Key Steps to Set Up a Business with Foreign Ownership in the UAE
UAE previously allowed foreigners only 49% of ownership with the rest of it belonging to a UAE national. Amendments in the foreign ownership law UAE have changed things. Foreigners can now avail 100% of ownership in UAE.
We have written this piece to help you set up a foreign ownership business. We also cover the steps and benefits of full foreign ownership in UAE.
Choose Your Business Activity and Legal Structure:
Start with identifying the nature of your business activity. That will help you apply for the right license. 6 types of licenses can be obtained in the UAE mainland. These include professional, industrial, occupational, agricultural, commercial and tourism. There are different licenses for investors in free zones depending on the nature of their business. These consist of manufacturing, commercial trade, media, warehousing, educational, e-commerce, educational, and industrial.
Decide the legal structure of your business. Its nature and requirements will influence which structure you will be choosing. In the UAE mainland, the legal forms encompass sole establishment, civil company, limited liability company, holding company, public joint stock company, branch of a local company, holding company, private joint stock company, representative office of a foreign company, and branch of a GCC company. UAE free zone has three types of legal forms: Free Zone Company, Free Zone Establishment and Free Zone Limited Liability Company.
Select a Business Location:
Choosing the location will affect many things in the process of setting up a business with foreign ownership UAE.
Free Zones
There are more than 40 free zones in UAE. They happen to be a preference among entrepreneurs and foreign investors. Various options to have complete foreign ownership are present in the free zone. You can buy land, rent and own offices or even get a virtual office registered.
There are many benefits of UAE foreign ownership in the free zones including tax exemptions and an extended global reach. There are facilities and support for foreign ownership businesses made accessible by the authorities.
Mainland
There is more flexibility in the operations of business when you choose the mainland. You have the freedom to conduct commercial activities with anyone without facing many restrictions.
Business Name Registration:
After selecting the location for conducting business with UAE foreign ownership, it’s time to register your trade name. Apply for a trade name with the Department of Economic Development. The name should be unique.
There are certain terms and conditions in the UAE mainland when you are picking a trade name. The abbreviation reflective of the company’s legal structure should be added in the suffix of the trade name. The trade name must not contain any appropriate and offensive words. It should not have the names of government agencies and rules either. The name and trademark have to be approved by the Department of Economic Development.
Apply for Initial Approval:
Get the approval from UAE to establish your UAE foreign ownership business. This helps in moving to the next step of the process. You will need to submit the necessary documents to apply for the initial approval. In the free zones, the required documents are a complete application, business plan, Letter of Intent containing investor plan and investor idea, copies of shareholders’ and managers’ passports, RIC form for appointed managers and financial audit reports.
Draft and Notarize the Memorandum of Association (MoA):
For a public joint stock company, private joint stock company, civil company or limited liability company, get a Memorandum of Association.
Obtain Necessary Licenses:
Acquire the required permits or approvals for commercial activities from the relevant government authorities. The Ministry of Justice will issue approvals for legal consultancy and activities, the Ministry of Economy for insurance activities and consultancy, and the Local Municipal department for agricultural and engineering matters. Ministry of Interior issues approvals for general transport. TDRA issues approvals for activities concerning telecommunication. UAE mainland will require receipt of initial approval, copies of documents you submitted previously, a copy of the attested lease and a Memorandum of Association.
Register Your Business:
Get your companies with UAE foreign ownership registered. You will register it with the Chamber of Commerce and Industry. Get the license from the economic department’s service centres after sharing the documents and paying the fee. In free zones, register your foreign ownership UAE business by sharing the required documents of a complete application form for registration, passport-sized photographs of directors and managers, Articles of Association, notarized and attested specimen signature, board resolution and power of attorney given to the director.
Open a Corporate Bank Account:
The next step to continue the process is opening a corporate bank account. It eases financial transactions. There are several corporate benefits to having this type of bank account.
Visa and Labor Card Application:
Initiate working on applications to acquire employees’ visas and labour cards. Ensure your workforce has valid permits, licenses and labour cards before they start to work in UAE.
Benefits of 100% Foreign Ownership
There are a lot of advantages to having complete foreign ownership. These benefits make the foreign ownership law in UAE lucrative for investors as they are no longer limited to a partnership.
Complete Control:
There is complete control over the operations. There is no requirement to share the partnership of business with anyone else. It offers flexibility to many.
Ease of Operations:
Find a certain ease in conducting trade operations. Foreign ownership makes it easier to operate in the UAE.
Full Repatriation of Profits:
Complete foreign ownership in UAE lets you have all control and no requirement for partnership. This means you get a full return on profits
Tax Benefits:
There are many benefits of having foreign ownership in the UAE making it lucrative for entrepreneurs. One of them is they get to enjoy the tax exemptions that the United Arab Emirates has to offer.
Strategic Location:
The United Arab Emirates has a prime location. This makes it an attraction among foreign entrepreneurs across the world.
Business-Friendly Environment:
The atmosphere of the United Arab Emirates helps many businesses prosper. They find it a huge opportunity to expand their network when they start shop in UAE.
Regulations and Compliance
The regulations requiring the participation of UAE citizens previously have been changed. The new amendments mean foreigners have to remain in compliance with the UAE laws while owning 100% of their company.
UAE Commercial Companies Law:
The joint stock companies can sell seventy percent of the company with approval from concerned authorities. It has entirely transformed the dynamics of owning a company.
Economic Substance Regulations (ESR):
Companies in UAE need to have an economic presence when they are performing any relevant activities including investment fund management businesses, lease-finance businesses, banking businesses, headquartered businesses, shipping businesses, holding company businesses, intellectual property businesses, insurance businesses, and distribution and service centre businesses. Companies have to submit a report to the National Assessing Authority. It should include income, expenditure, assets, and employees.
Ultimate Beneficial Owner (UBO) Regulations:
UBO is a way to maintain transparency. Entities have to disclose their ultimate beneficial owners. This is for all entities licensed by local licensing authorities and non-financial free zones to comply.
Book Free Consultancy for Business Setup in UAE with Connect Zone
Make the whole business setup smooth with our assistance. Connect Zone offers free consultancy so you don’t run into any hitches in the process.  We will help you with everything needed for company formation in UAE.
