Starting up your own Business in the United Arab Emirates

A Member of The Emirates Network

Home: Living Here: Starting up your own Business in the UAE

Whatever type of business you are setting up, you will need a license to do business in the United Arab Emirates. The three types of licenses are -

1. Commercial license (all kinds of trading)
2. Industrial license (manufacturing or industrial)
3. Professional license (professions, services and craftsmen)

Before starting to setup a company, you need to decide how the ownership of the company will be. The two types of business ownership in the UAE are discussed below.

Partnership Ownership
In this type of ownership, 51% of the company will be owned by a UAE national and the other 49% you may own, with the business being situated anywhere in the UAE. There are seven categories of business organisation that can be established, which are - general partnership company, partnership-en-commendam, joint venture company, public shareholding company, private shareholding company, limited liability company and share partnership company. General partnership companies are limited only to UAE nationals, while the establishment of partnership-en-commendam and share partnership companies are not presently encouraged.

Public and Private Shareholding Companies
By law, banking, insurance, and financial activities should be setup as public shareholding companies, but for foreign companies in this category can setup a presence by opening a branch or representative office.

Large projects or operations are suitable to be shareholding companies as the minimum capital requirement for a public shareholding company is Dhs. 10 million (US$ 2.725 million) and Dhs. 2 million (US$ 545 thousand) for a private shareholding company. This type of company must have a chairman and majority of the directors as UAE nationals and there is less flexibility of profit distribution than is permissible in the case of limited liability companies.

Joint Venture
A joint venture is a contract agreement between a UAE party and a foreign party for the engagement in a desired business. The local party in the joint venture must have at least 51% of the company, while the profit and loss distribution can be prescribed. There is no need to license the joint venture or publish the agreement. The foreign partner deals with third parties under the name of the local partner who (unless the agreement is publicised) bears all liability.

Limited Liability Companies (L.L.C.)
A limited liability company can be formed by a minimum of two and a maximum of 50 persons whose liability is limited to their shares in the company's capital. Such companies are recognised as offering a suitable structure for organisations interested in developing a long term relationship in the local market. The required amount to setup a llc is currently Dhs. 300,000 (US$ 82,000). The foreign equity in the company may not exceed 49%, profit and loss distribution can be prescribed.

Sole Ownership
In order to start up a company that is solely owned by you, requires that you setup one at one of the free trade zones throughout the UAE. The majority of IT companies have setup their middle eastern branches in the Dubai Internet City (DIC), while many media related companies have setup their branches in the Dubai Media City (DMC). A list of the various free zones in the UAE can be found here. Alternatively, expats can have a company setup by a UAE national and sign legal documents at the courts that the actual ownership of the company is for them. This agreement normally involves paying the UAE national an agreed amount of money each month or year.