Mainland Dubai Company Formation or LLC Company Formation

Dubai Mainland is famous for its business friendly infrastructure and facilities. Dubai mainland company formation is still the first preference by most of the organizations when establishing their business in Dubai. Company Formation in Dubai Mainland is very challenging and time consuming task, Sakhi Management Consultancy as the best business setup consultancy offers the best services for mainland company formation in Dubai.

UAE mainland consists of all Business Entities which are directly registered under each Emirate’s government (other than specific free trade zones) and its authorities with the limitation of commercialized geographical areas. These mainland setups directly represent the Government policies and its legal structure towards its most developed economy.

Mainland Company Registration in Dubai

The basic requirement for all business activity in UAE is one of the following three categories of licenses:

  • Commercial licenses covering all kinds of trading activity
  • Professional licenses covering professions, services, craftsmen and artisans
  • Industrial licenses for establishing industrial or manufacturing activity

Some categories of businesses require approval from ministries also: for example, banks and financial institutions from the Central Bank of the UAE; manufacturing from the Ministry of Finance and Industry; and pharmaceutical and medical products from the Ministry of Health; branch of foreign company from the ministry of Economy and Commerce. More detailed procedures apply to businesses engaged in oil or gas production and related industries.

Ownership Requirements

51% participation by UAE nationals is the general requirement for all UAE company formations except:

  • Where the law requires 100% local ownership;
  • In the Free Trade Zones where 100% foreign ownership is permitted;
  • In activities open to 100%  AGCC ownership;
  • Where wholly owned AGCC companies enter into partnership with UAE nationals;
  • In respect of foreign companies registering branches or a representative office in Dubai
  • In professional or artisan companies where 100% foreign ownership is permitted.

However,the local sponsor or sleeping partner will make an agreement that he will not have any involvement in the company operations or profit sharing of the company setup in Dubai mainland.

The professional consultants at Sakhi Management Consultancy support our clients to select the most appropriate decision in business setup and guide them through complete procedures of mainland Dubai company formation and Dubai Economic Department company registration. Contact Sakhi Management Consultants for Dubai mainland business setup for more details, Call +971 50 7645-697 or e-mail us on [email protected].

Requirements for Dubai Mainland Business Setup

There are 6 main steps involved in mainland Dubai company formation. However, there are some activities which Mainland setup require special approval from some specific Government departments. The main 6 steps involved for DED company formation in mainland are:

  • Business Activity Selection and Name Approval
  • Selection of Local Partner or Service Agent
  • Apply for Initial Approval for Mainland company setup
  • Preparation of Court Notarization and MOA
  • Get Office Space and Tenancy Contact
  • Final Submission for Mainland company formation

Procedures governing the operations of foreign business interests

In practice, however, mainland Dubai company formation procedures are similar to the general system other emirates follow, whereby foreign owned offshore companies operated in one of three ways: with a local sponsor, through a partnership with a UAE national or company, or through a private limited company or public shareholding company incorporated by Ruler’s decree. Since 1984, steps have been taken to introduce a codified company law applicable throughout the UAE. Federal Law No. 8 of 1984, as amended by Federal Law No. 13 of 1988 – the“Commercial Companies Law” – and its by-laws have been issued. In broad terms the provisions of the Law are as follows: The Federal Law stipulates a total local equity of not less than 51%in any commercial company and defines seven categories of business organization which can be established in the UAE. It sets out the requirements in terms of shareholders, directors, minimum capital levels and offshore company incorporation procedures. It further lays down provisions governing conversion, merger and dissolution of companies.

Legal Structures for Business

Federal Law No. 8 of 1984, as amended by Federal Law No. 13 of 1988 – the Commercial Companies Law – and its by-laws govern the operations of foreign business. In broad terms the provisions of these regulations are as follows:

The Federal Law stipulates a total local equity of not less than 51% in any commercial company and defines seven categories of business organization, which can be established in the UAE. It sets out the requirements in terms of shareholders, directors, minimum capital levels and incorporation procedures. The seven categories of business organization defined by the Law are:

1. General partnership company

General partnership companies are limited to UAE nationals only. The Dubai government does not presently encourage the establishment of partnership-en-commendams and share partnership companies.

2. Joint venture company

A joint venture is a contractual agreement between a for eignparty and a local party licensed to engage in the desired activity. The local equity participation in the joint venture must beat least 51%, but the profit and loss distribution can be mutually agreed. Joint ventures are suitable for companies working together on specific projects.

3. Public and Private Shareholding Companies

The Law stipulates that companies engaging in banking, insurance, or financial activities should be run as public shareholding companies. Foreign banks,insurance and financial companies, however, can establish a presence in Dubai by opening a branch or representative office.
Shareholding companies are suitable primarily for large projects or operations,since the minimum capital required is Dh. 10 million (US$ 2.725 million) for a public company, and Dh. 2 million (US$ 0.545 million) for a privates share holding company. The chairman and majority of directors must be UAE nationals and there is less flexibility of profit distribution than is permissible in the case of limited liability companies.

4. Limited liability company (LLC)

A limited liability company can be formed by a minimum of two and a maximum of 50 persons whose liability is limited to their shares in the company’s capital.Most companies with expatriate partners have opted for this form of company.

In Dubai, the minimum capital is currently AED 300,000 (US$82,000), contributed in cash. But now it is not mandatory to show this amount deposited in bank account during registration of the company.
While foreign equity in the company may not exceed 49%, profit and loss distribution can be mutually agreed. Responsibility for the management of a limited Liability Company can be vested in the foreign or national partners or a third party.

5. Branches and Representative Offices of Foreign Commercial Companies

The Commercial Companies Law also covers the formation and regulation of branches and representative offices of foreign companies in the UAE and stipulates that they may be 100% foreign owned, provided a local agent is appointed.

Only UAE nationals or companies 100% owned by UAE nationals may be appointed as local service agents.Local agents – also sometimes referred to as sponsors -are not involved in the operations of the company but assist in obtaining visas, labour cards, etc and are paid a lump sum and/or a percentage of profits or turnover. In general,branches and offices of foreign commercial companies are not licensed to engage in importing activity except for re-export or in the case of products of a highly technical nature. To establish a branch or representative office in Dubai the following documents are required:

  • Company registration certificate
  • Board of directors’ resolution for establishing a branch
  • True copy of company’s memorandum / articles of association
  • Power of Attorney to the representative
  • Financial statements for the last two years
  • Local service agency agreement
  • Details of local service agent
  • Company profile

6. Professional Firms

In setting up a professional firm,100% foreign ownership,sole proprietorship or civil companies are permitted. Such firms may engage in professional or artisan activities but the number of staff members that may be employed is limited. A UAE national must be appointed as local service agent, but he has no direct involvement in the business and is paid a lump sum and/or percentage of profits or turnover. The role of the local service agent is to assist in obtaining licenses, visas, labour cards, etc.