UAE Corporate Law and Requirements for Company Incorporation in the UAE

Entering the world of investment requires a good awareness of the advantages, disadvantages, and associated risks. There is no certainty in the investment world when it comes to profits and losses. However, there are several ways to reduce or mitigate incidences of investment losses, the most important of which is by gaining knowledge through researching the types of investments available, the associated risk and benefits thereof, as well as various other factors.

The United Arab Emirates is considered one of the most promising investment destinations in the world due to the many advantages it offers, such as access to a large and diversified segment of consumers, easy registration procedures for companies and businesses, etc.

The UAE provides an ideal business environment for investors and entrepreneurs as it is equipped with excellent infrastructures. The UAE has a further competitive advantage in that it offers a wide variety of mechanisms for the facilitation of doing business across the country, for example, free zones, industrial zones, etc.

The UAE boasts some of the simplest and most time-effective procedures for the registering and establishing of a company amongst its neighboring countries. Company registration in Dubai falls within the jurisdiction of the Department of Economic Development.

In an effort to limit time and reduce costs, a company may be registered in a few simple steps and the following points are important to remember when embarking upon the registration process:

• Determining the type of activity that the company will engage in is the first step in establishing a company. This is important to determine the required license, obtain initial approval of a tradename and choose the number of partners in the company etc. Dubai offers more than 2000 commercial activities spread over a wide economic field including commercial, industrial, professional businesses. This provides the investor with a wide range of choices and increases the possibility that the prospective company will find a suitable registration category for its envisaged business activity.

• In the rare circumstances where a company is unable to find the suitable registration category for its activity, the registrant may engage with the classification department within the Department of Economic to develop the best description of the activity which the prospective company wishes to engage in.

• It is important to bear in mind that the type and scope of the license govern the type and scope of the company’s business. Thus, the type of license applied for is of vital importance. In certain cases, it is possible to combine different commercial activities when applying for such a license.

• There are some types of activities that require the approval of certain private entities, for example, activities related to road transport must be approved by Roads and Transport Authority (RTA), and activities related to communications must be approved by the Telecommunications Regulatory Authority (TRA) etc.

There are certain activities that do not depend on a legal description or categorization in the traditional sense but are instead subject to certain services and have specific standards. The most important of these activities are discussed in detail below:

Consulting Activities

These types of activities are divided into 3 types, namely:

Economic Activities belonging to the Economic Department

A company engaging in such activities may not be a limited liability company. It must be either a sole proprietorship or a civil institution, or a branch of a Gulf or foreign company. Furthermore, the owner, directors, partners, managers or any other responsible parties are obliged to complete a specific training program through the American University in Dubai to qualify as consultants.

Activities belonging to the Dubai Municipality – Engineering Activities

A company, the activities of which relate directly to the engineering sector, cannot be a limited liability company and must be either a sole proprietorship or a civil institution. The owner, directors, partners, managers or any other responsible parties, must hold university degrees in the engineering field in which the company specializes.

Legal Services and Advice Activities

Legal activities require the approval of the Legal Affairs Department before choosing the name of the company or institution. However, this is not required whilst establishing foreign consulting firms and firms as branches.

Establishing a Company as a Foreigner in Dubai

Investing in Dubai provides great opportunities for foreigners. Dubai is a popular investment destination that offers tax exemptions as well as quick and cost-effective methods for establishing new foreign companies or opening branches of foreign companies. This may be completed in a few simple steps:

• Defining the Activity of the Company– The first step is determining the type of commercial activity that the company will engage in.

• Commercial Registry– This is the next step in extracting the commercial registry according to the commercial activity of the company.

• Initial approval– Initial approval can be obtained from the General Administration of Residency and Foreigners Affairs.

• Choosing the location of the company– It is very important to legally establish the location of headquarters for the company since the submission of a lease agreement forms part of the requirements to finalize the establishment of a company in Dubai.

• Obtaining the license and commencing business– In order to obtain the license, the registrant must obtain all the necessary documentation, together with the approvals from the concerned authorities, and pay the prescribed fees.

Establishing a Company in Abu Dhabi

Abu Dhabi is of particular importance in the UAE investment world. One of its greatest advantages is that it is the capital of the UAE and also the richest emirate. It is further characterized by high per capita income, a very low crime rate and robust infrastructure. The economic and commercial growth rate of Abu Dhabi is amongst the highest in the world.

To establish a company in Abu Dhabi, similar steps must be followed as those followed when establishing a company in Dubai. i.e. defining the activity of the company, obtaining a commercial registry etc.

We at HHS Lawyers and Legal Consultants UAE, have a team of specialists to assist you in the establishment of your company in the UAE.