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7 July, 2020

A Review of the Business Setup Policies in UAE

Business setup in Dubai can be a pretty daunting and overwhelming exercise. While on the one side you have the requirement to turn your idea into a running business, you also need to ensure full adherence to all the Government processes and paperwork demands. It is only upon successful adherence to all processes that one can complete a new company establish and operate their business in Dubai.

Due to the ever-changing business environment, the need for companies that provide business advisory in Dubai has increased. It is now a benchmarked practice that one takes the help of companies providing business consultancy to complete the process of LLC company formation in Dubai.

So, what are some of the key policies required for new company establishment? Apart from focusing on the key policies, why should companies go for business consultancy advice? How will this lead to business startups’ survival?

Should I focus on LLC Company Formation?

The most critical part of a new company establishment is to not restrict yourself to any legal structure that your friends or other contacts have followed. What works for one business setup in Dubai, may not be a working method for another new company establishment process.

Business setup in Dubai can be done in any of the following legal structures:-

  • Sole proprietorship: Allowed only for UAE/GCC Nationals if the business setup in Dubai comes under the commercial or industrial category. For professional businesses, even non-UAE nationals can be a sole proprietor provided they appoint a local service agent.
  • Single Owner LLC: Allowed only for UAE Nationals
  • Limited Liability Company (LLC): 51% shareholder must be a UAE national, and the remaining 49% can be other nationals. Mandated as the legal structure for certain types of business setup in Dubai due to the nature of business they intend to carry out.
  • Civil Company: Partnership structure to operate a business, but the partners can be non-UAE nationals. This is due to the nature of the business activity that the company intends to carry out.

Other legal structures such as the branch of a foreign company, branch of UAE Company, or a branch of Free Zone Company exist, but the most common types of new company establishment areas listed above. It is therefore important to note that not all business setup in Dubai follows the process of an LLC company formation.

In order to successfully complete your business setup in Dubai, it is critical to follow the right business consultancy advice. More often than not, it is the right business advisory in Dubai that guides you to efficiency and effectiveness in the process of your new company establishment.

Do I need a Local Partner/Service Agent for my Business Setup in Dubai?

According to the law, for any LLC company formation or a new company establishment, it is important to have the association of a UAE national. The UAE national (or UAE local) can either be a company entity or can be an individual.

So, which business setup in Dubai warrants which kind of involvement from the UAE national? What would be the right business consultancy advice in this case?

  • Local Partner

    • Also referred to as a local business partner, the local partner is required as per law when following the process of an LLC company formation.
    • The business activity mandates that the UAE local partner must have at least 51% ownership in the new entity. For instance, it is impossible to complete a business setup in Dubai under general trading activity, without a local partner owning 51% of the entity.
    • The local partner can bequeath their ownership and share in profits in exchange for a fixed annual fee, through an internal agreement signed between the owner and local partner.
  • Local Service Agent

    • The local service agent is required only in certain new company establishments where the business activity is professional.
    • The owner can have full 100% ownership of the new company establishment.

How would a Business Consultancy Company Help?

The right business advisory in Dubai can help your business go a long way. Business consultancy like Corporate Business Services provide you with the following advantages:-

  • Fewer hassles associated with Government document clearance and paperwork;
  • Saves time and effort in completing your business setup in Dubai;
  • Experience of having handled many such new company establishments;
  • Knowledge arising from daily engagement with Government authorities and departments;
  • Local expertise
  • Enabling business startups survival through post-license support;
  • Access to networking events;
  • Ability to support business development in the country/region;

In summary, the main focus during a new company establishment should be on adherence to the Government policies, especially on the right legal structure and the requirement for a local partner/local service agent.

For further enquiries, feel free to reach out to our business consultancy experts for a consultation.

FAQs:

  1. What are the key Government policies to be followed for business setup In Dubai?

Ans: The main policies that businesses need to carefully follow during a new company establishment are: –

  • Following documentation requirements as per the business activity and jurisdiction
  • Following the right legal structure
  • Appointing a local partner/local service agent
  • Getting required approvals
  1. What is the difference between a local partner and a local service agent?

Ans: A local partner is appointed during LLC company formation when the business activity mandates that such a UAE national be owning 51% (or more) in the new company establishment. A local service agent is appointed when the non-UAE national owns 100% of the business.

  1. Is LLC company formation the only way to set up a business?

Ans: No, there are different legal structures such as sole proprietorship, civil company, single-owner LLC, or branch of foreign company. The LLC company formation is followed only for certain types of business activities.

  1. Who is a business consultancy company?

Ans: A company that helps you in your new company establishment process is called as a business consultancy expert or a business advisory in Dubai.

  1. Will a business advisory in Dubai reduce my time and effort?

Ans: Absolutely. Appointing a business consultancy company to help you in your Government processes (even after you get your trade license) is a proven best practice for companies in Dubai.

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