A) An investor can apply online to start his/her own business on the UAE mainland within 15 minutes at the most.
- The UAE Government introduced the Bashr service to start a business. Bashr is an integrated eService, which enables investors to establish their businesses in the UAE within 15 minutes through a unified online platform.
- Abu Dhabi Business Centre provides investors with an instant licence service to start their businesses online and get the commercial licence without need to visit the service centre.
- Dubai Economy along with other Dubai government entities launched the Dubai Virtual Commercial City programme (VCC) which will enable entrepreneurs and freelancers across the world to start a virtual company in the UAE even if they do not live in the UAE
B) Staring a business in ordinary ways
Starting a business in United Arab Emirates (UAE) in ordinary ways requires a series of steps, procedures and approvals from the Economic Department and other government entities. Let us look at the investor’s journey to start a business in the UAE mainland.
Starting a business in ordinary ways involves a series of steps, including:
- Identifying a business activity
- Selecting an appropriate legal form
- Registering the trade name
- Applying for an initial approval
- Drafting a Memorandum of Association and local service agent agreement
- Select a business location
- Get additional government approvals
- Submit documents and pay fees
1) Identify business activity
Business activity is the basis for selecting the legal form and type of licence, whether industrial, commercial, professional, tourism, agricultural and occupational.
2) Select the legal form
The legal form depends mainly on the business requirements. Moreover, the legal form is basis for identifying applicable laws and regulations. Following are the legal forms available at the moment:
- General partnership
- Limited partnership
- Limited liability company (LLC)
- Public joint stock company (PJSC)
- Private joint stock company (PrJSC)
- Civil company
- Local company branch
- GCC company branch
- Foreign company branch
- Free zone company branch
- Sole establishment
- Holding companies.
Note: Each Emirates in UAE has its own list of requirements of each business activity and legal form.
3) Register the trade name
A trade name distinguishes one business from another. It also reflects the nature and the form of the business. An investor can apply for the trade name through the economic department in each emirate, through its website or mobile application by complying with various following provisions.
The trade name must:
- be followed by the legal form of the company such as: LLC, EST, PJSC, PrJSC
- not violate the public morals or the public order of the country
- be compatible with the required type of activity and the legal status of the company or business entity
- not contain names of any religion, or governing authority, nor names or logos of any external bodies
- not have been previously registered
4) Initial approval
An initial approval means that the UAE Government has no objection for the business to be established in the country. It also allows the investor to proceed with the next steps in setting up a business. It does not, however, grant the authority to run or practice the business activity.
Foreign investors must obtain the approval of the General Directorate of Residency and Foreigners’ Affairs before getting the initial approval.
Some activities require additional approvals from government entities related to that particular business before applying for the initial approval. These include activities related to legal affairs, security affairs and financial securities and commodities.
5) MOA and LSA
Depending on the legal form of a business, a completed and signed Memorandum of association (MoA) or a local service agent agreement (LSA) of the business is required. The memorandum of association is required for the following business legal forms:
- Limited partnership
- Limited liability company (LLC)
- Public joint stock company (PJSC)
- Private joint stock company (PrJSC).
6) Select a business location
All businesses in the UAE must have a physical address to operate. The business premises and location must comply with the requirements defined by the respective emirate’s Department of Economic Development, as well as the land planning regulations of the local municipalities.
Office and warehouse rental agreement must be provided. Some emirates require the agreements to be attested. In Dubai, the agreement must be registered with Ejari.
7) Get additional government approvals
In some cases, additional approvals from government entities governing certain business activities are required.
The following are examples of such activities sorted by ministry:
|driving schools, fire equipment, alarm and safety systems, used-car dealers, used auto-parts, car rental||Ministry of Interior|
|Legal activities and legal consultancy||Ministry of Justice|
|Architectural and engineering affairs||Local municipal department|
|Telecommunication activities||Telecommunications and Digital Government Regulatory Authority (TDRA)|
|Travel and tourism, general services, charter trading, ship and maritime agencies, car clubs, charter air transport and foreign company branches||Executive Council|
|Insurance activities and insurance consultancy||Ministry of Economy|
|Health-related activities||Local health departments|
|Onshore and offshore gas and oil-field services and onshore and offshore oil drilling operations||Supreme Petroleum Council|
8) Collect the business licence
After completing the above steps, investor can collect the business licence from service centres of the economic departments or through their websites.
The following documents are required for getting a licence for all legal forms:
- Initial approval receipt and all the previously-submitted documents
- Copy of the lease contract duly attested by the Real Estate Regulatory Agency (RERA) in Dubai
- Duly attested memorandum of association (for all types of companies)
- Approvals from other government entities concerned, as may be required
- Duly attested service agent contract (for civil establishments and companies that are 100% owned by non-GCC nationals), the UAE involving a local service agent.
Spectrum Auditing is an expert firm in the Company Formation and Company Liquidation process. We are registered Auditors under the Ministry of Economy UAE and also registered Tax Agent from Federal Tax Agency UAE, Dubai providing dedicated Audit, Accounting, Tax services and various Business Advisory Services complying regulatory requirements.
100% Mainland Foreign Ownership In The UAE
The UAE cabinet had recently adopted an amendment to the commercial companies act that allows for hundred per cent foreign ownership of companies in the UAE. These changes are now in effect starting from June 1 ,2021, onwards. Announcing the changes, the UAE Minister of Economy, Abdulla Bin Touq Al Marri stated, ‘The amended Commercial Companies Law aims at boosting the country’s competitive edge and is a part of UAE government efforts to facilitate doing business. The new changes were introduced by the Federal Decree-Law No. (26) of 2020 that amended some provisions of Federal Law No. (2) of 2015 on +commercial companies.
The Dubai Economy has now issued its clarifications for the procedures required for effecting the hundred per cent ownership change in accordance with the Federal Decree-Law no. 26 of 2020.
- New updates related to the hundred per cent foreign ownership:
- Hundred per cent foreign ownership has been approved for more than 1000 commercial and industrial licenses.
- No additional fees are applicable for requesting the changes to be effected on existing trade licenses.
- No additional capital is required in order to effect these changes on existing trade licenses.
- Full foreign ownership is not allowed for ‘professional licenses’ in the UAE.
- In addition to a hundred per cent foreign ownership in the mainland companies in the UAE, the branches of foreign companies in the UAE are now exempted from the requirement of appointing a ‘National Service Agent’ (NSA).
- Commercial activities for which hundred per cent foreign ownership is now allowed in the UAE include amongst others the business segments of, ‘general trading’, ‘gold’, ‘pearls’, ‘jewellery’, ‘cars’, ‘luxury watches’, ‘food’ etc.
- Industrial activities for which hundred per cent foreign ownership is now allowed in the UAE include amongst others the industrial segments of ‘construction’, ‘building materials’, ‘water production’, ‘paint’, ‘food’, ‘flooring’, ‘flooring metal’.
- With the new changes, the steps for either a reduction of the share capital of the Emirati partner or full withdrawal of the Emirati partner can be affected on the trade license of the company.
- Limited liability company can be converted to single-person ownership with limited liability structure along with hundred per cent foreign ownership.
The UAE has been at the forefront of developing innovative measures to attract the best talent and entrepreneurs to the region, the latest in a series of measures aims at liberalizing business in the UAE, where foreigners make up more than eighty per cent of the population.
Dubai had also recently introduced the ‘Virtual Company Licensed’, which allows global companies to access a regulated e-commerce platform populated by Dubai-based companies while digitally exploring new markets and investment opportunities. The Latest decision seeks to accelerate the UAE’s economic progress and to add to the gains the country has made so far. These strategic decisions enhance the investment attractiveness of the UAE and its advanced position on the global business map, while also reinforcing the competitive advantages that UAE enjoys as an ideal investment destination.
Reach us to have a frills free life in your journey in Dubai, UAE. We at Spectrum will assist you in taking care of all the legal procedures involved in the registration and de-registration of your company in the UAE. Call us today for any kind of assistance at +971 4 2699329 or email us at [email protected] to get all your queries addressed. Spectrum is your partner in your success.