SOLE ESTABLISHMENT OR SOLE PROPRIETORSHIP
In the UAE, a business that is owned and controlled by one individual and has a trade licence that is issued in that person’s name is referred to as a “Sole Establishment”, which is also frequently referred to as a “Sole Proprietorship”. It is considered as the most basic form of legal structure.
A sole Proprietorship has unlimited liability for commercial debts and commitments.
CIVIL COMPANY
A civil company is a legal structure for professional businesses such as consultancy firms, engineering practices, law firms, architectural services, and other similar professions. In such structures, the firm’s partners are the sole owners of the company.
LIMITED LIABILITY COMPANY (LLC)
A Limited Liability Company also known as LLC, is a popular type of business entity that combines characteristics of a corporation and a partnership. It is a legal framework that enables people or businesses to create a unique legal entity to carry out business operations in the nation.
A Limited Liability Company can be established by two or more shareholders, with a maximum of 50% share, who are each only liable for their individual shares of the company’s capital.
This means that the personal assets of the owners or shareholders normally cannot be used to meet such responsibilities if the company incurs difficulties or faces legal issues.
FREE ZONE COMPANY (FZC)
In the UAE, a company that conducts business inside a defined free zone is known as a Free Zone Company (FZC). The UAE government created free zones, which are designated economic zones, to draw foreign investment, promote corporate expansion, and ease international trade.
The UAE has over 50 free zones. Each free zone is governed by their own rules and regulations. Free zones provide attractive options for foreign investors to set up their free zone company in the UAE. Main benefits include 100% foreign ownership, zero percent personal tax, no hiring restrictions, 100% exemption from import and export duties, access to international markets, and more.
PARTNERSHIP COMPANY
By definition, a partnership business consists of two or more individuals who combine their resources to create a company and agree to split the risks, profits, and losses. Law firms, medical groups, real estate investment firms, and accountancy groups are common examples of partnership businesses.
PRIVATE JOINT STOCK COMPANY
A company with the following traits is referred to as a Private Joint Stock Company (PrJSC) in Dubai:
- It is owned by a non-governmental organisation.
- Shares of a PrJSC cannot be offered to the public.
- A PrJSC cannot extend an invitation to the public to subscribe for its shares, in contrast to a Public Joint Stock Company.
- There must be a minimum of three participants in a PrJSC.
- A PrJSC in Dubai must have a minimum capital of AED 2 million. A private shareholding business must go by all the same rules as a public shareholding corporation, in addition to the restrictions mentioned above.
PUBLIC JOINT STOCK COMPANY
The UAE offers various types of corporate structures to commence a business, and one of them is a Public Joint Stock Company (PJSC). A PJSC is a company where the capital is divided into equal shares and the shareholder’s liability is limited to the number of shares in the company.
A Public Joint Stock Company (PJSC) in Dubai is often referred to as a Public Shareholding Company (PJSC). A company with the following traits is referred to as PJSC:
- A PJSC’s chairman and majority of the directors must be UAE nationals who hold at least 51% of the company’s shares.
- A PJSC must have at least 10 founding members and more.
- Management should be delegated to a board of directors with a minimum of three and a maximum of fifteen members.
- The required minimum capital to establish a shareholding company in Dubai is AED 10 million.
- Local businesses who tend to engage in banking, finance, or insurance must typically be run as PJSCs, whereas foreign businesses engaged in similar operations may open branches or representative offices in Dubai.
BRANCH OFFICE OF FOREIGN COMPANIES/REPRESENTATIVE OFFICE
A company with the following traits is referred to as a branch office of a foreign company/ representative office:
- It does not engage in sales, services or any type of commercial activity but only promotes the activities of its parent company.
- It requires National Service Agent (NSA). The NSA has no equity participation or liability to the business.
- It requires a refundable deposit bank guarantee of AED 50,000 for the duration of your license, and this cannot be withdrawn or used as working capital.
TAKEAWAY
There are various procedures and requirements that you need to prepare and take into consideration to successfully register a startup business in Dubai. Creation Business Consultants will help you throughout the entire process. From selecting the right jurisdiction for your startup, completing and draft the proper documentation to complete your business and office registration etc.
Our team of experts will leverage our experience to help simplify the process while simultaneously providing you with all the details needed to run your company in Dubai. Contact a member of our team to learn more about setting up a company in the UAE and Saudi Arabia, email us on [email protected] or call UAE +971 4 878 6240.
