- Individual Establishment (UAE national or GCC national)
Individual establishments with 100% ownership can be formed with either UAE Nationals or GCC Nationals as owners in order to do any Commercial, Professional and Industrial activities.
Civil companies are formed 100% in the name of individuals (Foreigner) in order to enable him to practice the professional or craftsmanship. It is necessary to appoint a UAE National as “Local Service Agent” without holding any responsibility or financial commitment in respect of the principal’s business.
This is an arrangement between two or more UAE Nationals, each of whom are jointly and severally liable to the extent of their assets for the Company’s liabilities.
This is an arrangement between two or more of UAE Nationals of which one or more of them may be general partners and one or more of these may be limited partners. General partners are liable to the extent of their assets for the company’s liabilities whereas limited partners are liable for the company’s liabilities to the extent of their respective shares in the capital only.
- Private Share Holding Company
A private shareholding company is incorporated with persons not less than three. A private share holding company cannot invite public for subscribing its shares. The minimum capital to form a private share holding company is AED 2 Million. The Chairman and majority of Directors in private shareholding company shall be UAE Nationals.
- Public Shareholding Company
Public shareholding company is a company with a capital divided into equal negotiable shares. In such companies a shareholders’ liability is limited by the number of shares held by him. Minimum capital required to form a Public Shareholding Company is AED 10 Million. The Chairman and Majority of the Directors of Public Shareholding Company must be UAE Nationals. In addition, at least 51% of the shares of PSC should be held by UAE Nationals. The law stipulates that the Companies engaged in banking, insurance or financial activities should be run by a PSC.
A Joint Venture is a type of Company where two or more partners agree by contract to share the profits or losses of one or more commercial enterprises which will be carried on in the name of one of the partners. Third parties can recourse only to the partners with whom they deal. However, should the Joint Venture be disclosed to the third parties, all the partners are liable to the third parties.
- Partnership Limited with Shares (PLS)
A Partnership limited with shares is a company formed by general partners who are jointly liable to the extent of all their shares for the company liabilities and participating partners who are liable only to the extent of their shares in the capital. The capital of this PLS shall be divided into negotiable equal shares. All general partners shall be UAE Nationals and minimum capital requirement for limited partnership is AED 500,000/-
- Limited Liability Companies (LLC)
LLC or the Limited Liability Company is the popular and preferred type of company. Minimum capital for setting up a LLC company is AED: 150,000/- (AED 300,000/- for Dubai).
Companies with foreign partners prefer the limited liability company. The ownership percentage LLC offers to the foreign partner is 49%. 51% shares will be held by the local partner who will be a UAE National.
Authorities that issue LLC licenses in the UAE are;
- Dubai: Department of Economic Development
- Sharjah: Economic Development Department
- Abu Dhabi & Other Emirates: Municipality / Chamber of Commerce
The popularity of LLC business is due to its flexibility, some of major advantages of setting up LLC company are:
- Although foreign equity in the company is limited to 49%, profit and losses can be shared at a ratio difference from the share capital.
- The investor becomes the partner in the company.
- The investor is provided with an investor’s visa with a family visa status.
- No restrictions for business expansions and starting new branches.
- No annual financial statements requirement.
- The assets and capital will be held by the company and not by the local national partner.
- Ease of opening global corporate bank accounts.
- Foreign Companies (Branch / Representative office)
A foreign company is licensed to exercise its main activity in the UAE by opening a branch or representative office. These foreign companies need to get themselves registered in the foreign companies register in the Ministry of Economy, after obtaining approval of the concerned authorities. These companies need to appoint UAE Nationals as the Agent. A foreign Company’s branch can freely exercise their activities whereas a representative office may practice only promotional business for the products and services provided by the parent company. These companies need to submit a bank guarantee for AED 50,000/- as part of the licensing process.
Onshore companies have to meet a few series of requirements of the state government. Obtaining a license to start a business and it is necessary to have an office. Hypothetically, such office can be just a desk leased by the free zone authority. Another requirement is that business should be conducted only within the FEZ or outside it, but not directly in the UAE. If the company would do the business directly inside the country, it would require a local company to act as an agent for it.