Company
Incorporation procedure
In UAE
Article Written by CS Shika Mehra
Step by step process and does not require endless visits to a lawyer at
every juncture of company formation. The procedures for incorporation in UAE
are recognized to be a legal one and it includes the registration of company
name and licensing of business activity.
LICENSING
The basic requirement for all business activity in Dubai is one of the
following three categories of licenses:
1. Commercial licenses covering all kinds of trading activity;
2. Professional licenses covering professions, services, craftsmen and
artisans;
3. Industrial licenses for establishing industrial or manufacturing.
OWNERSHIP REQUIREMENTS
Fifty-one per cent participation by UAE nationals is the general
requirement for all UAE established companies except:
- Where the law requires
100% local ownership;
- In the Jebel Ali Free
Zone;
- In activities open to
100% AGCC ownership; ( Gulf cooperation council)
- 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.
BUSINESS INCORPORATION TYPES:
1. Limited Liability Company: The most common form of business in the UAE.
Dubai requires a share
capital of AED. 300,000 (Rs. 51, 81,000/-) ( 1 AED = Rs.17.27/-) but
this varies by Emirate, by Free Zone, and by activity. e.g. The new procedures
for incorporation in UAE for Real Estate brokers who wish to rent out property
in their own name is to now give a bank guarantee of around AED 1 million.
An UAE national, ‘Sponsor’
must own 51% of the shares of this company – even though he may not invest any funds
into the venture. An agreement with him can be reached about the profit sharing
percentage or the fee he will be entitled to instead.
2. Joint Venture: These companies are
basically formed to share the profits or losses of another venture which will
be run by one or more of the partners. This maybe a written or verbal contract
and need not be notarized.
3. Professional
Company: These are partnership companies between members of the same profession
to supply a professional service e.g. accounting, educational services, medical
and so on.
4. Sole Proprietorship firm to
Practice a Profession: For a foreign professional investor, the procedures for
incorporation in UAE allow him / her to form such a firm without any UAE
national being a ‘partner’. However, a UAE national must be taken on as a fee
based ‘Service Agent’ instead of a ‘Sponsor’ to sign important documents such
as applications for visas and practicing licenses.
FREE ZONE
INCORPORATIONS
Free Zones offer the
following incentives to the investors.
1.100% foreign ownership
2. No corporate taxation
for 50 years; renewable for an additional 50 years.
3. Freedom to repatriate
capital and income
4. No personal income tax.
5. Full exemption from
import duties.
6. No currency
restrictions.
7. No bureaucratic
red-tapism.
8. No recruitment problems.
9.
Modern efficient communication.
10.
State of the art infrastructure.
11.
Abundant energy
LIST OF FREE ZONES:
There
are more than 38 Free
Zones operating in UAE.
1)
Abu Dhabi Airport Free Zone (ADAFZ)
2)
ADPC – Khalifa Port and Industrial Zone (KPIZ)
3)
Umm Al Quwain Free Trade Zone (UAQFTZ)
4)
Ajman Free Zone (AFZ)
5)
Dubai Academic City
6)
Dubai Airport Free Zone (DAFZ)
7)
Dubai Biotechnology & Research Park (DuBiotech)
8)
Dubai Car and Automotive City Free Zone (DUCAMZ)
9)
Dubai Gold and Diamond Park
10)
Dubai Healthcare City
11)
Dubai Industrial City (DIC)
12)
Dubai International Academic City
13)
Dubai International Financial Centre (DIFC)
14)
Dubai Internet City
15)
Dubai Knowledge Village
16)
Dubai Logistics City
17)
Dubai Media City
18)
Dubai Multi Commodities Centre (DMCC Free Zone)
19)
Dubai Outsource Zone
20)
Dubai Silicon Oasis
21)
Dubai Studio City
22)
Dubai Techno Park
23)
Dubai Technology and Media Free Zone
24)
Economic Zones World
25)
Fujairah Creative City
26)
Fujairah Free Zone
27)
Hamriyah Free Zone
28)
Higher Corporation for Specialized Economic Zones
29)
Industrial City of Abu Dhabi
30)
International Media Production Zone
31)
Jebel Ali Free Zone
32)
Jumeirah Lakes Towers Free Zone
33)
RAK Investment Authority Free Zone
34)
Ras Al Khaimah Free Trade Zone
35)
Ras Al Khaimah Media Free Zone
36)
Sharjah Airport International Free Zone
37)
Twofour54
38)
U.S.A. Regional Trade Center (USARTC) Free Zone
FREE ZONES UNDER CONSTRUCTION
1)
Dubai Maritime City
2)
Dubai Carpet Free Zone
3)
Dubai Auto Parts City
4)
Heavy Equipment and Trucks Zone
5)
Mohammad Bin Rashid Technology Park
6)
Dubai Flower Center
7)
Dubai Textile Village
8)
International Humanitarian City
9)
Dubai International Arbitration Center
PROCEDURE OF INCORPORATING
COMPANY IN FREE ZONE
1.
Determine the free zone license type.
2.
Confirm the activities.
3.
Legal structure of the company.
4.
Confirm the business facilities required.
5.
Verify the fees and other charges.
6.
Submit the application form and other documents.
7.
Secure the preliminary approvals.
8.
Payment of the fees.
9.
Sign the agreements and other legal documents.
10.
Receive your business license and other certificates or documents.
OFFSHORE COMPANY:
Offshore
companies can feature in most financial planning scenarios when trying to
mitigate tax exposure and/or with regards to passing assets on to beneficiaries
freely in the event of death. Sometimes referred as Special Purpose Vehicles
(SPV), there is an array of scenarios where an offshore company becomes
invaluable and this article relates to their uses when buying property.
The offshore
possibility has basically been set up to cater for companies who need to have a
regional “tax relief-invoicing-facility” – There
is no minimum capital required and also no need to set up an actual office
facility. The off-shore regulations have been issued
according to international standards and the company will have to register minimum 2 directors,
keep financial records and issue an annual financial report audited by a
professional auditing company approved by JAFZA/RAKFTZ.
