visaprocessUAE: Business in Dubai

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How to start a Business in Dubai?

Starting a business in Dubai is becoming quicker and easier than ever.

In this article we are going to give you the step-by-step procedure on how to start a business in Dubai.

Department of Economic Development-DED is the concerned authority for licensing a business in Dubai.

Broadly, there are two jurisdictions in Dubai for conducting business: Dubai 'mainland' and more than 20 economic free zones like Jebel Ali Free Zone, Dubai Airport Free Zone.

Mainland and free zones offer different advantages depending on your business type and activities.

If you choose to conduct business in Dubai mainland, you will need to register with DED, which will issue you a business license.

The first step in the process of issuing a license is determining the activity type which identifies legal form options and parties associated with that activity. There are more than 2,100 business activities available in Dubai, which fall into different classes and groups: industrial, commercial, professional and tourism activities.

The license type is associated with the activity type, thus if the activity type of the license is professional, then the license should be professional as well. When the license combines several activities, the largest activity which is the industrial activity is taken into consideration followed by the commercial activity and then the professional one. For example, if a license contained both commercial and professional activities, the type of the license should be commercial since it’s the larger activity (not applicable for tourism activities).

Please note that some of the business activities require approvals from government bodies other than Dubai DED.

Consultations (include three types):

DED-related activities:

Business activities of firms that can’t take a limited liability company as a legal form.

Business activities of firms that can take either a sole proprietorship or a civil works company as legal form.

Business owner or director must join AUD program for qualifying directors in consultancy domain.

For the foreign companies interested in the consultations activity, the director must join AUD program for qualifying directors in consultancy domain.

Dubai Municipality-related engineering activities:

Include engineering activities only.

Business activities of firms that can’t take a limited liability company as a legal form.

Business activities of firms that can take either a sole proprietorship or a civil works company as legal form.

Business activities of firms whose parties (owners/ partners/ managers) should be holding a university degree or having an equivalent experience in the required consultation activity.

A local service agent agreement is not required for the engineering activities.

The foreign engineering consultancy offices can open branches without having to appoint a corporate agent.

Legal consultations activities:

Should receive an approval from Legal Affairs Department before obtaining the initial approval and the trade name from DED.

The foreign legal consultation offices can open branches without having to appoint a corporate agent.

Remarks:

There are other consultancy activities that are subject to the approval of governmental bodies.

The consultancy activities can have any legal form but only after the approval of the bodies governing the activity.

General Trading:

Through this activity, all kinds of commercial activities that does not require approval of other bodies can be done in the same place. It doesn’t include activities that require approvals from external bodies unless an NOC is obtained, examples of these activities are: jewelry, magazines and newspapers trade.

The general trading activity can include all kinds of direct commercial activities if approved by the concerned bodies. For instance, it can include telecommunications trade activity if approved by the Telecommunications Regulatory Authority.

AED 15,000 fees are charged in the following cases:

License issuance.

Changing the activity into a general trade activity.

Upon the license renewal, AED 3,000 are charged per year.

Investment:

The company can’t have the sole proprietorship legal form.

Branches of different kinds of licenses (professional, commercial, and industrial) can be opened only if they are branches of the parent company.

Any economic activity can’t be performed through this activity; however, other companies’ shares can be owned and branches can be opened.

The term “group” or “holding” can be used in the trade name for this activity.

AED 15,000 fees are charged for the investment activity in its different kinds in the following cases:

License issuance.

Changing the activity into any kind of investment activity.

Upon the license renewal, AED 3,000 are charged per year.

Companies and Institutions Management:

This activity authorizes the management of any company or institution related to one individual only as long as the licenses are not less than 3.

It is not authorized to manage companies and institutions belonging to others.

The term “group” can be used in the trade name such as: “BNB Group”.

Only UAE citizens can practice this particular activity.

Call us for your business set-up requirements:
First Gate Business Service
Dubai, Qusais (Al Nahda-2) Near Zulekha Hospital:
Tel. 009714-239 1302
Mob: 00971-55 273 2295, 055-345 7829
Mail: visaprocess.ae@gmail.com

www.visaprocess.ae

How to register your Trade name in Dubai?

The trade name should be related to the license type so that clients can't be confused.
You can apply for a trade name online or through Business in Dubai App (iOS, Android). You may also visit authorised service centers, Happiness Lounge, or law firms. Please note that to access online services, you need a user account.
You can make the payment online or by cash.

Remember:
Trade name reservation costs
A trade name certificate is valid for 6 months and can be renewed with the same fee.
DED has the right to cancel or change a business name if an existing trade name has been found similar to another name.

The name should not be the same name of one of the brands active in UAE or government projects or brand names.

Family names, tribes' names and other persons' names should not be used as a trade name unless the name belongs to the licensee concerned.
The name should not be the same as used by any of the active brands in the Emirate of Dubai or government projects, or those names used by any of the international brands.

Names should be written literally and not translated, for example: If the Arabic name is السماء العالية it must be written as "Al Samaa Al Aalya"; and if Arabic name is هاي سكاي it must be written as "High Sky").
The name should not include the name of a country or government unless an approval is obtained from the country's respective embassy.

Trademarks:
Trademarks cannot be registered by DED. The Trade Marks Department in the Ministry of the Economy is responsible for receiving, studying and deciding requests of registration of the trade marks. When the client submits a complaint of infringement of a trademark, the intellectual property rights unit at DED will first ensure that the registration certificate of the trademark at the Ministry of Economy is available then take legal action.
A company is entitled to use the trade name of another company granted a franchise after submitting a franchise agreement to DED.

How to get Initial Approval for your Business in Dubai?

Documents Required for the Initial Approval of all Legal Forms:

Business registration and licensing form.
Copy of the licensee's passport/ ID.
Copy of the applicant's residence permit/ visa (for non- GCC nationals).
No Objection Certificate from the applicant's sponsor (for non-GCC nationals) to practice a business activity (Not applicable for partner or investor).
Feasibility study of the project (if the company's activity is industrial or manufacturing).

If the company is branch of other emirate or foreign company:

The parent company's board resolution to open a branch in Dubai.
Letter of authorisation of the managing director.
Copy of the parent company's commercial registration certificate.
Copy of the parent company's memorandum of association (MOA).
Copy of the parent company's license.

You can apply for the initial approval through:

eServices - to access eservices you need a user account.
Business in Dubai App (iOS, Android)
Service centers like Tas'heel
Happiness Lounge under DED
Law firms

You can make the payment through various approved payment channels using debit card, credit card, net banking, cash...

Remember:
You must have an Initial Approval Certificate and Initial Approval Form to obtain a license.
The Initial Approval Certificate records partners, legal type and activities of the license.
It is valid for six months and renewable with a cost of
To apply for an initial approval, external approvals of bodies governing the following activities are required:

Legal Department-related activities:
Legal Consultants:
License Type: professional
Legal Translation:
License Type: professional.

Estidama/Sustainability Contract.
Department of Economic Development has started issuing Licenses without office space. So instead of getting a permanent office space which takes a big junk from your budget, you can get an Estidama / Sustainability Contract which is like a virtual office. You get a Lease Agreement for the company which enables you to get up to 4 employment visas.

This is applicable for new companies and for existing companies who want to reduce their Lease cost.

If you want a physical office, the tenancy contract should be registered through EJARI system under RERA.

You can add a new trade license to the same location taking into account the following conditions:

The local party of the new license should be the same owner, partner or LSA in the existing license of the desired location.
The space of location allocated for each license should not be less than 100 sq. ft.
Entities governing certain activities require specific area for the business location like Contracting, General trading....

How to get Final Approval for your business license in Dubai?

Some business activities require special licensing approvals

Call us for your business set-up requirements:
First Gate Business Service
Dubai, Qusais (Al Nahda-2) Near Zulekha Hospital:
Tel. 009714-239 1302
Mob: 00971-55 273 2295, 055-345 7829
Mail: visaprocess.ae@gmail.com
www.visaprocess.ae

How to Set up Business in Dubai?

Commercial licences covering all kinds of trading activity;

Professional licences covering professions, services, craftsmen and artisans;

Industrial licences for establishing industrial or manufacturing activity.

These licences are all issued by the Dubai Department of Economic Development. However, licences for some categories of business require approval from certain ministries and other authorities: for example;

+ Banks and financial institutions from the Central Bank of the UAE;

+ Insurance companies and related agencies from Insurance Authority;

+ Manufacturing license; from the Ministry of Finance and Industry;

+ Pharmaceutical and medical products from the Ministry of Health;

+ Contracting and Building Maintenance and some other activities from Municipality (click herefor the list of activities required Municipality Approval);

+ Transportation and vehicle rental activities from Road and Transport Authority (click here for the list of activities required RTA approval);

+ Printing, publishing and advertising activities from National Media Council;

+ Cargo Clearing, Cargo packaging, Canal dredging contracting and Fishing cages manufacturing activities from Dubai Maritime City;

+ Travel and tourism activities (now direct approval from DED). No need approval from Department of Tourism and Commerce Marketing DTCM).

+ Gymnasium Club activity from Dubai Sports Council.

+ Social Club registration and licensing to be completed from Community Development Authority.

+ Tents, awnings and Tarpaulin manufacturing from Environment Protection Section of Dubai Municipality.

+ Car Wash License is issued only in locations where there is a petrol filling station. This will need an agreement with the said oil company to lease the space at their filling station. Other norms on environment protection and safety have to be followed as per the standards prescribed.

More detailed procedures apply to businesses engaged in oil or gas production and related industries.

Practicing some trade activities (e.g. jewellery and insurance) requires the submission of a financial guarantee issued by a bank operating in Dubai.

In general, all commercial and industrial businesses in Dubai should be registered with the Dubai Chamber of Commerce and Industry.

Tourism CompaniesFor Inbound Tourism Dh100,000 to be deposited in Bank
For Outbound Tourism Dh200,000 to be deposited in Bank
These deposits are irrevocable till the license cancelled.

Travels
For Travel Agency Dh100,000 to be deposited at Department of Tourism & Commerce Marketing. This deposit is irrevocable till the license is cancelled.

Building Contracting CompaniesFor Building Contracting Company License, Dh10,000 to be extra at the Department of Economic Development when the license issued first time.

General TradingFor General Trading License, Dh15,000 to be extra at the Department of Economic Development when the license issued first time.
Customs Broker
Dh50,000 to be deposited at Dubai Customs. This deposit is irrevocable till the license is cancelled.

RTA Activities (following fees to be paid for RTA initial approval)
Rent a Car: Dh5000
Bus Rental: Dh1000
Passenger Transport by rented Buses: Dh1000

Telephones & Telecommunications Equipment Trading
Dh5500 to be paid at Telecommunications Regulator Authority (TRA). This is one time fee.

Security Service: Property guard & Surveillance Services, Party security & private guarding services
Initial approval from Department of Protective Systems, Dubai. Tel. 04-2048312

Oilfield & Natural Gas related activitiesInitial approval from Ruler's Court

Money Exchange Initial approval from Central Bank of UAE and Department of Protective Systems

Jewelry, Mobile SIM Card Trading, Stamp & Seal MakingInitial approval from Department of Protective Systems

SupermarketFor supermarket, 2000 square feet area is required.

Electrical Fitting Contracting: minimum 360 square feet office area is required.

Cafeteria/Coffee Shop: Minimum 175 square feet kitchen area is required.

+ To set-up your business, to prepare your DED related forms, court agreements and amendments, call:Qusais (Al Nahda-2): 055 273 2295, 055-345 7829

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Street Food Truck License in Dubai is controlled by Dubai Municipality

Only ready-made meals and fry-ups are allowed to be served by food trucks.

Get No Objection Permit from Permits and Applied Nutrition section at Dubai Municipality to conduct this activity.

The kitchen area in the vehicle must be suitable for the permitted activities. The floors, walls and ceilings should be made of smooth materials; they should be easy to clean, non-absorbent of water, fire-resistant, light-coloured, non-toxic and without cracks.

Food trucks must also provide appropriate ventilation and lighting.

There should also be a double sink for washing small equipment that is situated close to the preparation area.

It is also required to provide sufficient and appropriate places for storing one-time use packaging materials, and the equipment should be conveniently distributed inside the vehicle, so as to separate the various operations to prevent cross-contamination. It is not allowed to prepare raw materials, thawed meat, poultry and fish in the mobile truck.

The activity of food trucks should be limited to heating operations, simple barbecues and fry-ups for ready-made meals like burgers, sausages and French fries.

It is not allowed to clean and wash the vegetables in the mobile trucks, and all vegetables must be sorted, cleaned, sterilised and stored in clean covered containers outside the vehicle, in a licensed and secure place in order to avoid cross-contamination.
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Minimum area required for a normal commercial/professional shop/office: 200 square feet.

+ Ownership Requirements

Fifty-one per cent participation by UAE nationals is the general requirement for all UAE established companies except:

Where the law requires 100% local ownership;

In the Jebel Ali Free Zone;

In activities open to 100% AGCC ownership;

Where wholly owned AGCC companies enter into partnership with UAE nationals;

In respect of foreign companies registering branches or a representative office in Dubai;

In professional or artisan companies (eg. consulting, educational service) where 100% foreign ownership is permitted.

+ Legal Structures for Business
In the past, each emirate followed its own procedures governing the operations of foreign business interests. In practice, however, Dubai and the other emirates followed the same general system, whereby foreign companies operated in one of three ways: with a local sponsor, through a partnership with a UAE national or company, or through a private limited company or public shareholding company incorporated by Ruler's decree.

The Federal Law stipulates a total local equity of not less than 51% in any commercial company and defines seven categories of business organisation which can be established in the UAE. It sets out the requirements in terms of shareholders, directors, minimum capital levels and incorporation procedures.
The seven categories of business organization defined by the law are:

General partnership company

Partnership-en-commendam

Joint venture company

Public shareholding company

Private shareholding company

Limited liability company

Share partnership company

+ Limited Liability Companies

A limited liability company can be formed by a minimum of two and a maximum of 50 persons whose liability is limited to their shares in the company's capital. Such companies are recognised as offering a suitable structure for organisations interested in developing a long term relationship in the local market.

In UAE, The minimum capital requirement law was abolished on 10th August 2009. While foreign equity in the company may not exceed 49%, profit and loss distribution can be prescribed. Responsibility for the management of a limited liability company can be vested in the foreign or national partners or a third party.

The following steps are required in establishing a limited liability company in Dubai.

Select a commercial name for the company and have it approved by the Licensing Department of the Economic Department;

Get initial approval for the activity from Economic Department;

Draw up the company's Memorandum of Association and have it notarised by a Notary Public in the Dubai Courts;

Seek approval from the Department of Economic Development and apply for entry in the Commercial Register;

Once approval is granted, the company will be entered in the Commercial Register and have its Memorandum of Association published in the Ministry of Economy and Commerce's Bulletin. The licence will then be issued by the Department of Economic Development;

The company should then be registered with the Dubai Chamber of Commerce and Industry.

Trade Names that cannot be reserved: Name of country, Name of Continent, Famous regions and Towns, Coloure (blue, red etc.).
Foreign words and short words will be charged extra fee of Dh2000 per year.

+ Branches and Representative Offices of Foreign Commercial Companies
The Commercial Companies Law also covers the formation and regulation of branches and representative offices of foreign companies in the UAE and stipulates that they may be 100% foreign owned, provided a local agent is appointed.

Only UAE nationals or companies 100% owned by UAE nationals may be appointed as local agents (which should not be confused with the term "commercial agent"). Local agents - also sometimes referred to as sponsors -- are not involved in the operations of the company but assist in obtaining visas, labour cards, etc and are paid a lump sum and/or a percentage of profits or turnover. In general, branches and offices of foreign commercial companies are not licensed to engage in importing activity except for re-export or in the case of products of a highly technical nature.

To establish a branch or representative office in Dubai, a foreign commercial company should proceed as follows:

Apply for a license from the Ministry of Economy and Commerce, submitting an
agency agreement with a UAE national or 100% UAE owned company. Before
issuing the licence, the Ministry will:

forward the application to the Department of Economic Development to obtain the approval of the Dubai government;

forward the application specifying the activity that the office or branch will be
authorised to undertake in the UAE, to the Federal Foreign Companies
Committee for approval;

Once this has been done, the Ministry of Economy and Commerce will issue the required Ministerial licence specifying the activity to be practiced by the foreign company;

The branch or office should be entered in the Economic Department's Commercial Register, and the required licence will be issued;

The branch or office should also be entered in the Foreign Companies Register of the Ministry of Economy and Commerce;

Finally the branch or office should be registered with the Dubai Chamber of Commerce and Industry. read more

+ Branches and Representative Offices of Foreign Professional Companies
Branches and representative offices of foreign professional firms may be 100% foreign owned provided UAE nationals or 100% UAE owned companies are appointed as local agents. Such agents are not involved in the operations of the firm but assist in obtaining visas, labour cards etc and are paid a lump sum as remuneration. The Department of Economic Developmentt is the authority in charge of licensing such branches or representational offices. read more

+ Professional Firms
In setting up a professional firm, 100% foreign ownership, sole proprietorships or civil companies are permitted. Such firms may engage in professional or artisan activities but the number of staff members that may be employed is limited. A UAE national must be appointed as local service agent, but he has no direct involvement in the business and is paid a lump sum and/or percentage of profits or turnover. The role of the local service agent is to assist in obtaining licences, visas, labour cards, etc.

+ Setting up Business in the Jebel Ali Free Zone
The Jebel Ali Free Zone was established in 1985 with the specific purpose of facilitating investment. Accordingly, the procedures for setting up in the zone are relatively simple.
While Jebel Ali was established to complement and contribute to Dubai's growth and development, its legal status is quite distinct. Companies operating there are treated as being "offshore", or outside the UAE for legal purposes.
The option of setting up in Jebel Ali is therefore most suitable for companies intending to use Dubai as a regional manufacturing or distribution base and where most or all of their turnover is going to be outside the UAE.

Jebel Ali Free Zone Incentives

100% foreign ownership;

Exemption from all import duties;

100% repatriation of capital and profits;

Freedom from corporate taxation, as applied throughout Dubai, with the added bonus of a renewable 15 year guarantee in the Free Zone; Abundant inexpensive energy; Simple and efficient recruitment procedures ensuring the availability of a competitive skilled and experienced workforce;

A high level of administrative support from the Free Zone Authority.

Licences
Companies approved for operation in Jebel Ali Free Zone will be granted one of the following types of licences: Trading, Industrial, Service or National Industrial. These licences are renewable annually for as long as the company holds a valid lease from the Free Zone Authority.

Trading licences will be granted to companies holding a valid licence issued by the Dubai Economic Department or an equivalent authority in the UAE, and to companies incorporated outside the UAE. In each case, the permitted activities on the Free Zone licence must conform to those on the existing licence. Trading licences are also issued to Free Zone Establishments (FZE).

Industrial licences are issued to companies incorporated outside the UAE and to Free Zone Establishments.

Service licences are only granted to companies holding a valid UAE licence.

National Industrial licences are issued to industrial companies registered within or outside the UAE, provided they meet the conditions of having at least 51% AGCC equity and their local production accounting for at least 40% value added. Such companies must obtain the provisional approval of the UAE Ministry of Finance and Industry. A National Industrial licence grants its holder the same rights as those of national and AGCC companies, and products exported to AGCC states will be exempted from customs duties.

If a company wishes to practice more than one of the above mentioned activities, it must obtain a separate licence for each category of activity.
Companies holding a Free Zone licence are permitted to operate in the Jebel Ali Free Zone and outside the UAE. Operation within the UAE can be undertaken either by a commercial agent, representative, distributor, or the mother company licensed by the relevant UAE authority. Any company holding a Free Zone licence can itself purchase goods or services within the UAE. read more

+ Setting Up a Branch of a Foreign Company
Any company wishing to set up a project in Jebel Ali Free Zone must first complete a simple questionnaire. From the information provided, the Free Zone Authority can make a first assessment of whether the company's needs can be met.
After consideration of this questionnaire, the company will be provided with:

A licence application including an appendix with details of the documents required concerning the company's legal status;

A proforma of information required for planning; and

A consumer request for electricity supply.

On receipt of these documents, the Free Zone Authority will consider the proposal. If provisional approval is given, the company will be asked to prepare and submit the documents called for in the appendix to the licence application.
After the checking of these documents, a meeting will be called to discuss and finalise the project details. If everything is satisfactory, the Authority will issue conditional approval for the project. Thereafter, a lease agreement and, if required, a personnel secondment agreement will be prepared by the Authority for signature by the company.

At the time of signing, the applicant will be required to provide the insurance policies called for in the agreements and should pay the agreed rental and licence fee prior to collection of the licence.

If the company wishes the Free Zone Authority to sponsor employees on its behalf, applications for entry permits may be submitted once the licence has been issued. The bank guarantee called for in the personnel secondment agreement will be required at this stage together with visa charges.

If the company's project involves the erection of a structure, detailed plans must be submitted after the lease has been signed. When the plans have been agreed, a building permit will be issued.

Administrative work, such as importing equipment or engaging labour for installation of equipment, may proceed in parallel with construction work. But application for entry permits for operatives to be sponsored by the Free Zone Authority will not normally be accepted until a completion certificate for the construction has been issued.

+ Joint Venture Companies
A joint venture is a contractual agreement between a foreign party and a local party licensed to engage in the desired activity. The local equity participation in the joint venture must be at least 51%, but the profit and loss distribution can be prescribed. There is no need to license the joint venture or publish the agreement. The foreign partner deals with third parties under the name of the local partner who - unless the agreement is publicised - bears all liability.

In practice, joint ventures are seen as offering a suitable structure for companies working together on specific projects.

+ Public and Private Shareholding Companies
The Law stipulates that companies engaging in banking, insurance, or financial activities should be run as public shareholding companies. Foreign banks, insurance and financial companies, however, can establish a presence in Dubai by opening a branch or representative office.

Shareholding companies are suitable primarily for large projects or operations, since the minimum capital required is Dh. 10 million (US$ 2.725 million) for a public company, and Dh. 2 million (US$ 0.545 million) for a private shareholding company. The chairman and a majority of directors must be UAE nationals and there is less flexibility of profit distribution than is permissible in the case of limited liability companies.

+ Setting Up a Free Zone Establishment
A Free Zone Establishment - or FZE - is an establishment formed and registered in Jebel Ali and regulated solely by the Free Zone Authority.
Such establishments must have a capital of at least Dh 1 million and liability will be limited to the amount of paid-up capital. A FZE need only have a single shareholder and is an independent legal entity.

Any company, organisation or individual wishing to form a Free Zone Establishment must submit a completed application form to the FZE Department of the Free Zone Authority. A decision on whether permission has been granted will be given within 30 days of receipt of the application and any other information and documentation required.

If permission is granted, the Authority will record all relevant details in the FZE Register and issue a Certificate of Formation. This will specify the date of registration after which the FZE will be free to conduct any such business as is permitted in its Special Licence.

DMCC (Dubai Multi Commodities Centre) Business Activities List (click here)
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NOTE: GCC nationals can set-up business in Dubai without local partner as a sole proprietorship. Partnership with foreigners is subject to the following conditions:
GCC nationals and foreigners can form partnerships without Emirati sponsorshipDubai has allowed partnerships between GCC investors and foreigners without Emirati sponsorship, on condition that investors finance projects through capital inflows. GCC nationals can have foreign business partners without third local party in Dubai for any project worth a minimum of Dh10 million and based on foreign knowledge and finance.

Investments should come under the categories of enabled sectors like industrial, services, tourism or other businesses that add critical value to the emirate's economy.

Another compulsory condition for this new initiative is that investors move the business headquarters to Dubai and engage experienced professionals. One more of these businesses conditions is there should focus on the quality of the employees rather than quantity. All workers should fall under the skilled worker category.

However, such new businesses can't be set up before submitting a concrete business proposal to be approved by the DED committee.

Approvals for starting these businesses is speedy and won't take more than two weeks. read more

+ DED Branches
Head Office: Business Village
Near Clock Tower
Deira, Dubai
Tel:04-4455196

Tel: 04-4455006 (VIP Section)

Al Tawar
Al Tawar Centre, First Floor, Qusais, Deira, DubaiTel: 04-6013333
Dubai MallDeira, Dubai
Tel: 04-3827709TECOM Branch
(To register licenses in TECOM area)
Dubai
Tel: 04-3754115

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Are you planning to Set-up your business in Dubai? Call us for Setting up new business, LLC Formation, Amendment in existing license, PRO Service and Translation. +971 55-273 2295, 055-345 7829, 04-239 1302 or mail your queries to visaprocess.ae@gmail.com

Limited Liability Company and Professional License in Dubai

Limited Liability Company (L.L.C)

A Limited Liability Company (L.L.C) is a recognized legal company formation structure in Dubai. The local sponsor will usually hold a 51% stake in your company and you will hold the 49% stake in the company. There are some business activities such as banks or money-exchange firms that require a higher percentage of holding by the local UAE national sponsor and these are dictated by the Dubai authorities from time-to-time.

The role of the Local Sponsor in a Dubai LLC

In a Dubai LLC or Dubai Limited Liability Company a local UAE sponsor is therefore a partner in your business. In technical terms he is a director on your company's board. However, this does not mean that you do not have management control of your Dubai business. There are a lot of businesses in Dubai where the local UAE sponsor plays an active role in the day-to-day running of the business for a percentage of the profits.

Silent Partner

However, a larger portion of Dubai Limited Liability Companies use the local UAE sponsor as a "silent partner." In this arrangement, the local UAE sponsor is usually paid an annual "sponsorship fee" in return for giving up management control of the company to the foreign investor. However, legally, the local UAE sponsor still holds a majority stake in your business. Dubai Professional License
A Dubai Professional License or Dubai Services License is a type of company formation structure in Dubai whereby the foreign investor or foreign owner has 100% ownership of the company. It is compulsory to appoint a local UAE sponsor for this type of company also, with the only exception being that the local UAE sponsor does not own any equity in the company.

Preferred Method with 100% Foreign Ownership

A Dubai Professional License is the preferred method of incorporation for several businesses where the structure of the business and the activity of the business are allowed by the Dubai Government. If you own 100% of your company, it brings security to your investments in Dubai. This type of Dubai company structure and Dubai company formation is limited to only certain business activities.
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BUSINESS SET-UP IN UAE

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+ Free Trade Zones in UAE

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Are you planning to Set-up your business in Dubai? Call us for Setting up new business, LLC Formation, Amendment in existing license, PRO Service and Translation. +971 55-273 2295, 055-345 7829, 04-239 1302 or mail your queries to visaprocess.ae@gmail.com

Setting up a business in Dubai

Call us for your Business set-up, family visa, maid visa, parents visa, Certificate attestation, Translation....requirements in Dubai.

First Gate Business Service

Al Nahda-2, Dubai, UAE.

00971-55 273 2295, 055-345 7829, 04-239 1302

www.visaprocess.ae | visaprocess.ae@gmail.com

In Dubai, the authorities have deliberately sought to create an environment which is well ordered without being unduly restrictive. As a result, Dubai offers businessmen operating conditions that are among the most liberal and attractive in the region.

There are many options open to international companies seeking to establish a business relationship with Dubai.

Having a presence can provide considerable business advantages in the Middle East. Businessmen in the region prefer to deal with someone they know and trust and personal relationships are much more important in doing business in the Arab world than they are in western Europe or America.

+ Licensing
The basic requirement for all business activity in Dubai is one of the following three categories of licences:

Commercial licences covering all kinds of trading activity;
Professional licences covering professions, services, craftsmen and artisans;
Industrial licences for establishing industrial or manufacturing activity.

These licences are all issued by the Dubai Department of Economic Development. However, licences for some categories of business require approval from certain ministries and other authorities: for example;

+ Banks and financial institutions from the Central Bank of the UAE;
+ Insurance companies and related agencies from Insurance Authority;
+ Manufacturing license; from the Ministry of Finance and Industry;
+ Pharmaceutical and medical products from the Ministry of Health;
+ Contracting and Building Maintenance and some other activities from Municipality (click here for the list of activities required Municipality Approval);
+ Transportation and vehicle rental activities from Road and Transport Authority (click here for the list of activities required RTA approval);
+ Printing, publishing and advertising activities from National Media Council;
+ Cargo Clearing, Cargo packaging, Canal dredging contracting and Fishing cages manufacturing a
ctivities from Dubai Maritime City;
+ Travel and tourism activities (now direct approval from DED. No need approval from Department of Tourism and Commerce Marketing DTCM).
+ Gymnasium Club activity from Dubai Sports Council.
+ Social Club registration and licensing to be completed from Community Development Authority.
+ Tents, awnings and Tarpaulin manufacturing from Environment Protection Section of Dubai Municipality.

+ Car Wash License is issued only in locations where there is a petrol filling station. This will need an agreement with the said oil company to lease the space at their filling station. Other norms on environment protection and safety have to be followed as per the standards prescribed.

More detailed procedures apply to businesses engaged in oil or gas production and related industries.

Practicing some trade activities (e.g. jewellery and insurance) requires the submission of a financial guarantee issued by a bank operating in Dubai.

In general, all commercial and industrial businesses in Dubai should be registered with the Dubai Chamber of Commerce and Industry.

Tourism CompaniesFor Inbound Tourism Dh100,000 to be deposited in Bank
For Outbound Tourism Dh200,000 to be deposited in Bank
These deposits are irrevocable till the license cancelled.

Travels
For Travel Agency Dh100,000 to be deposited at Department of Tourism & Commerce Marketing. This deposit is irrevocable till the license is cancelled.

Building Contracting CompaniesFor Building Contracting Company License, Dh10,000 to be extra at the Department of Economic Development when the license issued first time.

General TradingFor General Trading License, Dh15,000 to be extra at the Department of Economic Development when the license issued first time.
Customs Broker
Dh50,000 to be deposited at Dubai Customs. This deposit is irrevocable till the license is cancelled.

RTA Activities (following fees to be paid for RTA initial approval)
Rent a Car: Dh5000
Bus Rental: Dh1000
Passenger Transport by rented Buses: Dh1000

Telephones & Telecommunications Equipment Trading
Dh5500 to be paid at Telecommunications Regulator Authority (TRA). This is one time fee.

Security Service: Property guard & Surveillance Services, Party security & private guarding services
Initial approval from Department of Protective Systems, Dubai. Tel. 04-2048312

Oilfield & Natural Gas related activitiesInitial approval from Ruler's Court

Money Exchange Initial approval from Central Bank of UAE and Department of Protective Systems

Jewelry, Mobile SIM Card Trading, Stamp & Seal MakingInitial approval from Department of Protective Systems

Supermarket: For supermarket, 2000 square feet area is required.

Electrical Fitting Contracting: minimum 360 square feet office area is required.

Cafeteria/Coffee ShopMinimum 175 square feet kitchen area is required.

To set-up your business, to prepare your DED related forms, court agreements andamendments, call: Qusais (Al Nahda-2): 055 273 2295, 055-345 7829

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Street Food Truck License in Dubai is controlled by Dubai Municipality

Only ready-made meals and fry-ups are allowed to be served by food trucks.

Get No Objection Permit from Permits and Applied Nutrition section at Dubai Municipality to conduct this activity.

The kitchen area in the vehicle must be suitable for the permitted activities. The floors, walls and ceilings should be made of smooth materials; they should be easy to clean, non-absorbent of water, fire-resistant, light-coloured, non-toxic and without cracks.

Food trucks must also provide appropriate ventilation and lighting.

There should also be a double sink for washing small equipment that is situated close to the preparation area.

It is also required to provide sufficient and appropriate places for storing one-time use packaging materials, and the equipment should be conveniently distributed inside the vehicle, so as to separate the various operations to prevent cross-contamination. It is not allowed to prepare raw materials, thawed meat, poultry and fish in the mobile truck.

The activity of food trucks should be limited to heating operations, simple barbecues and fry-ups for ready-made meals like burgers, sausages and French fries.

It is not allowed to clean and wash the vegetables in the mobile trucks, and all vegetables must be sorted, cleaned, sterilised and stored in clean covered containers outside the vehicle, in a licensed and secure place in order to avoid cross-contamination.
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Minimum area required for a normal commercial/professional shop/office: 200 square feet.

Ownership Requirements

Fifty-one per cent participation by UAE nationals is the general requirement for all UAE established companies except:

Where the law requires 100% local ownership;
In the Jebel Ali Free Zone;
In activities open to 100% AGCC ownership;
Where wholly owned AGCC companies enter into partnership with UAE nationals;
In respect of foreign companies registering branches or a representative office in Dubai;
In professional or artisan companies (eg. consulting, educational service) where 100% foreign ownership is permitted.

Legal Structures for Business
In the past, each emirate followed its own procedures governing the operations of foreign business interests. In practice, however, Dubai and the other emirates followed the same general system, whereby foreign companies operated in one of three ways: with a local sponsor, through a partnership with a UAE national or company, or through a private limited company or public shareholding company incorporated by Ruler's decree.

The Federal Law stipulates a total local equity of not less than 51% in any commercial company and defines seven categories of business organisation which can be established in the UAE. It sets out the requirements in terms of shareholders, directors, minimum capital levels and incorporation procedures.
The seven categories of business organization defined by the law are:

General partnership company
Partnership-en-commendam
Joint venture company
Public shareholding company
Private shareholding company
Limited liability company
Share partnership company

Limited Liability Companies
A limited liability company can be formed by a minimum of two and a maximum of 50 persons whose liability is limited to their shares in the company's capital. Such companies are recognised as offering a suitable structure for organisations interested in developing a long term relationship in the local market.

In UAE, The minimum capital requirement law was abolished on 10th August 2009. While foreign equity in the company may not exceed 49%, profit and loss distribution can be prescribed. Responsibility for the management of a limited liability company can be vested in the foreign or national partners or a third party.

The following steps are required in establishing a limited liability company in Dubai.

Select a commercial name for the company and have it approved by the Licensing Department of the Economic Department;
Get initial approval for the activity from Economic Department;
Draw up the company's Memorandum of Association and have it notarised by a Notary Public in the Dubai Courts;
Seek approval from the Department of Economic Development and apply for entry in the Commercial Register;
Once approval is granted, the company will be entered in the Commercial Register and have its Memorandum of Association published in the Ministry of Economy and Commerce's Bulletin. The licence will then be issued by the Department of Economic Development;
The company should then be registered with the Dubai Chamber of Commerce and Industry.

Trade Names that cannot be reserved: Name of country, Name of Continent, Famous regions and Towns, Coloure (blue, red etc.).
Foreign words and short words will be charged extra fee of Dh2000 per year.

Branches and Representative Offices of Foreign Commercial Companies
The Commercial Companies Law also covers the formation and regulation of branches and representative offices of foreign companies in the UAE and stipulates that they may be 100% foreign owned, provided a local agent is appointed.

Only UAE nationals or companies 100% owned by UAE nationals may be appointed as local agents (which should not be confused with the term "commercial agent"). Local agents - also sometimes referred to as sponsors -- are not involved in the operations of the company but assist in obtaining visas, labour cards, etc and are paid a lump sum and/or a percentage of profits or turnover. In general, branches and offices of foreign commercial companies are not licensed to engage in importing activity except for re-export or in the case of products of a highly technical nature.

To establish a branch or representative office in Dubai, a foreign commercial company should proceed as follows:

Apply for a license from the Ministry of Economy and Commerce, submitting an

agency agreement with a UAE national or 100% UAE owned company. Before

issuing the licence, the Ministry will:

forward the application to the Department of Economic Development to obtain the approval of the Dubai government;

forward the application specifying the activity that the office or branch will be

authorised to undertake in the UAE, to the Federal Foreign Companies

Committee for approval;

Once this has been done, the Ministry of Economy and Commerce will issue the required Ministerial licence specifying the activity to be practiced by the foreign company;

The branch or office should be entered in the Economic Department's Commercial Register, and the required licence will be issued;

The branch or office should also be entered in the Foreign Companies Register of the Ministry of Economy and Commerce;

Finally the branch or office should be registered with the Dubai Chamber of Commerce and Industry. read more

Branches and Representative Offices of Foreign Professional Companies
Branches and representative offices of foreign professional firms may be 100% foreign owned provided UAE nationals or 100% UAE owned companies are appointed as local agents. Such agents are not involved in the operations of the firm but assist in obtaining visas, labour cards etc and are paid a lump sum as remuneration. The Department of Economic Development is the authority in charge of licensing such branches or representational offices. read more

Professional Firms
In setting up a professional firm, 100% foreign ownership, sole proprietorships or civil companies are permitted. Such firms may engage in professional or artisan activities but the number of staff members that may be employed is limited. A UAE national must be appointed as local service agent, but he has no direct involvement in the business and is paid a lump sum and/or percentage of profits or turnover. The role of the local service agent is to assist in obtaining licences, visas, labour cards, etc.

Setting up Business in the Jebel Ali Free Zone
The Jebel Ali Free Zone was established in 1985 with the specific purpose of facilitating investment. Accordingly, the procedures for setting up in the zone are relatively simple.
While Jebel Ali was established to complement and contribute to Dubai's growth and development, its legal status is quite distinct. Companies operating there are treated as being "offshore", or outside the UAE for legal purposes.
The option of setting up in Jebel Ali is therefore most suitable for companies intending to use Dubai as a regional manufacturing or distribution base and where most or all of their turnover is going to be outside the UAE.

Jebel Ali Free Zone Incentives
100% foreign ownership;
Exemption from all import duties;
100% repatriation of capital and profits;
Freedom from corporate taxation, as applied throughout Dubai, with the added bonus of a renewable 15 year guarantee in the Free Zone; Abundant inexpensive energy; Simple and efficient recruitment procedures ensuring the availability of a competitive skilled and experienced workforce;
A high level of administrative support from the Free Zone Authority.

Licences
Companies approved for operation in Jebel Ali Free Zone will be granted one of the following types of licences: Trading, Industrial, Service or National Industrial. These licences are renewable annually for as long as the company holds a valid lease from the Free Zone Authority.
Trading licences will be granted to companies holding a valid licence issued by the Dubai Economic Department or an equivalent authority in the UAE, and to companies incorporated outside the UAE. In each case, the permitted activities on the Free Zone licence must conform to those on the existing licence. Trading licences are also issued to Free Zone Establishments (FZE).
Industrial licences are issued to companies incorporated outside the UAE and to Free Zone Establishments.
Service licences are only granted to companies holding a valid UAE licence.
National Industrial licences are issued to industrial companies registered within or outside the UAE, provided they meet the conditions of having at least 51% AGCC equity and their local production accounting for at least 40% value added. Such companies must obtain the provisional approval of the UAE Ministry of Finance and Industry. A National Industrial licence grants its holder the same rights as those of national and AGCC companies, and products exported to AGCC states will be exempted from customs duties.

If a company wishes to practice more than one of the above mentioned activities, it must obtain a separate licence for each category of activity.

Companies holding a Free Zone licence are permitted to operate in the Jebel Ali Free Zone and outside the UAE. Operation within the UAE can be undertaken either by a commercial agent, representative, distributor, or the mother company licensed by the relevant UAE authority. Any company holding a Free Zone licence can itself purchase goods or services within the UAE. read more

Setting Up a Branch of a Foreign Company
Any company wishing to set up a project in Jebel Ali Free Zone must first complete a simple questionnaire. From the information provided, the Free Zone Authority can make a first assessment of whether the company's needs can be met.
After consideration of this questionnaire, the company will be provided with:
A licence application including an appendix with details of the documents required concerning the company's legal status;
A proforma of information required for planning; and
A consumer request for electricity supply.

On receipt of these documents, the Free Zone Authority will consider the proposal. If provisional approval is given, the company will be asked to prepare and submit the documents called for in the appendix to the licence application.

After the checking of these documents, a meeting will be called to discuss andfinalise the project details. If everything is satisfactory, the Authority will issue conditional approval for the project. Thereafter, a lease agreement and, if required, a personnel secondment agreement will be prepared by the Authority for signature by the company.

At the time of signing, the applicant will be required to provide the insurance policies called for in the agreements and should pay the agreed rental and licence fee prior to collection of the licence.

If the company wishes the Free Zone Authority to sponsor employees on its behalf, applications for entry permits may be submitted once the licence has been issued. The bank guarantee called for in the personnel secondment agreement will be required at this stage together with visa charges.

If the company's project involves the erection of a structure, detailed plans must be submitted after the lease has been signed. When the plans have been agreed, a building permit will be issued.

Administrative work, such as importing equipment or engaging labour for installation of equipment, may proceed in parallel with construction work. But application for entry permits for operatives to be sponsored by the Free Zone Authority will not normally be accepted until a completion certificate for the construction has been issued.

Joint Venture Companies
A joint venture is a contractual agreement between a foreign party and a local party licensed to engage in the desired activity. The local equity participation in the joint venture must be at least 51%, but the profit and loss distribution can be prescribed. There is no need to license the joint venture or publish the agreement. The foreign partner deals with third parties under the name of the local partner who - unless the agreement is publicised - bears all liability.

In practice, joint ventures are seen as offering a suitable structure for companies working together on specific projects.

Public and Private Shareholding Companies
The Law stipulates that companies engaging in banking, insurance, or financial activities should be run as public shareholding companies. Foreign banks, insurance and financial companies, however, can establish a presence in Dubai by opening a branch or representative office.

Shareholding companies are suitable primarily for large projects or operations, since the minimum capital required is Dh. 10 million (US$ 2.725 million) for a public company, and Dh. 2 million (US$ 0.545 million) for a private shareholding company. The chairman and a majority of directors must be UAE nationals and there is less flexibility of profit distribution than is permissible in the case of limited liability companies.

Setting Up a Free Zone Establishment
A Free Zone Establishment - or FZE - is an establishment formed and registered in Jebel Ali and regulated solely by the Free Zone Authority.
Such establishments must have a capital of at least Dh 1 million and liability will be limited to the amount of paid-up capital. An FZE need only have a single shareholder and is an independent legal entity.

Any company, organisation or individual wishing to form a Free Zone Establishment must submit a completed application form to the FZE Department of the Free Zone Authority. A decision on whether permission has been granted will be given within 30 days of receipt of the application and any other information and documentation required.

If permission is granted, the Authority will record all relevant details in the FZE Register and issue a Certificate of Formation. This will specify the date of registration after which the FZE will be free to conduct any such business as is permitted in its Special Licence.

DMCC (Dubai Multi Commodities Centre) Business Activities List (click here)
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NOTE: GCC nationals can set-up business in Dubai without local partner as a sole proprietorship. Partnership with foreigners is subject to the following conditions:

GCC nationals and foreigners can form partnerships without Emirati sponsorship

Dubai has allowed partnerships between GCC investors and foreigners without Emirati sponsorship, on condition that investors finance projects through capital inflows. GCC nationals can have foreign business partners without third local party in Dubai for any project worth a minimum of Dh10 million and based on foreign knowledge and finance.

Investments should come under the categories of enabled sectors like industrial, services, tourism or other businesses that add critical value to the emirate's economy.

Another compulsory condition for this new initiative is that investors move the business headquarters to Dubai and engage experienced professionals. One more of these businesses conditions is there should focus on the quality of the employees rather than quantity. All workers should fall under the skilled worker category.

However, such new businesses can't be set up before submitting a concrete business proposal to be approved by the DED committee.

Approvals for starting these businesses is speedy and won't take more than two weeks.
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Related Pages
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BUSINESS SET-UP IN UAE

+ General Trading License in Dubai (Five Minutes Procedures)

+ How to Set up a Business in Dubai?

+ LLC Formation in Dubai
+ Management Skills Placement Test for Consulting License in Dubai
+ ദുബൈയിലെ ബിസിനസ് സാധ്യതകള്‍

+ Free Trade Zones in UAE