Things To Know When Opening A Company In Dubai

Dubai Burj Khalifa View

Because of its economic stability in the global market, Dubai has gained enough popularity among foreign investors and continues to be one of the most lucrative locations for business setup. Surprisingly, there are varied business opportunities in UAE’s commercial capital apart from oil and gold. As a result of the investor-friendly government and international exposure offered here, entrepreneurs are coming up with innovative commercial models. Startups get a beneficial edge in Dubai with various policies and tax advantages. Despite the ease of doing business, opening a company in Dubai may seem difficult for someone new. The information we are about to discuss further can help you a lot.

Everything You Need To Know About Business Setup In Dubai

1. Deciding Your Business Activity Beforehand

When you make up your mind to open a company in Dubai, you must know that there will be several limitations. All business activities are not allowed in the United Arab Emirates. Before you can actually start, you may need various consents. Therefore, the first thing you want to do is check whether the business activity you chose will be permitted in the city.

2. Choosing The Right Jurisdiction

For increasing the productivity and competence of a business, jurisdictions in Dubai are differentiated on the basis of zones. You can opt for freezone company formations, mainland business setups, or offshore establishments. The choice of jurisdiction will be, however, dependent on the business activity and nature of the business you select.

3. Deciding On The Shareholding Structures

Your company setup will be majorly affected by the shareholding structure you choose. It will determine the legal form of your business. Make sure that the shareholding structure aligns with the business activities and jurisdiction you choose. You can opt for the following shareholding structures for your business in Dubai:

  • Limited Liability Company
  • General Partnership
  • Sole Proprietorship
  • Public / Private Shareholding
  • Joint Venture
  • Limited / Shared Partnership
  • Branch Offices
  • SME License
  • Partnership In Commendam

4. Finding A Local Partner / Sponsor

If you wish to have a business setup in Dubai mainland, you are obligated to have a partner who is a UAE national. This is one of the challenging aspects of starting a business here. Your local business partner should own 51% of the shares. While this is mandatory, you can seek help from a local service agent or sign an agreement with a silent partner.

5. Getting Your Trade Name Registered With DED

You need to decide on a name for your company according to the standards of the DED (Department of Economic Development). DED suggests associating the trade name with your license type as it will be the identity of your business. It may take around 3 days to get the trade name registered.

6. Approval For Business Activity

There are a few business activities that are not permissible in Dubai. While there are restrictions on a few, others may be completely prohibited. According to the law, DED decides, classifies, regulates, and permits various economic activities. However, this is different for offshore and freezone business setups.

7. Necessary External Approvals

Generally, DED is entitled to deal with the investors and dispense trade licenses to them. However, there may be some exceptions where external approvals may be necessary. These permissions may be acquired from semi or non-governmental bodies.

8. Renting A Business Premise

Physical existence is obligatory for any business in Dubai. You will be required to submit various documents, including tenancy agreement, EJARI, RERA (Real Estate Regulation Authority) documents, before getting initial approval from DED.

9. Initial Approval From DED

Once all the documents are submitted, the DED grants initial approval after getting them checked. Initial approval from DED is also the accreditation to start your business. You can now continue the process to acquire your trading license.

10. Drafting The MOA

Drafting the Memorandum Of Association is another important task that needs to be done. The MOA specifies the liberty and shares limitations for each partner. If local agents are involved, you may have to define their role in a separate agreement. These documents should be drafted under the guidance of a legal advisor and need to be translated into Arabic.

11. Procedure For Company Registration And Business License

Company registration and business licensing move parallel in Dubai. Your business license can be processed and duly collected once the company gets registered by DED. Business licenses are issued based on business activities and jurisdiction. The most common licenses include industrial licenses, commercial licenses, and professional licenses. A trade license generally takes one week or more after you receive the initial approval. It is determined by the external documentation and the business activity. Mentioned below is the general list of documentation and certifications that may be necessary:

  • License application with attested LLC agreement.
  • Name reservation certificate, governmental forms, initial approval certificate, and approval from external departments.
  • Tenancy contract and EJARI registration certificate.
  • NOC and passport copies for partners.

12. Collecting Business License And Commencing Business Activities

DED will provide you a transaction number or payment voucher once you submit the necessary documents. You will have to make the final payment to collect the business trade license. After collecting the license, you will be a full-fledged business entity.

Final Thoughts

The details mentioned here are just highlights; the procedure for business setup is extensive! Seeking help from a consultant will help you know everything precisely and take suitable actions. Only when you are well aware of the regulations, requirements, and procedures will you be able to get things done in time and get your business running towards success.