Opening up the Market in the United Arab Emirates – Forming a Private Company
8th October, 2018
This is the Fourth in a series of 6 articles with regards to establishing a business in the United Arab Emirates.
Forming a Private Company
Limited liability companies (LLCs) are the most common form of company within the UAE. The formation of an LLC is undertaken under the Commercial Company Law in respect of an onshore incorporation and is incorporated under regulations governed by the Department of Economic Development.
The first step is to actually consider the business activity to be undertaken by the LLC. The business listings are available from the Department of Economic Development and there are some 2,000 business activities available for selection.
The type of business activity will affect the minimum share capital requirements and indeed the ownership structure of the LLC, so choosing correctly and accurately is important.
It should be noted that LLCs are used to undertake industrial or commercial business but cannot be used in relation to the provision of professional businesses other than banking, insurance or investment. Therefore, if the business is considering setting up a service company, such as a law firm, auditing, accountancy or other consulting service, an LLC would not be applicable.
The formation process for an onshore LLC consists of two main stages.
The first is to obtain initial approval and the second is to obtain the relevant licence from the Department of Economic Development.
It is necessary to complete and lodge the registration and licencing applications as well as proof of any reserved trade names. This can be done as an online application to the Department of Economic Development.
You may also need to provide approvals issued by other government authorities depending on the business activity which you intend to pursue.
All documentation will need to be accompanied by the company’s board of directors resolution to subscribe for new shares in the company and this will need to be attested by a UAE Embassy/Consulate or by a Gulf Co – Operation Consulate/Embassy Official and sent in with the final submission.
The fees for lodging the final application vary depending on the business activity of the LLC and are paid to the local government office.
The main document for consideration in an incorporation of an LLC under the Commercial Company Law is the Memorandum of Association.
There is no standard form of memorandum issued under the Commercial Company Law. It will, however, include the company’s name, the company’s headquarters, the objects of the company, the names of the shareholders (including their nationality, place of residence and the number of shares held by them), together with the names of the directors and the company’s commencement date and unlike some jurisdictions, termination date.
The Department of Economic Development does provide a service for preparing a Memorandum of Association if any party wishes to make use of this.
The time taken for incorporation is typically six to ten weeks.
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Corporate & Commercial Partner