Economy

Legal Minds

Practicing Business in Dubai

GENERAL INFORMATION ABOUT BUSINESS REGISTRATION Prior to operating any business in Dubai, the steps outlined below must be undertaken in order to meet the legal requirements of all concerned government […]

GENERAL INFORMATION ABOUT BUSINESS REGISTRATION

Prior to operating any business in Dubai, the steps outlined below must be undertaken in order to meet the legal requirements of all concerned government authorities and to guarantee maximum commercial benefit for the business owner:

• Determine, in the beginning, the category/categories (commercial, industrial, and/or professional) and type of business activity/activities to be practiced. Determine all the related business activities that can be included within each business license, subject to a maximum of 10 activities per license.

• Confirm all the requirements of the license to be issued.

• Determine the trade name of the business.

• Submit an application to the Department for an Initial Approval and registering of the trade name, either by a personal visit to the Department Offices and its external branches or through the internet services that are available on the website.

• After getting the initial approval you can lease premises and contact the counter of the Planning Department of Dubai Municipality in order to verify that said premises are suitable for the business.

• Prepare all required documents and submit an application to the Department or one of its external branches to pay the required fees to obtain a final license.

• Submit an application to one of the Department’s external branches for a signboard permit for a business trade name as required by the economic regulations.

Terms & Conditions of Operating Economic Activities in the Emirate of Dubai — UAE Nationals

UAE nationals may operate all commercial, professional, and industrial activities, when they fulfill all the terms and conditions. They may carry on activities through any of the following legal forms:

• Individual Establishment.

• Limited/Joint Liability Company.

• Private/Public Shareholding Company.

• Civil Business Company.

Nationals of Gulf Cooperation Council (GCC) Countries

GCC nationals may carry out most commercial, professional, and industrial activities when they fulfill all terms and conditions (except for activities of Haj and Umra, trade agencies, homes for the elderly and disabled, community service, and journals and magazine publishing and printing houses, as they are limited only to UAE nationals). They may carry on activities through any of the following legal forms:

• Individual Establishment

• Limited Liability Company: two or more GCC nationals may establish a Limited Liability Company to practice a specific commercial activity. However, if there are one or more partners who are not GCC nationals, one or more UAE national partners are required, with a shareholding of not less than 51% of the paid-up capital.

• Private/Public Shareholding Company: three or more GCC nationals may establish a private shareholding company to practice a specific commercial activity. However, if there are one or more partners who are not GCC nationals, one or more UAE national partners are required, with a shareholding of not less than 51% of the paid-up capital. (For example: GCC partner, foreign partner, it is a must to have a UAE national partner).

• Civil Business Company: two or more GCC nationals may establish a civil business company to practice a specific profession without a Local Services Agent. However if there are one or more partners who are not GCC nationals, a Local Services Agent who is a UAE national shall be appointed or included as a partner.

Nationals of Other Countries

Nationals of other Arab or foreign countries may carry out economic activities through any of the following forms:

• Individual Establishment: it may be established to practice any professional activity, only by appointing a Local Services Agent who is a UAE national.

• Limited Liability Company: this kind of company shall be established to carry on any commercial or industrial activity, including one or more UAE partners whose shareholding shall not be less than 51% of the paid-up capital.

• Private Shareholding Company: this kind of company shall be established to carry on any commercial or industrial activity, including one or more UAE national partners whose shareholding shall not be less than 51% of the paid-up capital.

• Civil Business Company: two or more persons may establish a civil business company to practice a profession, provided that a Local Services Agent, who must be a UAE national, is appointed or included as a partner.

Foreign Companies

Any company incorporated outside the UAE may operate any commercial, industrial, or professional activity through one of the following legal forms:

• Branch of a Foreign Company

• Limited Liability Company: this kind of company shall be established to operate any commercial or industrial activity, including one or more UAE national partners whose shareholding shall not be less than 51% of the paid-up capital.

• Private/Public Shareholding Company: this kind of company shall be established to operate any commercial or industrial activity, including one or more UAE national partners whose shareholding shall not be less than 51% of the paid-up capital.

Annual Filings

Under the UAE Commercial Companies Law, most companies or branches are required to have their accounts audited locally. These accounts will then need to be filed with the appropriate Emirate level authorities on an annual basis as part of the license renewal filing process. There is also an annual license renewal fee to be paid, which is based on the type of license, entity, and its activities. Similar requirements are necessary for the free trade zone entities, although the requirements and fees vary and need to be considered based on the legal entity set up and its location.

AUDIT & ACCOUNTANCY

Joint stock and limited liability companies must appoint one or more auditors. All legally incorporated companies have to file their audited financial statements with the Ministry of Economy or relevant authority in order to renew their trade licenses. There are no exceptions available or restrictions on the appointment of auditors. Companies generally prepare their accounts on a calendar year basis, and banks are specifically required to do so by the Central Bank of the UAE. Listed companies (including banks) are required to file quarterly reviewed financial statements and annual audited financial statements in both English and Arabic with the Securities and Commodities Authority (SCA), which publishes the quarterly and annual financial statements on its website. Banks, including branches of foreign banks, are also required to file audited annual financial statements and regulatory returns with the Central Bank of the UAE and publish them in a local newspaper. There is no specific language requirement for the purpose of maintaining books and records, although books are generally maintained in English. International Financial Reporting Standards are mandated by the SCA and the Central Bank of the UAE and adopted as the default GAAP by all other companies.