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Company Registration in Dubai

Once the preliminary details of your future business are ironed out and your funding and initial investment capital is in order, you can begin the formal process of obtaining a trade licence (Company Registration in Dubai) through the Department of Economic Development. Regardless of what business structure you’ve decided on, if you’re an expatriate you are likely need to appoint a local service agent, also known as a sponsor.

Since non-GCC nationals are not permitted to be majority share holders outside of free zones in the UAE, a system of shared ownership has been developed in which UAE nationals formally own 51% of the company and the foreign proprietor owns the remaining 49%; details of profit and loss distribution are then agreed upon in a separate contract. Local sponsors can be individuals or locally-owned businesses. For the most part, a local sponsor will not have any responsibility towards the business but is obliged to assist with all government related procedures such as obtaining permits, trade licences, visas and labour cards. His/her signature will be required on most official forms.

Depending on the legal structure of the business, the Department of Economic Development has certain capital requirements for obtaining a trade licence.

Also keep in mind that certain businesses require separate approvals from varying government ministries before the trade application can be completed. When applying for a trade name, be sure to enquire about any external approvals that will be needed for the proposed business activity. Do note that 'Virtual offices' are not allowed by DED which has advised potential investors that any commercial enterprise in Dubai must have a physical address and an actual office.

It is important to do as much preliminary research as possible before applying for your trade licence. This means attending trade shows and exhibitions, networking through Dubai’s various business councils and even meeting with a consultancy firm that specialises in the business set up process.

Prior to operating any business in Dubai, the steps outlined below must be undertaken in order to meet the legal requirements of all concerned government authorities and to guarantee maximum commercial benefit for the business owner:
  • Determine, in the beginning, the category/categories (commercial, industrial and/or professional) and type of business activity/activities to be practiced. Please determine all the related business activities that can be included within each business license, subject to a maximum of ten activities per license.
  • Determine the appropriate business legal form for your business taking into consideration the desired business activity/activities and the number and nationalities of the business owners.
  • Confirm all the requirements of the license to be issued.
  • Determine the trade name of the business.
  • Submit an application to the Department for an Initial Approval and registering the trade name, either by a personal visit to the Department Offices and its external branches or through the Internet Services that are available on the website.
  • After getting the Initial Approval you can lease premises and contact the counter of the Planning Department of Dubai Municipality in order to verify that this said premise is suitable for the business.
  • Prepare all required documents and submit an application to the Department or one of its external branches for paying the required fees to obtain a final license.
  • Submit an application to one of the Department external branches for a signboard permit for a business trade name as required by the economic regulations.

Terms & Conditions on Operating Economic Activities in the Emirate of Dubai

First – United Arab Emirates Nationals:

United Arab Emirates nationals may operate all commercial, professional and industrial activities, when they fulfill all Terms and Conditions. They may carry on activities through any of the following legal forms:
  • Individual Establishment.
  • Limited / Joint Liability Company.
  • Private / Public Shareholding Company.
  • Civil Business Company.

Second – Nationals of Gulf Cooperation Council Countries (GCCC):

GCCC nationals may carry on most commercial, professional and industrial activities, when they fulfill all Terms and Conditions (except for activities of Haj and Umra, trade agencies, houses of disabled and old people, community service, and journals and magazine publishing and printing houses as they are limited only to United Arab Emirates nationals). They may carry on activities through any of the following legal forms:
  • Individual Establishment
  • Limited Liability Company: two or more GCCC nationals may establish a Limited Liability Company to practice a specific commercial activity. However if there is one or more partners who are not GCCC nationals in this case one or more UAE national partner is required, with a shareholding of not less than 51% of the paid-up capital.
  • Private / Public Shareholding Company: three or more GCCC nationals may establish a private shareholding company to practice a specific commercial activity. However if there is one or more partners who are not GCCC nationals in this case one or more UAE national partner is required, with a shareholding of not less than 51% of the paid-up capital.
  • (For Example: GCCC partner, foreign partner, it is a must to have a partner from the United Arab Emirates nationals).
  • Civil Business Company: two or more GCCC nationals may establish a civil business company to practice a specific profession without a Local Services Agent. However if there is one or more partners who are not GCCC nationals, a Local Services Agent who is a UAE national shall be appointed or included as a partner.

Third - Nationals of Other Countries:

Nationals of other Arab or foreign countries may carry on economic activities through any of the following forms:
  • Individual Establishment: it may be established to practice any professional activity, only by appointing a Local Services Agent who shall be a UAE national.
  • Limited Liability Company: this kind of company shall be established to carry on any commercial or industrial activity, including one or more UAE partners whose shareholding shall not be less than 51% of the paid-up capital.
  • Private Shareholding Company: this kind of company shall be established to carry on any commercial or industrial activity, including one or more UAE national partners whose shareholding shall not be less than 51% of the paid-up capital.
  • Civil Business Company: two or more persons may establish a civil business company to practice a profession, provided that a Local Services Agent who must be a UAE national is appointed or included as a partner.

Fourth – Foreign Companies:

Any company incorporated outside the United Arab Emirates may operate any commercial, industrial or professional activity through one of the following legal forms:
  • Branch of a Foreign Company
  • Limited Liability Company: this kind of company shall be established to operate any commercial or industrial activity, including one or more UAE national partner whose shareholding shall not be less than 51% of the paid-up capital.
  • Private / Public Shareholding Company: this kind of company shall be established to operate any commercial or industrial activity, including one or more UAE national partner whose shareholding shall not be less than 51% of the paid-up capital.

Changing business structure

Only some businesses can change their structure. The most common change of business structure is from a sole proprietorship to a limited liability company. It is important to note that an LLC cannot change its business structure because of the limitations put on foreign ownership. If the partners of an LLC want to restructure their company by selling their shares to a single owner and forming a sole proprietorship, they will need to cancel the original trade licence and start the business set up process from the beginning.

The procedures and documents needed for changing from a sole proprietorship to an LLC or other structure are the same as starting a new business. The outcome however, will not be a new trade licence but a modified one.

Another option is ‘going public’ by selling shares of your company. Generally private companies who need additional capital for growth which cannot be obtained personally by the principals or from venture capital or financial institutions may ‘go public’ using the Dubai Financial Market. Such a decision is an important strategic one that should be made after obtaining financial advice and within the scope of a well developed business plan.