Things to know | Starting a business in Abu Dhabi - Legal business structures

  1. 1. A commercial or industrial type sole proprietorship can be owned only by UAE nationals or GCC nationals.
  2. 2. The owner of a consultancy type of sole proprietorship should have a scientific qualification for the activity selected.
  3. 3. A sole proprietorship firm can have only one manager.
  4. 4. A sole proprietorship has no minimum requirement for business capital.
  5. 5. Trade name should be related to the activity.
  6. 6. A sole proprietorship can have branches, which can perform all activities included in license of parent firm.
  7. 7. The firm and its branches can be sold but industrial or commercial type of firm can only be sold to UAE nationals or GCC nationals.

LLC Foreign Branch Office Representative Office
Structure Ownership 51% (Local Partner) / 49% (Foreign Party) 100% Foreign Party 100% Foreign Party
National Service Agent N/A Mandatory Mandatory
Shareholders

Minimum: 2 / Maximum: 50
(Minimum: 1 if Emirati)

Overseas Parent Company Overseas Parent Company
Board Members Unlimited number of managers Overseas Parent Company Overseas Parent Company
Incorporation Process 2-3 weeks once legal documents and commercial lease arranged, subject to approvals by specific entities, depending upon the trade license activities 6-7 weeks once legal documents and commercial lease arranged, subject to approvals by specific entities, depending upon the trade license activities 6-7 weeks once legal documents and commercial lease arranged, subject to approvals by specific entities, depending upon the trade license activities
Foreign Party Document Requirements If a company is holding the 49% shareholding: Certificate of Incorporation, Memorandum of Association, Board Resolution, POA to General Manager, GM’s Passport Copy. If an individual is holding the 49% shareholding: Passport Copy and Visit visa copy / last entry stamp into the UAE or cancelled visa page if previously held a visa in the UAE Certificate of Incorporation, Memorandum of Association, Board Resolution, Undertaking Letter for full financial commmitment, POA to GM, GM’s Passport Copy, Appointed Auditor’s Letter, List of Branches / Representative Offices in the UAE. Certificate of Incorporation, Memorandum of Association, Board Resolution, Undertaking Letter for full financial commmitment, POA to GM, GM’s Passport Copy, Appointed Auditor’s Letter, List of Branches / Representative Offices in the UAE.
Name Trade Name Must describe the activity. Shouldn’t contain acronyms. As per parent company As per parent company
Activities Number of Activities Up to 10x related activities per Trade License As per parent company Representative Office
Activities Allowed Trading, consruction, logistics, manufacturing, consulting etc… Must match those of the parent company Representative Office
Activities Restricted Insurances, banking, Investment of funds etc… Trading Limited to marketing the services of the parent company. No transactions allowed.
Finance Federal Ministry of Economy – Bank Guarantee AED50,000 AED50,000
Registration with the Ministry of Economy & Planning AED3,000 (one off fee) AED15,000 (initial fee), AED10,000 (annual fee) AED5,000 (initial fee), AED10,000 (annual fee)
Share Capital AED150,000 N/A N/A
Liability Dependent upon the value of the shares/restricted to the capital contribution of the company. In some instances it can be more, e.g. fraud cases Unlimited
Tax Exempt. Excluding foreign oil companies, where the rate of tax is generally 55%, but can be as much as 85%. Foreign oil companies: generally 55%, but can be as much as 85%. Branches of foreign banks: 20% of their taxable income. Potential tax liabilities in parent company’s home country (Professional tax advice recommended). N/A
Import Tax 5% GCC tariff on the CIF (cost insurance freight) of the goods. Tobacco products: 100% duty. Alcholic beverages: 50% duty. List of over 400 exempt products. 5% GCC tariff on the CIF (cost insurance freight) of the goods. Tobacco products: 100% duty. Alcholic beverages: 50% duty. List of over 400 exempt products. N/A
Financial Statements Accounts to be maintained and audited annually. Accounting year = min 6 months, max 18 months. Accounts to be maintained and audited annually. Accounting year = min 6 months, max 18 months. Audited accounts of Abu Dhabi Branch to be submitted to the Ministry of Economy annually for Trade License renewal, in Arabic by a UAE-based Auditor Accounts to be maintained and audited annually. Accounting year = min 6 months, max 18 months. Audited accounts of Abu Dhabi Representative Office to be submitted to the Ministry of Economy annually for Trade License renewal, in Arabic by a UAE-based Auditor
Escrow Account Required to allocate 10% of net profit per annum to a statutory escrow account N/A N/A
Staffing Number of staff Necessary to submit a quota for approval. For large number of employees, it would be necessary to submit a contract demonstrating the need for that quota. Approval is usually based on the value of the contract. Necessary to submit a quota for approval. For large number of employees, it would be necessary to submit a contract demonstrating the need for that quota. Approval is usually based on the value of the contract. Restricted to a maximum of 5x visas.
Premises Type of premises Dependent upon activity. i.e. trading requires a store or warehouse and an office Dependent upon activity. i.e. trading requires a store or warehouse and an office Office space

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