Company Formation

Company formation in the United Arab Emirates (UAE) involves a series of steps and considerations, given the diverse business landscape and regulatory environment. The UAE consists of seven emirates, each with its own set of rules and regulations. We, Sheikh Anwar Accounting & Auditing LLC, having vast experience in UAE, experts in this core area can help you to establishment your companies in UAE smoothly. Here is a general guide to the process of company formation in the UAE:

Types of Companies:

1. Limited Liability Company (LLC):

• Common structure for small to medium-sized businesses.
• Requires a minimum of two and a maximum of 50 shareholders.
• Shareholders are not personally liable for the company's debts.

2. Free Zone Company:

• Operates within specific free zones, each with its own regulations.
• Allows 100% foreign ownership.
• Exemptions from import and export duties.

3. Branch of a Foreign Company:

• Allows foreign companies to establish a presence in the UAE.
• Requires a local service agent, who is not a partner or shareholder but assists in obtaining licenses and permits.

4. Public Joint Stock Company (PJSC):

• Suitable for larger businesses planning to go public.
• Requires a minimum of 10 founding shareholders.
• Subject to more extensive regulatory requirements.

General Steps for Company Formation:

1. Select a Business Activity:

• Determine the type of business activity your company will be engaged in. Different activities may have varying licensing requirements.

2. Choose a Business Name:

• Select a unique and approved business name that complies with the naming conventions of the UAE.

3. Legal Structure and Ownership:

• Decide on the legal structure and ownership model. Understand the ownership restrictions, especially for LLCs operating outside free zones.

4. Find a Local Partner or Service Agent:

• If required, identify a local partner or service agent. This is necessary for certain business structures, such as a branch of a foreign company.

5. Submit Initial Approval:

• Submit the required documents to the relevant authorities for initial approval. This may include a business plan, passport copies, and other necessary paperwork.

6. Memorandum of Association (MOA) and Local Sponsorship Agreement:

• Prepare and sign the Memorandum of Association (MOA) outlining the company's details, shareholders, and activities. If required, finalize the local sponsorship agreement.

7. Office Space:

• Arrange for office space as per the legal requirements. Free zone companies often have specific office space requirements.

8. Obtain Necessary Approvals:

• Obtain approvals from relevant authorities, such as the Department of Economic Development (DED) for mainland companies or the respective free zone authority for free zone companies.

9. License Issuance:

• Once all approvals are obtained, the business license is issued.

10. Register for VAT:

• If applicable, register for Value Added Tax (VAT) with the Federal Tax Authority (FTA).

11.Open a Corporate Bank Account:

• Open a corporate bank account in the name of the company.

12. Visa Processing:

• Process employee visas and other required permits.

Considerations:

Legal Advice:

• Seek legal advice to ensure compliance with local laws and regulations.

Choose the Right Location:

• Decide whether to establish the business in a mainland area or a specific free zone based on the nature of the business and ownership preferences.

Costs and Fees:

• Be aware of the costs associated with company formation, including licensing fees, office rent, and other related expenses.

Ongoing Compliance:

• Understand and adhere to ongoing compliance requirements, including filing annual reports and renewing licenses.

Local Culture and Etiquette:

• Familiarize yourself with local business customs and etiquette.

Company formation in the UAE requires careful planning and adherence to regulatory requirements. Engaging with local business advisors or consulting firms can be beneficial to navigate the complexities of the process.