Dubai, in the United Arab Emirates (UAE), is the leading regional trading hub; it offers access to a market of outstanding potential for overseas companies. Among its key characteristics are:
- A growing market - Dubai's imports have more than doubled since 1989; regional economic growth and liberalization is set to boost demand
- A prosperous market - strategic location at the heart of one of the world's richest regions
- A diversified market - wide import requirements; opportunities for suppliers of most products
- An accessible market - served by more than 170 shipping lines and 86 airlines
- An open market - no exchange controls, quotas or trade barriers
Unless you open your business in Dubai within one of the free trade zones, where 100% foreign ownership is permitted, the Federal Law stipulates a total local equity of not less than 51% in any commercial company and defines seven categories of business organisations which can be established in the UAE. It categorises and defines the requirements in terms of shareholders, directors, minimum capital levels and incorporation procedures. It further lays down provisions governing conversion, merger and dissolution of companies.
The seven categories of business organisations defined by the law are:
- General partnership company
- Joint venture company
- Public shareholding company
- Private shareholding company
- Limited liability company
- Share partnership company
Procedures governing the operations of foreign business interests
In practice, however, Dubai and the other emirates follow the same general system, whereby foreign companies operate 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. Since 1984, steps have been taken to introduce a codified companies law applicable throughout the UAE. Federal Law No. 8 of 1984, as amended by Federal Law No. 13 of 1988 - the "Commercial Companies Law" - and its by-laws have been issued. In broad terms the provisions of the Law are as follows: The Federal Law stipulates a total local equity of not less than 51% in any commercial company and defines the seven categories of business organization which can be established in the UAE. It sets out the requirements in terms of shareholders, directors, minimum capital levels and incorporation procedures. It further lays down provisions governing conversion, merger and dissolution of companies.
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 service agents. 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 the following documents are required:
- Company registration certificate
- Board of directors' resolution for establishing a branch
- True copy of company's memorandum / articles of association
- Power of Attorney to the representative
- Financial statements for the last two years
- Local service agency agreement
- Details of local service agent
- Company profile
Some of the principle uses for going offshore are: trading, investment, holding, financing, professional services or consultancy, patent, royalty and copyright holding, ship management and yacht owning, personal and corporate tax planning.
We can assist with the registration of International Business Companies (IBCs) or trusts in the major offshore jurisdictions. Our expertise in the British Virgin Islands (BVI) and abroad can help you in optimizing your bottom line.
The Jebel Ali Free Zone Authority (JAFZA) introduced regulations in 2003 for the establishment of Jebel Ali Free Zone Offshore Companies. The international business community can now establish offshore entities at JAFZA in line with other international offshore jurisdictions. Regulations were framed in a manner so as to deliver the convenience and efficiency of global offshore locations and maintain a high level of repute with international financial authorities.
Besides the traditional advantages of total tax and duty exemption, and a cooperative regulatory regime, offshore companies established under the Offshore Regulations can enjoy the added benefits of Dubai's reputation for commercial transparency and its forward regional location. We are also a registered agent with JAFZA offshore companies.