Types of Company Formation in Dubai

Dubai has shown unprecedented industrial growth in the past years, and the results are in front of everyone to see. Today, the UAE is considered a premier business hub for various business activities, and the credit for it goes to the government, the local people, and of course, the foreign investors.

A critical reason behind the booming economy of the UAE has been their flexibility to offer various types of company formation structures. Be it budding startups or multinational companies – all can find a home for their business in Emirates. You can connect with business consultants to better understand the business operation mechanism in Dubai.

types of company formation- Shuraa Business Consultants

What are the company formation types in Dubai?

1. Sole proprietorship

The investor or entrepreneur is the 100% owner of his/her business under the sole proprietorship business structure. It’s a type of company formation that’s best suited for people who wish to offer professional services like beautification, repair, development, etc. You might need to partner with a local agent for legal formalities, but they don’t have any shareholding in your company. Moreover, you don’t need to form any such collaborations if you’re a UAE or GCC national. Foreign investors need the local service agent’s (LSA) agreement for business formation, and their consent should be certified by a Notary Public.

2. Limited liability company (LLC)

You need to form an LLC if you want to establish your company in the Dubai mainland. It’s considered the best marketplace in the world where you can sell directly to high-profile customers who are willing to spend their money on quality products and services. Under the LLC structure, you must partner with a local sponsor in the UAE who’ll have 51% ownership of the company. Furthermore, you can have a maximum of 50 shareholders in your LLC company (and a minimum of 2). You can partner with Shuraa Business Setup, and we’ll become your silent partners so you can enjoy 100% operational ownership of your business.

3. Free zone company

The UAE is home to more than 40 free zones and several specialized zones that cater to the particular business industry. One such example is the DIFC (Dubai International Financial Center) which is the premier business hub for all finance-related activities, fintech startups, and other such establishments. People having their companies in the free zones enjoy complete exemption from taxes, 100% foreign ownership, independent jurisdiction, etc., at affordable costs. Moreover, you get high-quality labour and hassle-free availability to various business-ended resources when you go for a free zone establishment.

4. Joint venture

A joint venture is a legal name given to the official collaboration of two or more entities in the UAE. It’s a type of company formation where all the partners share the associated profits and losses incurred by the legal entity during the tenure of the joint venture. It’s also referred to as a “consortium.” Foreign collaborations need a UAE national as a partner who’ll have a larger share in the company. In case you have any of the free zones for company formation in Dubai, the foreign partners can enjoy 100% ownership of the joint venture.

5. Representative office

A representative office is a legal extension of a foreign parent company in the UAE. This type of company formation structure helps you retain 100% ownership of your company without the involvement of a local sponsor. Remember that you can utilize the representative office for the promotion, marketing, and maintenance of your foreign company, and you’re not entitled to indulge in any commercial activities. Therefore, you can’t churn profits from a representative office in this region. You can open a branch office of the parent company in Dubai and acquire the necessary approvals to engage in all commercial activities.

6. Civil company

Professionals like surgeons, accountants, lawyers, etc., can open their civil company in Dubai. You can have 100% business ownership under the civil company structure. All you need to do is hire a local service agent and take his/her help in the various legal proceedings at a fixed annual fee. However, a civil company serving the engineering field must partner with a UAE national who’ll have 51% ownership of your business. Moreover, the national must possess a similar qualification in engineering to become eligible for the legal partnership. Any foreign entity that invests in your civil company must also be from identical business activity.

7. Public shareholding company

A public shareholding company requires a minimum capital of AED 10,000,000 with transferable shares. Furthermore, there should be at least 10 investors in such a company, but exceptions can be made depending on the individual jurisdiction’s decision. The trade name should always have the keywords “public shareholding company” and should not be from any of the partnering investors. All the founders in this type of company formation need to subscribe to at least 20% of the Association’s capital (the highest being 40%).

8. Private shareholding company

If you don’t want to be a part of a public shareholding company, you can opt to become a partner in a private shareholding company. This type of company formation in Dubai requires a minimum capital of AED 2,000,000, and the legal entity should have at least 3 investors. The stocks of a private shareholding company cannot be made open for the general public. However, you can convert this into a public shareholding company after a term of 2 years if the venture meets the required criteria. You can consult with legal advisors to understand the functioning of these company structures in the UAE.

9. Branch of a foreign company

The branch of a foreign company is different from a representative office since you have the allowance to carry out commercial activities when you open a branch office. Moreover, the cost of setting up a branch of a foreign company is affordable, and you can perform all the operations that the parent company is allowed to conduct in the UAE. However, just like in the case of a representative office, you can enjoy 100% business ownership when you go for this category of company formation in Dubai.

10. Branch of a Dubai-based company

You can have multiple branches of your UAE-based company to meet your business goals. The new branch is the official extension of your local parent company and can perform all the permissible activities approved for the main company’s license. Furthermore, you can diversify the type of business activities by getting additional approvals from the concerned authorities. You can enjoy all the privileges of the parent company and the only legal obligation is to hire an LSA. Note that the local agent will only help you set up the branch and won’t have any shareholding in your company.

Connect with Shuraa

There are various types of company formation in the UAE, and all have their unique set of advantages and limitations. Shuraa Business Setup is there for you to simplify the business formation process. The business experts at Shuraa help you analyze the various company formation categories and pick the one that’s best suited to your business activities. But it doesn’t end there. We then take care of the company establishment process from start to end so that you don’t have to worry about anything while in the UAE. So, what are you waiting for? Call us today to get started with your dream business in Dubai.

Consult with Shuraa today by calling us on +971 44081900. For chat assistance, send a WhatsApp message on +971 50 777 5554. You can also write to us at info@Shuraa.com.