The Emirate of Dubai is located on the Arabian Peninsula, in the south of the Persian Gulf.
Among the seven emirates that make up the UAE, it is the most populated one and second largest after Abu Dhabi. Dubai has more than 20 free zones.
Legal system of the UAE is a mixed legal system which combines:
Codified laws regulating labor relations, maritime law relations, commercial transactions, civil acts, intellectual property, etc. apply in the UAE.
There are two main types of law in the UAE:
Federal laws have effect on the whole territory of the UAE and are adopted by the legislative body or ministers. Local decrees and acts have effect only on the territory of a separate emirate. Local decrees is adopted by the Emir or Hereditary Prince of the emirate; local acts is issued by the member of the royal family of the emirate.
Types of Entity
Companies registered in the UAE can be divided into 3 categories:
Besides, commercial activities can be established through Sole Establishment (sole trader). Foreign companies can also establish a branch or a representative office in the UAE or Free Zone.
Mainland companies may carry on business indicated in license on the territory of the UAE and Free Zones. They provide for obtaining visas for the founder and employees of the company and members of their families. At the same time, number of staff should be proportional to the occupied office space. The presence of an registered office is compulsory (from Flexi desk). Foreigners can own 100% of a local company, unless such a local company is carrying out activities of "strategic importance"
Onshore companies may carry on business indicated in license on the territory of the Free Zone or outside the UAE. It is envisaged to obtain visas for the founder and employees of the company and members of their families. At the same time, number of staff should be proportional to the occupied office space. The registered office can only be located in a Free Zone. Some Zones provide a seat in a business center. Possible 100% foreign ownership.
Offshore companies may carry on any activity which is not specially regulated outside the UAE only. The company's activities must be carried out exclusively outside the UAE. The company may not have an office in the UAE, Possible 100% foreign ownership through an individual or legal entity.
According to the UAE Commercial Companies Act, the following business forma can be established in the UAE:
According to the Civil Code civil companies can be established in the UAE. Types of activities of such companies are restricted – they can carry on professional activities in technologies, law, medicine, etc. The local shareholder is not required.
There are more than 40 Free Zones in the UAE. The federal laws, local laws and special laws adopted by the zone, regulate activities of the companies registered in a Free Zone. According to the general rule, local founder is not required.
To carry on international transactions a company is obliged to obtain a related license which is issued in the process of incorporation. The company may not carry on business outside the Free Zone. However, international activity is not restricted by the law if it complies with the issued license.
The law requires to lease a minimum office space in a Free Zone or a seat in the business center.
Free Zone companies can be established in the following forms:
Each Free Zone has its own requirements of share capital, number of directors, audit of accounts, etc.
The activities of offshore companies, along with federal law and the legislation of the relevant Emirate, are governed by special laws adopted in relation to such offshore jurisdictions.
The establishment of an offshore company does not require the involvement of a local partner as the founder.
Such companies generally do not have the right to conduct activities in the UAE, but are not restricted from conducting foreign trade operations outside the UAE. An offshore company cannot own real estate in the UAE and, unlike a resident company, cannot be used to obtain visas for its employees or directors.
Offshore companies are fully exempt from taxation in the UAE.
Such companies are not required to maintain an office or staff, or audit their annual financial statements.
Offshore companies cannot benefit from double taxation agreements.
The Dubai company registration procedure includes the following steps:
The UAE does not have public company registries that would contain details of shareholders or directors. Information about companies can only be obtained at the request of a local court.
The register of shareholders and directors of the company is not accessible to third parties.
Every Dubai mainland company must have an office in the Emirate of Dubai.
The area of the premises for one license must be at least 100 sq. feet.
Companies are required to have a common seal.
The redomiciliation of companies both to and from the UAE is permitted.
The director can be an individual (in DMCC a corporate director can be appointed with the permission of the Registrar). There are no requirements as to the residence of the director. The minimum number of directors is one, the maximum is set by the local authorities (mostly without restrictions, but, for example, in the SEZ Dubai South - 7, and in the DIC - 5). Details of directors are not accessible to public.
The secretary can be either an individual (over 21 years of age) or a legal entity. There are no requirements as to the residence of the secretary. In some Free Zones there can be the same person as director. Details of the secretary are not accessible to public. In some Free Zones, as well as for local companies, there is no requirement for a secretary
The minimum number of members / shareholders in the company is one (maximum - 50 or more). Both individuals and legal entities can be shareholders. There are no residence requirements. Details of shareholders are not accessible to public.
The manager (if necessary) can only be an individual over 21 years of age (for Dubai South it can be a corporate person), the minimum number is one. Residence requirements depend on the Free Zone. It can be the same person as director / shareholder. Details of managers are not accessible to public.
Despite that many jurisdictions consider creating a public register of beneficial owners, the UAE does not have one yet. This means that there is no open access to the beneficial ownership information. It is stored by a service provider, namely a company registration agent, trustees, lawyers, accountants and other professionals, subject to strict confidentiality. Information about the beneficial owner can only be disclosed to regulatory authorities (for example, during inspections for its availability) or by court order.
The share capital can be denominated in UAE Dirhams (AED) only. Its size varies depending on the Free Zones (from AED 10,000 and more). For some companies, there is no minimum share capital. Sometimes a bank letter is required confirming the payment of share capital. Bearer shares are not permitted.