Procedures For Incorporation In UAE For GCC Nationals And Foreigners - Easy Descriptions

Procedures for Incorporation in UAE are both simple and counter intuitive at the same time. The UAE, as other Gulf Cooperation Council [GCC] countries move to a logic that is different from that of the Western based company law systems!

The term incorporation refers to the establishing of a new business or non profit firm in the United Arab Emirates. The procedures for incorporation in UAE are recognized to be a legal one and it includes the registration of both the company name as well as the company logo.

The benefits in regard to the incorporation process are immense when compared to that run by individuals also known as Professional Licenses. Liabilities are limited to the net worth of the company and do not transfer on to the shareholders. Also western companies feel more secure working with Limited Liabilities Companies [LLC] since they give a sense of organizational continuity as opposed to a single person company.

Company incorporation consulting in UAE is also available via intermediates and aims at providing the best service to its clients. However the best type of an intermediate is your local 'Sponsor' if he is willing to help you with the documentation and the leg work.

You can choose from different incorporation types in UAE depending upon your requirements. Each of the procedures for incorporation in UAE have its own advantages and disadvantages and you need to select the one that suits your business needs.

UAE & Gulf Cooperation Council Country [GCC] Nationals:

1. To start up a venture in the UAE, they can establish a sole proprietorship firm and this corresponds differently to UAE and GCC citizens.

a. They can get help from the many incorporation consulting in UAE companies, or they can follow these guidelines:

b. They can apply directly to the Department of Economic Development by filling up the application form to gain the appropriate license they are seeking.

c. They need to present their national ID card, passport photocopy, no-objection letter from their employer [applies to employees] and sometimes a no-objection letter from the concerned ministry or department which governs that business field. E.g. Department of Health for a Clinic. A special form maybe required for this approval.

d. The procedures for incorporation in UAE for the retail or wholesale trade says that to benefit from the sole selling agency law, they must reside in the country!

A GCC national can practice this business provided he has a similar license in his home country. He is allowed to open other branches within the country. In addition to the above documents he must also submit a copy of his license from his home country.

There are different incorporation types in UAE and it includes the Limited Liability Company or the LLC, the Nonprofit Corporation and others.

The procedures for incorporation in UAE must be chosen after thought and research to meet your requirements appropriately.

Business incorporation Types:

a. General Partner Company

Only for UAE nationals.

b. Partnership in Commendams

Also only for UAE nationals only where only one partner is responsible for the firm's liabilities.

c. Public Shareholding Company

Also for UAE nationals only. The directors and chairman must be UAE nationals as well as owners of 51% of the shareholding. The share capital must be at least AED. 10 mn [1 US$ = 3.67 AED.]

d. Private Shareholding Company

It should have at least 3 or more shareholders and cannot invite public participation. Its minimum share capital must be AED. 2 mn [1 US$ = AED. 3.67] and its Chairman and the majority of directors must be UAE nationals.

e. Limited Liability Company

The most common form of business in the UAE. Dubai requires a share capital of AED. 300,000, but this varies by Emirate [e.g Sharjah, Abu Dhabi etc.], 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. 5 mn!

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.

These type of companies also cannot sell its shares to the public.

f. Joint Venture

Formed basically 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.

g. 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.

h. 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.

i. Appointing a Branch Establishment by GCC citizen

require other documents and it includes copy of valid passport, copy of local agent’s valid passport, copy of the local agent agreement, non-objection letter from the authority concerned thus approving to practice the same.

Special approvals are recognized to be necessary for activities like pharmacy, medical clinics, bookshops, advertising agency, audio or video shops, private clinics, money exchangers, financial investments companies, banks, banking, consultancies, financial investment, travel agents, contracting companies, gas stations, advocated and legal consultants, private schools, new industrial expansions and projects, cargo clearing offices, sea cargo, recruitment agencies and children’s nurseries.

The procedures for incorporation in UAE are easy to follow if you just follow the steps required.

One interesting piece of information which will sound frivolous but is true. In most western countries you will look for a lawyer to proceed with your incorporation.

Old hands in the UAE consult the Arabic typist near the office where the application is to be made. In most cases, the typists know the steps to be taken, the forms to be used, and the amount of money to be paid!

They will even type out the agreements for you. [Of course they will not give you the same degree of comfort that the lawyer will give you!]