The United Arab Emirates is one of the most appealing countries in the world for investors. The innovative political leadership has created legislation and procedures to assist expatriates in establishing businesses more easily. As a result, establishing a business in the UAE is becoming increasingly popular among entrepreneurs worldwide.
This article will teach you everything you need to know about starting a business in the UAE. Understanding the legal requirements for establishing a business in the UAE is critical. As a result, the information provided will help you avoid unnecessary delays and confusion. Consider the following:
1. Legal requirements to establish a business in the UAE
Let us look at the legal requirements for establishing a business in the UAE:
1.1. The legal structure of the company
It’s fantastic that you’ve decided to start a business in a country with so many opportunities. You’re on the right track. If you work hard and persevere, you will soon have one of the most powerful business empires.
However, you must define the type of company organization you intend to establish, as well as the type of business activity you intend to engage in. You must also decide on the jurisdiction in which you intend to operate. Setting up a business in Dubai is a critical decision because you must launch your company at the right time and with the right resources.
As a result, a reputable business service provider can help you properly steer your UAE venture. The legal form or legal structure of the business must be finalized before proceeding. There are several company structures available, each of which is unique. Each has its own set of fundamental needs or legal formation processes.
The following types of businesses can be established in the UAE:
• LLC (Limited Liability Company) (Limited Liability Company).
• Corporation. Sole Proprietorship.
• Limited Liability Company.
1.2. Intellectual property rights
Is your company planning to introduce new products or methods? Then you must comprehend intellectual property laws and ensure that you have obtained all necessary rights. If you do not, others may try to imitate your inventiveness. They may even claim ownership of the innovation and charge you a fee for duplicating their product.
Not only that, but you must also protect:
• The brand name of your company.
• The domain of commerce.
• Idea.
• Patents.
• Trademarks.
• Formulas and symbols.
• Any data that is required before making it public.
• Connect Group can help you understand intellectual property rights and how to protect them. As a result, we will help you obtain the rights through the proper channels.
1.3. Obtain an appropriate license for your business.
To do business in the country, you must first obtain a trade license. The jurisdiction and activities permitted will be specified in the license. The responsible government, the Department of Economic Development (DED), will only grant a business license after reviewing the paperwork in most Emirates.
As a result, before submitting your application to the DED, you must obtain permission from all relevant agencies and ministries. For example, if you want to open a restaurant in Dubai, you must first obtain certain permits before applying for a license. You will require permission from:
• The Ministry of Health.
• The Food and Safety Division.
• The Municipality of Dubai
1.4. Reach an agreement with your collaborators.
You might want to start a company with some of your friends. A formal, written agreement is required. It will eliminate any chance of a disagreement. Even if there is future friction between partners, the resolution will be simple because the agreement is in place.
1.5. Employees’ duties, responsibilities, and rights
Don’t forget to include a detailed policy outlining the employees’ roles, responsibilities, and rights. Each employee must receive it on their first day on the job. As a result, future legal disputes may be avoided, and employee output may be increased.
1.6. Adherence to all safety precautions and guidelines
Any of the activities should not endanger the employees. Employees must be provided with appropriate safety equipment if the working environment poses a risk to their health or safety.
You must also ensure that they are aware of the safety precautions and are following them correctly. Failure to comply will result in severe penalties imposed by the authorities. If they discover that you are not following the health and safety regulations, you may face consequences.
2. What are the legal requirements for establishing a company in the UAE?
2.1. Determine the legal structure and activity.
The first step in obtaining a business license is deciding what kind of activities will be carried out. This is related to the type of business you intend to start. Furthermore, you must define the firm’s specific type. It doesn’t matter whether it’s an institution, a branch of a foreign corporation, or a limited liability company.
Furthermore, depending on the type and nature of the operation, the regulations, restrictions, criteria, and costs for business setup in the UAE differ.
2.2. Registration of a trading name
After determining the activity and legal status, you must select a trading name. The trade name must be distinct for the company to be distinguished from others. However, keep in mind that the title of the trade name must represent the nature of the activity as well as its legal status.
In general, the following conditions must be met before a trading name can be registered:
It should be appropriate for the type of activity and legal status required. Furthermore, it should not have previously been used or be currently registered in the same company industry.
It must not break any public laws or rules.
It must not be identical to any registered local or foreign trade name with the Ministry of Economy. Furthermore, it must not deceive consumers/clients.
A trading name can be canceled by the Department of Economic Development (DED). This will happen if it is discovered to be identical to an existing one or fails to meet the department’s standards and conditions.
2.3. Obtaining permission
After registering a trading name and receiving a certificate, preliminary permission from the DED is required to receive all additional approvals easily and quickly. As a result, entrepreneurs should be aware that the preliminary permission is only valid for three months from the date of issuance.
If the certificate attestation expires, the business owner must obtain a replacement before moving on to the next stage.
2.4. Getting a License
After obtaining all necessary permissions, the next step is to obtain the business license. The paperwork required to obtain a business license will be determined by the business’s economic and legal situation. It is critical to remember that foreign documents must be translated into Arabic by a legal translator and approved by the Ministry of Justice.
Setting up a business in the UAE or other regions is not an easy task. To meet all legal requirements, one must go through a lengthy procedure. Fortunately, business consultancy services in Dubai and other parts of the UAE can help make the process go much more smoothly.
Connect Group is also well-known for its business setup services in the UAE, which include:
• Business registration.
• Sponsoring.
• Outsourcing services provided by a partner.
• All legal paperwork is being processed.
• Handling and assisting with licenses for both free zones and non-free zones.
We can have your business up and running quickly because we have years of experience and strong relationships with the relevant government authorities.
3. What exactly is the Commercial Companies Act? (CCL)
On July 1, 2015, a new Commercial Companies Law went into effect, replacing the old Federal Law No. 8 of 1984. The new CCL brought with it a slew of reforms that impacted businesses across the UAE. Companies that do not comply with the CCL may face several penalties, including:< /p> • Fines. • License revocation. • Deregistration. • Criminal prosecution in extreme cases. • However, the severity of the company/directors’ infraction will determine the penalty imposed.
4. Limited Liability Corporation (LLC)
Under the CCL, foreign investors can conduct business through a Limited Liability Company. This is a common practice in all commercial sectors in the UAE. Banking, insurance, and financial investments are exceptions that cannot be legally carried out by an LLC.
4.1. UAE national partner requirements
In most cases, you can form an LLC with as few as two and as many as fifty shareholders. This may be possible if a UAE national owns at least 51% of the company’s shares.
Profit and loss sharing in proportions up to 80/20 may be prescribed to benefit the minority shareholder. This is because a foreign partner’s shareholding in a company in the Emirate of Dubai cannot exceed 49%.
A single UAE resident or a firm controlled entirely by UAE nationals may now form an LLC on their own under the CCL. An LLC’s management may be delegated to a foreign partner or a third party. It is possible to agree with the UAE’s national partner.
This is for protecting and specifying the minority partner’s interests, especially if the minority partner provides all of the firm’s capital. It should be noted, however, that the UAE national would continue to legally own at least 51 percent of the firm. As a result, any attempt to transfer shares that have an impact on this minimal level is prohibited by Article 10 of the CCL.
4.2. Methodology
The LLC’s name and operations should be approved by the applicable government registration authority in the first application. In Dubai, this is handled by the Dubai Department of Economic Development (DDED). The Abu Dhabi Department of Economic Development is the responsible authority in Abu Dhabi.
Specific authorization from relevant ministries or agencies may also be required, depending on the nature of the action. Oil and gas companies, for example, typically require the prior approval of the Office of the Ruler of the Emirate in question. In some cases, however, they will require permission from the Supreme Petroleum Council.
As a result, if the application is complete and you pay all of the required fees, everything will be fine. The LLC will then be added to the Commercial Registry database and granted an operating license by the relevant Emirates business licensing agency.
5. How can Connect Group assists you in establishing your business in the UAE?
When it comes to establishing a business in another country, you must be wise and cautious. It is preferable if you seek assistance from a reputable company, such as ours, to guide you through the process of establishing a business in the UAE.
