the UAE for a commission or profit. The agent must either be a person holding UAE nationality or a company that is 100% owned by UAE nationals. The agent must be registered with the Ministry of Economy. Unless otherwise agreed in writing between a foreign company and its commercial agent, an agent is entitled to receive a commission on the sale of products in his or her designated Emirate, irrespective of whether such sales are made by or through the agent.<\/p>\n
6.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Other Business Opportunities<\/u><\/p>\n
\u00b7\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Offshore Companies<\/u>: Following the introduction in 2003 of the Regulations for Jebel Ali Free Zone (JAFZA) Offshore Companies, international companies can establish JAFZ offshore companies, with benefits similar to other international offshore jurisdictions.\u00a0Ras Al Khaimah has, since 2006, allowed for the establishment of offshore companies.<\/p>\n
\u00b7\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Public Sector Procurement<\/u>: Each Emirate has specific provisions regulating government procurement activities. Public sector work is generally awarded on the basis of the Public Tenders Law, which prescribes minimum standards in relation to government procurement across the UAE. Public defense contracts have their own set of industry-specific rules.<\/p>\n
\u00b7\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Specialized Economic Zones<\/u>. The UAE has specialized economic zones, such as those established by Zones Corp in Abu Dhabi, which offer investment incentives such as certain reductions on infrastructure costs, administrative support, simplified approvals processes and residential cities for workers. Companies situated in specialized economic zones are subject to the requirements of the UAE Commercial Companies Law (including the 51% UAE participation requirement described above).<\/p>\n","protected":false},"excerpt":{"rendered":"
Under United Arab Emirates (UAE) law, there are 5 FIVE […]<\/p>\n","protected":false},"author":2,"featured_media":81095,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1,3],"tags":[12,4,20,57,9,10,5,15],"class_list":["post-450","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-anuvibs-business-solutions","category-business-set-up","tag-anuvibs-business-setup-in-dubai","tag-busines-setup-in-sharjah","tag-business-setup","tag-business-setup-in-ajman","tag-business-setup-in-uae-llc","tag-business-setup-service-providers","tag-bussines-set-up-in-dubai","tag-freezone-company-formation"],"yoast_head":"\n
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