Dubai is a popular area to start a business due to its excellent tax structure. It is a major business capital city and one of the most sought-after places for international investors.
It is a popular choice for both foreign and domestic organizations because of its world-class infrastructure, strategic position, and easily accessible and diverse market with minimal operational costs and logistics. Dubai offers around 25 Free Trade Zones (FTZ), which attracts worldwide business owners to register their enterprises there.
Types of Company Registration in Dubai
Companies that can be established in Dubai include the following:
Free Zone Companies/Establishment
The free zone companies/establishments are located in FTZs, which have their own set of regulations governing taxation, ownership, and customs that differ from mainland Dubai. A foreign entrepreneur can possess 100% of a company founded in an FTZ. Entrepreneurs can create two types of enterprises in an FTZ: free zone establishments and free zone companies.
A single shareholder with limited responsibility may form a free zone establishment. A free zone corporation or LLC has more than one stakeholder (up to five). A natural or legal person may form a free zone establishment or free zone firm. The legal prerequisites for forming a free zone company/establishment are outlined in the regulations and norms established by the individual free zones.
Limited Liability Company (LLC)
A Limited Liability Company (LLC) in Dubai requires at least two shareholders. An LLC can have as many as 50 shareholders. An LLC’s shareholders can only contribute to the share capital. An LLC can conduct any business except banking, insurance, and financial investments.
Onshore Company
An onshore company is one that is based in mainland Dubai. The corporation is governed by directors from Dubai. For international businesses, Dubai only allowed 49% ownership, which had to be created in conjunction with a native sponsor or agent.
However, the Dubai administration has changed this. Currently, a foreign entrepreneur can hold 100% of a Dubai onshore company, with the exception of enterprises founded for economic operations with a strategic impact on seven industries.
Offshore Company
An offshore corporation is established and operated outside of the country’s jurisdiction. It is a totally foreign-owned corporation incorporated in Dubai with a basis in another nation. Foreign entrepreneurs possess 100% of offshore enterprises.
Branch Office
A branch office is an extension of the main company. Any international company can establish a branch office in mainland Dubai and most FTZs throughout Dubai. It is an excellent choice for organizations wishing to develop in the UAE’s local markets.
Dubai Company Registration Advantages
- Allowance for 100% repatriation of capital and profits
- Lenient labor rules make it cost-effective to recruit workers.
- Exemption from individual or corporation income taxes
- Excellent physical infrastructure.
- Some FTZs offer shared and virtual office facilities.
- FTZs are exempt from import and export duties, therefore commercial company law regulations do not apply.
Company Formation in Dubai
To register a company in Dubai, every entrepreneur or applicant needs to complete the procedure outlined below:
Decide business structure
Before registering for company registration in Dubai, an applicant should consider their business structure. An applicant has the option of establishing a free zone company or free zone establishment in the FTZ, LLC, onshore company, offshore corporation, or branch office. The right business structure is determined by the number of shareholders, financial requirements, and commercial activities.
Reservation of company name
The applicant should choose a company name in accordance with the law of the land. It should not be the same as another company’s name. The applicant should check the availability of the desired company name with the Dubai Economic Department (DED) or the relevant Free Zone Authority. The corporation should conduct its operations under the approved company name.
The applicant should bear the following criteria in mind when selecting the firm name:
- The name should not disrupt public harmony or undermine the morale of the country.
- It should be according to the company’s legal form.
- It should not have been previously registered.
- It should be in conformity with the anticipated business activities of the organization.
- It should not contain the name of any governing authorities, religions, or other bodies’ names or logos
- It shouldn’t be offensive, contentious, or disrespectful.
- Entrepreneurs’ names should represent their complete names rather than nicknames.
Apply for a business license
After reserving the name, the applicant should apply for a business license based on the business operations the company intends to conduct in Dubai. The business license is a legal document that allows its holder to engage in the specified business activity. The DED is in charge of issuing local company licenses. The following are the different sorts of licenses:
- Commercial License: This applies to entities engaged in trade.
- Industrial license: Entities involved in manufacturing and industrial operations should apply for this license.
- Professional License: Professionals who provide services, artists, and technicians should receive this license.
Decide location/jurisdiction of the company
Applicants must decide where the company’s office space will be located. Applicants might choose to acquire or lease office land. The selection of office space is determined by the chosen business activity, the number of employees, and the corporate budget. The various free zones in Dubai feature office sizes ranging from 20-30 sq.m. to 2000 sq.m. and more.
Opening a bank account
After acquiring all necessary registrations and approvals from the relevant authorities, the company must open a corporate bank account to transmit and receive money related to the company’s operations.
Documents Required for Company Registration
- A copy of the shareholders’ and directors’ passports.
- A duplicate of the directors’ and shareholders’ national identification cards
- A recent bank account, credit card statement, or energy bill that includes the shareholders’ and directors’ names and residential addresses
- Company’s Memorandum and Articles of Association
- Board resolution with details on the formation of the branch or subsidiary, nominating an authorized manager
- Share Capital Information
- A duly attested contract of appointment for a company or service