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Legal Business Structures in UAE

Legal Business Structures in UAE


The business legal structure is among the vital things to decide before starting a firm in any country in the world. The form of your legal business in Dubai is subject to the type and size of your business, your settings, and the way you plan to run and grow your business. The UAE corporate law controls all corporations' power, finance, and control within the country. 

Every region, though, has its own primary corporate code. A firm is formed in the UAE in any area, namely, Free Zone, Mainland, and Offshore. The licensing of your legal business in Dubai on the mainland is through the own region's DED. For Free Zones, its own Free Zone Authority is in charge of issuing the license. And the respective offshore licensing authority handles all requests for the setup of offshore firms. The usual UAE legal business set up in any region are as follows:

Sole or Single Ownership

One owner owns this business where the economic activity can be industrial, commercial, professional, real estate, or agricultural. The firm's financial liability is linked wholly to the owner, who is responsible for every firm's financial obligation up to the extent of his personal assets.

This legal business in Dubai can be formed by a national of UAE or Gulf Cooperation Council or GCC. For a foreign national, setting up a sole ownership company would demand that he possess a local sponsor and residence permit, a citizen or company in Dubai. And when the business is to engage in a commercial or professional activity, the owner must first obtain the proper license.

Civil Company

A legal business in Dubai created as a civil firm is a professional partnership for doctors, lawyers, accountants, consultants, or engineers. It wholly belongs to the professional associates where one is a UAE National Local Service Agent. The exception to this rule is civil engineering firms. 

For this business in Dubai, the company owners are not limited to UAE nationals. Also, a foreign firm can become a civil company partner, provided the foreign firm belongs to the same line of work of the civil business.

Limited Liability Company or LLC

This is the top type of legal business in Dubai and is proposed when the firm aims to sell within the area. However, full foreign ownership is not permitted in LLCs because the UAE Commercial Companies Law or CCL only allows foreign investors 49% equity ownership. 

Of course, the remaining 51% ownership is always held by at least one UAE national in these companies. In line with CCL's Article 218, an LLC can be created by a maximum of 50 shareholders. Each shareholder has a liability depending on his capital share in the company. In June of 2009, the required minimum capital share was removed, allowing LLC founders to limit the company's capital share.

Partnership

As a legal business in Dubai, partnerships can be either general or simple limited.

General 

This type exists as a contract amid at least two partners. Each stays jointly and separately liable to all firm debts up to the extent of their personal assets. Note that only UAE citizens can form this kind of partnership. The business name must also be created from all the partners' names, if not at least one partner's name, with a word showing there are other partners. 

Also, as a legal business in Dubai, the firm can have a different business name when a person's name, who is not a firm partner, is included. Since the non-partner allowed this to happen, he also becomes liable for the business debts.

Simple Limited

This is a business formed by at least one general partner personally liable for company liabilities. In contrast, the other partners remain responsible up to their respective capital shares only. Once again, only UAE citizens can become general partners. In terms of naming the company, the same rule governing general partnership is followed.

The only difference is that the limited partners' names can be omitted in the business name. Otherwise, the limited partner becomes liable beyond his capital share. As a legal business in Dubai, the partnership contract shall comprise, on top of other information, each limited partners' name, surname, and nationality. Included, as well, is their birthday, country, share in capital, and the paid portion of their individual share.

Branch of Foreign Companies or Representative Office

Branch offices have identical legal identities as their parent companies and conduct business under their parent companies' names. This office can only engage in activities the same as its mother company. Still, it cannot import its parent company's products. This is because this function is reserved for domestic trade agents. 

In some instances, a foreign firm's branch is required to get an additional permit from the Ministry of Economy of the UAE. In contrast, representative offices are limited to helping the activities of their parent companies, such as gathering info and soliciting projects or orders to be carried out by their head offices. The law requires that a UAE national be appointed by way of the representative or branch office's service agent.

Branch of UAE-based Companies

Under the UAE law, there stand five kinds of business setups valid to ex-pat people drawn in launching their presence in the country. This exists in line with the UAE government's carrying out a wide array of admin and economic rules to be a charming global market starting point. 

A firm can launch a stable business, create a unit in any free zone in the UAE, or get into a business agency contract. The two other options are to set up branch offices or form a civil firm as a legal business in Dubai.

Since your preferred business structure determines your responsibilities as a business owner, it's good to find a business consultancy firm to discuss your planned legal design. With a track record of excellently assisting and maintaining clients, ITQANS can be the perfect financial, business, and legal adviser to guide you in starting your company in Dubai.


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