Procedures for establishing a company in Dubai for locals and foreigners

٢١ يوليو Procedures for establishing a company in Dubai for locals and foreigners

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Establishing a company in Dubai is considered an important strategic step for locals and foreigners alike, thanks to the advanced business environment that the emirate provides. Dubai is one of the most prominent investment destinations in the world, thanks to its advanced infrastructure, encouraging business environment, and diverse legal facilities. To achieve success in this step, it requires a comprehensive understanding of the procedures and requirements for establishing companies, which vary depending on whether the founders are local or foreign.

In this context, the article discusses the basic steps for establishing a company in Dubai , starting with choosing the appropriate type of company, through obtaining the necessary licenses, all the way to meeting the requirements of government agencies. It will also highlight the main differences between the requirements of locals and foreigners, and how to deal with legal and administrative procedures effectively.

Procedures for establishing a company in Dubai for locals and foreigners

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Procedures for establishing a company in Dubai for locals and foreigners

Establishing a company in Dubai requires following specific procedures that vary depending on whether the founders are local or foreign. Here’s an overview of the basic steps for each:

For locals:

Choose the company type :
- Limited Liability Company (LLC) : Requires a local partner who owns 51% of the shares.
- Public or private joint stock company : It can be fully owned by Emirati citizens.
Determine the commercial activity : The activity that the company wishes to practice must be identified and chosen from the list of approved activities.
Registering the company name : Choose a distinctive name and ensure that it conforms to the requirements of the competent authorities.
Obtaining approvals and licenses : Submit an application for commercial licenses from the Department of Economic Development (DED) in Dubai.
Preparing the articles of incorporation : drafting the company’s articles of incorporation and notarizing it with a notary.
Opening a bank account : Opening a commercial bank account in the name of the company and depositing the required capital.
Issuing a commercial license : Submitting the required documents and receiving the commercial license from the concerned authorities.
Registering the company with government agencies : Registering the company with the Federal Authority for Identity and Citizenship and registering it in the tax system.

For foreigners:

Choose the company type :
- Limited Liability Company (LLC) : Requires a local partner holding 51% equity.
- External company : It can be fully owned without the need for a local partner, but under certain conditions.
- Free company in free zones : Foreigners can own 100% of the company without the need for a local partner.
Identifying the commercial activity : identifying the activity and selecting it from the authorized activities.
Registering the company name : Registering the trade name and ensuring its compliance with local laws.
Choosing a free zone (if necessary) : Determine the appropriate free zone according to the company’s activity and submit an application to obtain the necessary licenses.
Obtaining approvals and licenses : Submitting an application to obtain a commercial license from the competent authority.
Preparing the Articles of Association : Preparing and documenting the Articles of Association.
Opening a bank account : Opening a commercial bank account in the name of the company.
Issuing a commercial license : Receiving the commercial license after submitting the required documents.
Registration with government agencies : Registering the company with the Federal Authority for Identity and Citizenship and registering it in the tax system.

General tips:

Consult a lawyer : to obtain specialized legal advice.
Compliance with local requirements : To ensure that the company complies with local laws and regulations.

These procedures contribute to facilitating the process of establishing a company and ensuring its success in the dynamic business environment in Dubai.

Types of companies in Dubai

Here is a table showing the types of companies in Dubai with some basic details for each type:

Company type	the details
Limited Liability Company (LLC)	– Ownership: You need a local partner with 51% of the shares.
	– Liability: limited to company funds only.
	– Activity: Suitable for various activities, and can expand within the scope of business.
Public joint stock company	– Ownership: Foreign investors and UAE citizens can own shares.
	– Liability: limited to company funds.
	– Activity: Its shares can be traded on the financial market, and it is suitable for large businesses.
Private joint stock company	– Ownership: Shares are limited to a specific group of shareholders.
	– Liability: limited to company funds.
	– Activity: It can be wholly owned by foreigners or citizens.
Sole proprietorship	– Ownership: Wholly owned by one individual.
	– Liability: unlimited, as the owner bears personal responsibility.
	– Activity: Suitable for small businesses and individual activities.
Company in the free zone	– Ownership: It can be fully owned by foreigners without the need for a local partner.
	– Liability: limited to company funds.
	– Activity: It can include a wide range of commercial, manufacturing and service activities.
External company	– Ownership: Wholly owned by foreigners.
	– Liability: limited to company funds.
	– Activity: Designated for international companies that wish to open a branch or representative office in Dubai.
Limited partnership company	– Ownership: includes a joint partner who is fully responsible and limited partners who do not bear personal responsibility.
	– Liability: Limited for limited partners.
	– Activity: Less common, usually used in companies with a joint venture structure.

This table helps you understand the different types of companies available in Dubai and choose the right one based on your business needs and circumstances.

Conditions for establishing a company in Dubai for locals and foreigners

Conditions for establishing companies in Dubai vary depending on whether the founders are local or foreign. Here are the establishment requirements for both categories:

For locals:

Nationality : Founders must be UAE citizens.
Company type : Citizens can establish limited liability companies (LLC) or public or private joint stock companies without the need for a foreign partner.
Capital : Determining the minimum capital depends on the type of company and commercial activity, and it may be required to invest capital in the company’s bank account.
Local partner : In the event of incorporation in some non-free zones, a local partner who owns 51% of the shares is required, with the exception of wholly owned companies in free zones.
Commercial Activities : The commercial activity must be selected from the list of activities authorized by the Department of Economic Development (DED).
Required documents :
- Submit a copy of your passport, Emirates ID card, and any other documents related to ownership.
Trade name registration : Choose a trade name that conforms to the registration requirements.
Licenses : Obtaining commercial licenses from the Department of Economic Development (DED) or other competent authorities.

For foreigners:

Nationality : The founders are not required to be Emirati citizens.
Company type : Foreigners can establish companies in free zones with 100% ownership or limited liability companies (LLC) in non-free zones with the need for a local partner.
Capital : Determining the required capital depends on the type of company and commercial activity, and it may be required to open a bank account and provide proof of the capital deposit.
Local Partner : In the case of companies not located in free zones, a local partner who owns 51% of the shares is required.
Choosing a free zone : Foreigners can establish companies in free zones that do not require a local partner. Choosing a free zone depends on the type of business activity.
Commercial activities : Identify the commercial activity from the list of activities authorized by the concerned authority.
Required documents : Submit a copy of the passport, initial licenses, and proof of residence if necessary.
Licenses : Obtaining commercial licenses from the Department of Economic Development (DED) or from the relevant free zone administration.

Additional Tips:

Consult a specialized lawyer : to obtain legal advice on the details of incorporation.
Compliance with local requirements : To ensure compliance with laws and regulations in Dubai.

Compliance with these conditions contributes to facilitating the process of establishing the company and ensuring its compliance with local laws and administrative procedures.

Types of companies in Dubai

Documents required to establish a company in Dubai

Here is a list of papers required to establish a company in Dubai , explaining the differences between locals and foreigners:

For locals:

Copy of passport: for all partners and shareholders.
A copy of the Emirates ID card: for all partners and shareholders.
Selfie: May be required for some procedures.
Articles of Association: Preparing and documenting the Articles of Association by a notary.
Trade name registration certificate: Confirmation of the registration of the company’s trade name.
Proof of address: such as a recent utility bill to prove the address of the company’s headquarters.
Capital: Proof of the deposit of capital in the company’s bank account (if necessary).
Licenses and Approvals: Necessary licenses from the Department of Economic Development (DED) or other relevant authorities.
Business Plan: Submit a business plan that explains the business activity and future plans of the company.

For foreigners:

Copy of passport: for all partners and shareholders, with translation and notarization if necessary.
A copy of the ID card (if they have it): for residents, with translation and notarization if necessary.
Selfie: May be required for some procedures.
Articles of Association: Preparing and documenting the Articles of Association by a notary.
Trade name registration certificate: Confirmation of the registration of the company’s trade name.
Proof of address: such as a recent utility bill to prove the address of the company’s headquarters.
Capital: Proof of the deposit of capital in the company’s bank account (if necessary).
Licenses and Approvals: The necessary licenses from the Department of Economic Development (DED) or from the relevant free zone administration.
Business Plan: Submit a business plan that explains the business activity and future plans of the company.
Conduct Report: Some businesses may require a conduct report from local authorities in the home country.
Local partner approval (if necessary): If the company is not located in a free zone, it will need a local partner who owns 51% of the shares.

In conclusion, establishing a company in Dubai is an important strategic step for both locals and foreigners, thanks to the advanced business environment and facilities provided by the emirate. The basic procedures that must be followed include determining the appropriate type of company, preparing the required documents, and fulfilling the necessary legal conditions and licenses. For locals, it is easier due to local presence and understanding of the regulations, while foreigners face some additional challenges such as needing a local partner or choosing a suitable free zone.

These procedures help ensure a legal and successful company that complies with local laws and provides a strong base for growth and expansion. It is necessary to benefit from legal and professional advice to ensure that all steps are adhered to and the desired success is achieved. By applying these procedures correctly, investors and entrepreneurs can achieve their business goals and make the most of the opportunities that Dubai offers as a global investment destination.