UAE has become a center of attraction for foreign investors over the past few decades and now it is a dream of every businessman to start a business in UAE.
Procedures, timelines, languages, costs and requirements can differ wildly – not only from country to country but also in different states and provinces. Forming a company in UAE can be very difficult if you are unaware of the legal formalities. It requires approvals from various government departments and a single mistake will result in a long legal process along with financial loss.
Professionals of RVG are expert in company formations. We offer a full spectrum of company formation services and are seasoned experts in incorporating companies. All our packages are designed to ensure that your company formation is completed in the most efficient manner possible. With over 12 years of experience, our team will make sure that you choose the correct jurisdiction and license type for your company.
In UAE, a company can be formed in any of the following three jurisdictions: Mainland, Free Zone and Offshore.
A mainland company is an onshore company and license to establish the entity is issued by the Department of Economic Development (DED) of the respective emirate. A mainland business is allowed to do business in the local UAE market as well as outside UAE without any restrictions. It is necessary to understand the term “Mainland” as per DED’s definition in order for an entrepreneur to take a decision to register a Mainland Company in UAE. Different types of license under mainland are:
- Professional license
- Commercial license
- Industrial license
- Tourism license
In commercial & industrial licenses, 51% shares is owned by an UAE National and 49% shares is for the expat partner. In professional license, 100% shares is owned by expat partner and an UAE national is appointed as a Local Service Agent.
Following are the facts about Mainland Companies in UAE.
- These companies are regulated under Federal Law No. 2 of 2015 which came in to effect on 1 July 2015.
- No expatriate can own more than 49% shares in any commercial limited liability company (LLC).
- GCC national can own 100% shares in any company.
- GCC companies or individual GCC national can make partnership with UAE national.
- For certain business activities, as per law only UAE national can own 100% shares.
- Business activities covered under professional category can be 100% owned by expat / foreigners but it is mandatory to have UAE national as a service agent.
Free Zone Company
Establishing a business entity in one of the UAE’s many Free trade zones (FTZs) can be an attractive option for foreign investors. UAE has over 37 FTZs of which more than 30 are located in Dubai. The main attraction for setting up a company in a free zone is that there is no UAE national shareholding required. All free zones in UAE offer the following incentives:
- 100% foreign ownership of the enterprises
- 100% import and export tax exemptions
- 100% repatriation of capital and profits
- No currency restrictions
- Corporate tax exemption for 15 years, renewable for an additional 15 years
- No personal income taxes
UAE Free Zone companies can only operate within the free zone boundaries and are generally limited to performing solely those activities listed in their license.
UAE Offshore company registration is a very popular method of doing business in the Middle East region. In UAE there are three offshore jurisdictions – Dubai (Jebel Ali Offshore Company) Ras Al Khaimah and Ajman. They offer similar services but serve different strategic goals of offshore company registration.
The Jebel Ali Offshore Company is an International Business Crown/holds the only offshore vehicle that is permitted to own / hold real estate in the Emirate of Dubai. JAFZA Offshore operated under JAFZA Free zone.
The RAK Offshore and the RAK International Company (RAKICC) are International Business Companies. They provide a flexible and credible option for foreign investors to register an offshore company in UAE without the need to establish a physical presence in the UAE. RAKICC is also allowed to hold the freehold property in Dubai.
UAE Offshore companies offer the following benefits:
- No Corporate tax
- 100% foreign ownership
- 100% Capital and Profit Repatriation
- UAE Bank Account
- International Invoicing
- Limited Liability Company
- Absolute Privacy and Confidentiality
- Ability to maintain multi-currency Bank accounts in the UAE
- Virtual office facilities available in the UAE
Legal form of business
The common legal forms of business in Mainland, Free zone and Offshore formation in the UAE are:
- Sole proprietorship
- Civil Company
- Limited Liability Company(LLC)
- Private Share Holding Company
- Public Share Holding Company
- Branch of Foreign Companies/Representative Office
- Branch of GCC companies
- Branch of Free zone company
- Branch of Dubai based companies
- Branch of UAE based companies
Under Law of UAE, there are five types of business establishments applicable to foreign entities interested in establishing their presence in the UAE. UAE government has implemented wide range of economic and administrative policies which has made UAE an attractive business destination.
Steps to set up a new company in the UAE
To start a business in UAE, follow the steps below:
- Select a Business.
- Select the Jurisdiction.
- Hire an experienced consultant company
- Find a local sponsor to act as the service agent for your business in the UAE.
- Decide the Company Structure/Legal Form.
- Collect the documents required for initial approvals.
- Get approval for your Company Name and Activity.
- Apply for your Trade License.
- Register your Company.
- Get your External Approvals.
- Draft Your Memorandum of Association.
- Sign the MOA and lease agreement in front of a public notary.
- Obtain location and inspection approval from the Municipality.
- Obtain the initial and special approvals.
- Collect Your Trade License.
If you need any advice related to business setup in UAE, RVG is always there to help you.
Documents requirement for initial approval
In order to proceed further for initial approval from DED, consultant will give you the list of documents required based on the business activity selected by you. Majorly the basic documents are as follows:
- Registration & licensing Application form & proof of reserved trade name.
- Photocopy of the applicants identification.
- Photocopy of applicant’s naturalization identification
- NOC from the applicant’s current sponsor.
- For applicants aged under 21, permission from the court can be obtain for them to practice business.
- Depending on the type of company you willing to setup, you may be asked to present some additional documents as well.
Company Liquidation :
Liquidation is the method by which a LLC company (or a part of a company), sole establishment, Dubai free zone company or institution closes its operation and therefore the assets and property of the corporate or institution is distributed to creditors and shareholders (owners) of the UAE registered Company.
Types of Liquidation
Company liquidation may be of the following two types:
1. Voluntary Liquidation
In case of voluntary liquidation, the shareholders of a company will decide to wind up the company as they have no money to pay for creditors. In this type of liquidation, priority is given to the creditors.
2. Compulsory Liquidation
Compulsory liquidation is a type of company liquidation which is put forward by court order. Here, the assets of the company are distributed to the creditors and contributors based on the priority of claims.
Once you plan to close your business, the government entities should be notified of the same, so as to avoid any accumulated fines and penalties.The liquidation of company in Dubai, UAE becomes inevitable when a corporation don’t have liquid funds to hold on day to day transaction of the company, creditors aren’t being paid or company commits some serious offense, and a regulatory authority or agency in UAE of Free Zone Authority accountable for the relevant sector files a suit for the effecting the operations of the corporate.
RVG services will include the following:
- Initiating the winding up process
- Publishing the liquidation notice.
- Preparation of legal documents
- Preparation of Company board resolutions
- Liquidators appointment acceptance
- application and submission
- Arrange clearance letter from DEWA
- Arrange clearance letter from Etisalat
- Arrange clearance letter from Municipality
- Arrange clearance letter from Custom
- Bank account closure and Bank No liability Certificate
- Audit for the financial statements for liquidation of company
- Overview of Collection & Distribution of Company Assets
- No Liability certificate
- Employees visa cancellation
- Labor card cancellation and clearance certificates
- Immigration card cancellation and clearance certificate
- Liquidation report preparation and submission
- Final cancellation letter
- Partner Visa Cancellation
Liquidation of company is a very time consuming process in UAE. At RVG, we help our clients in following the procedures to wind up a company in UAE. RVG Experts will help you in collecting all legal documents and you will not need to worry about any procedural compliance.
In short, only you have to appoint us as your company liquidator and our experts will give you license cancellation certificate.
- What happens when a company goes into insolvency?
When a company decides to go into liquidation, all of its assets are put into auction in order to repay its creditors. Its name is also removed from registries and the business is closed
- What are the duties of a company liquidator?
Company liquidators have numerous duties and responsibilities to successfully wind up a company, including:
- Open an account under the company’s name to deposit funds that can be reclaimed from selling off company assets;
- Take inventory of company assets and liabilities;
- Prioritize outstanding debts and divide assets between various shareholders;
- Repay loan taken;
- Represent the business in courts, if litigation is filed;
- Provide a report declaring assets of the business and settlement of liabilities
1) Is it mandatory to publish the liquidation notice?
Yes, it is mandatory to publish the liquidation notice in any 2 newspapers (one in Arabic and the other in English).
2) How long does it take to liquidate a company in Dubai?
Including the notice period, it may take 60-90 days to liquidate a company in Dubai.
3) What is the normal notice period for liquidation?
Liquidation period depends on the licensing authorities. For mainland companies, it is normally 45 days. For some free zones it is 15/21 days. There is a 45-day notice required for certain free zones like Dubai Creative Clusters Authority, etc.
4) Does a company need to cancel all company visas during liquidation?
Yes, a company must cancel all visas and get clearance letter from Immigration Deportment to complete the liquidation process. The company has to pay end-of-service benefits and other statutory dues, such as unpaid leave salary, air ticket, unpaid salary, etc. to the employees.
5) Does a company need to de-register from the FTA during the liquidation process?
If already registered under VAT with the FTA, a company needs to de-register during the liquidation process.