LLC Company Formation in Dubai: A Simplified Guide

Form a Limited Liability Company (LLC).  It is quite important to know:

• how to begin with your LLC company formation in Dubai
• how to start it
• what will you need

We will explain:

• what an LLC is
• how to set one up
• what benefits it can bring to your business

What is an LLC?

An LLC is one of types of business entities in the UAE. It has its own:

• Identity
• Assets
• liabilities

It is separate from its owners or shareholders. These are individuals or corporate entities. An LLC company in Dubai has one or more managers. They are responsible for daily operations of the company.

Starting your LLC company formation in Dubai is simple. It involves the following steps:

• Come up with a trade name for your company.
• Register it with the Department of Economic Development (DED).
• Choose a local sponsor or partner. They have to be UAE national. It can be a company fully owned by UAE nationals. Or opt for a corporate nominee service. In this case the local sponsor acts as a silent partner.
• Sign a Memorandum of Association (MOA) with your local sponsor or partner. Outline:
  • the company’s objectives
  • activities
  • share capital
  • profit distribution
  • management structure
  • other terms and conditions
• Apply for initial approval from the DED.
• Get any external approvals from relevant authorities. Your business activity might need them from:
  • the Ministry of Health
  • the Dubai Municipality
  • the Central Bank
• Rent or buy an office space for your company. Get a tenancy contract or title deed.
• Apply for a final trade licence from the DED. It will issue your licence after:
  • inspecting your office space
  • collecting the fees
• Register your company with:
  • the Ministry of Labour
  • the General Authority for Pension and Social Security
• Open a business bank account for your company.
• Apply for visas for yourself and your employees.

Benefits of Forming an LLC in Dubai

The benefits of an LLC company setup Dubai include:

• Limited liability protection

Your personal assets are safe from any claims or lawsuits against the company. It has advantages for taxpayers too.

• Flexible profit distribution

You agree with your local sponsor or partner on how to distribute the profits of the company. Inclusively, regardless of the shareholding ratio. You receive more than 49% of the profits if you negotiate well with your local sponsor or partner.

• No minimum capital requirement

An LLC does not have a requirement for minimum capital. Start your business with any amount of money that suits your needs and budget.

• Access to local markets

Trade with the local market without any restrictions or intermediaries. It means that you can reach more customers and expand your business opportunities.

• Favourable tax environment

Enjoy a tax-free environment in Dubai, as there are:

• no corporate taxes
• income taxes
• withholding taxes on your profits or dividends

Remember you can also establish a branch of a company you already own elsewhere.

Comprehensive Guide to LLC Company Formation

LLC consists of two or more shareholders. They are only liable for the debts of the company up to the extent of their share capital. An LLC engages in any type of commercial activity, except for:

• banking
• insurance
• investment

Another option is contacting business setup consultants. There are other steps you must follow to create your company.

Choosing a Commercial Activity

• Decide what kind of commercial activity you want to conduct. There are more than 2,000 activities classified into different categories:
  • industrial
  • professional
  • commercial
  • tourism
• Choose an activity that matches your business goals and expertise.
• Check if your chosen activity requires any special approvals or licences.

Selecting a Name for Your Business and Ownership

• Choose a name for your LLC.
• Reflect your business activity and identity.
• The name has to be unique.
• It does not have to be taken by any existing business in Dubai or the UAE.
• Check the availability of your desired name on the website of DED.
• Decide how you need to make the ownership structure of your LLC.
• UAE Commercial Companies Law requires an LLC to have:
  • at least two shareholders
  • maximum 50 shareholders
• These are individuals or corporate entities.
• UAE nationals or companies should own at least 51% of the share capital.
• Foreigners can only own up to 49% of an LLC in Dubai.

Getting Ready for Documents and a Trade Licence

Prepare the necessary documents. Apply for a trade licence from the DED. A legal document that authorises you to conduct your chosen activity in Dubai. The kind of trade licence you need will depend on your activity.

Submit the following documents:

• A completed application form
• Copy of your passport and visa (for foreign shareholders)
• A copy of your Emirates ID (for UAE national shareholders)
• Copy of the memorandum and articles of association of your LLC
• A copy of the lease agreement or title deed of your business premises
• Letter from your sponsor or local service agent (if applicable)
• A no-objection certificate from your current employer (if applicable)
• Any other documents required by the DED or other authorities

The DED will review your application. They will issue your trade licence within a few days. It depends on:

• the complexity of your business activity
• the completeness of your documents

Pay some fees for the trade licence and other related services.

Personal and Business Documentation

Complete some other formalities to start operating your LLC company in Dubai. These include:

• Register your LLC with the Ministry of Economy
• Open a bank account for your LLC
• Register with:
  • Federal Tax Authority and obtain a tax registration number
  • Dubai Chamber of Commerce and Industry
• Get any other permits or approvals required by your business activity
• Hire employees and obtain their visas and labour cards
• Get health insurance for you and your employees

Costs Associated with the Formation of an LLC

The cost of an LLC company formation in Dubai varies because of:

• the nature and size of your business
• the number of shareholders
• the location of your office
• the type of licence you need

That is why you need to make sure which LLC licence cost in Dubai you will cover.

Common costs that you can expect to pay

• Initial approval fee

You pay this fee to the DED to get an initial approval for your business name and activity. It is AED 100 to AED 500.

• Trade name reservation fee

This is one you pay to reserve your trade name for 60 days. The fee is anywhere from AED 200 to AED 2,000.

• Trade licence fee

This is a fee you pay to get your trade licence from the DED. Allowing you to operate your business. It is AED 3,000 all the way up to AED 15,000.

• Local sponsor fee

You pay this fee to a local sponsor. This guarantor is a UAE national. They own 51% of your LLC. They act as your legal representative. They also help you in dealing with government authorities. The fee depends on the agreement between you and the sponsor. It usually ranges from AED 10,000 to AED 50,000 per year.

• MOA fee

MOA is a document. It outlines the rules and regulations of your LLC. This fee depends on the capital and number of shareholders of your LLC. It usually ranges from AED 2,000 to AED 10,000.

• Office rent

This is a fee that you pay to rent an office space for your LLC. The office must be in a designated area. Your business activity has to be allowed over there. The rent depends on the size and location of your office. The rent is from AED 20,000 to AED 100,000 per year.

Important Paperwork for Establishing an LLC in Dubai

The paperwork involves several documents. Prepare and submit them to authorities. Some of the main documents are:

• Application form

This is a form that you fill out online or offline to apply for your initial approval and trade licence from the DED. Provide information such as:

• your trade name
• business activity
• shareholders’ details
• capital amount
• Passport copies:
  • Your passport
  • The passport of your shareholders
  • The manager’s passport

• No objection certificate (NOC)

You get it from your current employer or sponsor if you are already working or residing in Dubai.

• Local sponsor agreement

This is a contract that you sign with your local sponsor. It starts the terms and conditions of your partnership.

• MOA

This is a document that you draft with the help of a lawyer or a typing center. It states the rules and regulations of your LLC.

• Trade licence

This is a document that you get from the DED after submitting your:

• application form
• passport copies
• NOC
• fees

The trade licence states your:

• trade name
• business activity
• licence number
• expiry date
• You need to display this document in your office and renew it.
• Establishment card

You get this card from the Ministry of Labour after registering your LLC with them. You need this card to apply for visas for yourself and your employees.

• Visa

You get this from the General Directorate of Residency and Foreigners Affairs (GDRFA). It is after applying for it with your documents. The visa lets you live and work in Dubai. You need to renew your visa every two or three years.

Conclusion

LLC company formation in Dubai is a simple way to start a business. An LLC provides you with limited benefits, such as

• Liability protection
• Flexible profit distribution
• No minimum capital requirement
• Access to local markets
• A favourable tax environment.

For your LLC company formation in Dubai, cover some details. For example, choosing a trade name, finding a local partner, drafting and signing an MOA, etc.  If you need any help or guidance for your LLC company formation in Dubai, you can contact us today on our website and we will be pleased to lend you a hand.