Sitting at the crossroads of Africa, Europe, the Middle East, and Asia, Dubai has transformed itself from a dusty desert kingdom into a cosmopolitan emirate. By offering incentives to new businesses, the nation has created an atmosphere that is welcoming to companies, large and small. However, registering a company is complicated and needs the assistance of an experienced local lawyer.
Determine whether the company qualifies for inclusion in a free trade zone (FTZ). An FTZ company is typically a foreign company or one that operates outside the Dubai economy. These companies do not need to partner with a local national, do not pay corporate or personal taxes, and are not subject to import or export duties. FTZ companies must operate outside of Dubai but can operate within the local economy if they have a local partner. If FTZ classification is not possible, companies can only operate within the Dubai economy when they have a local partner.
Create a bank account for the company and deposit money in it. The minimum capital requirement for a Limited Liability company, which is the most popular business structure in Dubai, is AED 300,000 (USD $81,688.08 as of July 2010). Such a structure is popular because owners are only liable up to the amount they contributed and are not responsible for the entire liability of the company. Dubai also allows other business structures such as Simple Limited Partnership, where the partners are liable for the company's liabilities. A Simple Limited Partnership is open only to Dubai nationals. Another structure is the Private Joint Stock Company, which requires a minimum of three members and cannot trade shares publicly.
Register a trade name and obtain a business license from the Department of Development (DED). To register a trade name, visit the DED website and complete the name reservation application, and wait for a letter of approval. The cost to reserve a name is AED 200 (USD $54.45). To obtain the business license, select a legal structure for the company and complete the Registration & Licensing Application Form, which is available at the DED's website. The Licensing Section of the Dubai Department of Economic Development (DED) will process the application and issue the license. Both the name approval and license can be obtained within a day when completed online. If you opt to go to the DED office, the process will take longer. The licensing fee for a commercial company is AED 480 (approximately USD $131).
Notarize the company’s Memorandum of Association (MOA) at the notary public office within the DED. The MOA should be drafted by the lawyer hired to set up the business. Each clause of the Memorandum of Association will, among other things, provide information on the duties of the company's officers and directors. A skilled lawyer will ensure that the document adheres to Dubai laws. Notarization is used to indicate that the MOA meets basic legal requirements and is suitable for use when registering the business. This process will be completed in less than a day. While the cost of notarization will depend on the type of company, the maximum notary fee is AED 10,000 (USD $2,723).
Register the company by submitting the necessary documents to the Commercial Registry section of the DED. Upon approval, and payment of a fee of AED 500 (USD $136), the new company will be included on the Commercial Register and a certificate will be issued. The DED will then automatically forward the company’s information to the Ministry of Economy and Commerce for inclusion on its list of businesses. Once the company is included on the Commercial Registry, it is free to commence operations.
The Dubai government has incentives for companies in certain fields such as manufacturing. A lawyer will identify which incentives are available to your company. If your business must partner with a Dubai national, contact the American Business Council of Dubai and the Northern Emirates for assistance in finding a reputable local person to work with.
Keep in mind that Dubai law requires a Dubai national to own at least 51% of any foreign business. That Dubai national, who can be an individual or a company, does not have to contribute financially to the creation of the company. To prevent a situation where the Dubai partner could make detrimental business decisions, ensure that a lawyer creates a contract that limits the role of the Dubai partner.
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