Not just the infrastructure, services, and workforce that can contribute to the commercial success of Dubai, but also its well-known business environment that is universally recognized as one of the most business opportunities offering surroundings in the world. Furthermore, Khairallah Law Firm is an established expert in UAE business law so the organization can help to cope with all the legal challenges. Moreover, as well as the transportation and logistics hub of the region, Dubai is one of the main drivers of multinational corporations’ presence establishment on the emirate’s territory.
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Establishing Your Presence in Dubai: Navigating UAE Business Law
Dubai, one of seven emirates in the United Arab Emirates (UAE), offers a plethora of options for setting up corporate entities due to its multi-jurisdictional nature. As a major commercial, industrial, and trading hub in the region, Dubai has focused on simplifying the process of setting up companies to sustain its prominent position. In the process of setting up a company in Dubai, depending on business objectives and preferred shareholding structures, foreign investors can opt to establish themselves either in mainland Dubai or in one of the numerous industry-specific free zones.
Mainland Dubai
The Department of Economic Development (DED) in Dubai holds authority over licensing and registering corporate entities in mainland Dubai. Streamlining its procedures, the DED ensures ease of registration tailored to the specific business activities of each entity. Governed by the Commercial Companies Law (CCL), which is a federal law regulating all entities established in the UAE mainland, this legislation also applies to corporate entities established in mainland Dubai. Compliance with UAE business law and Dubai business law is integral throughout this process.
Understanding Limited Liability Companies and UAE Business Law
For foreign investors in limited liability companies on the UAE mainland, the primary constraint is the foreign ownership limits. As required by the CCL, an LLC is required to have its at least fifty-one percent of the share capital registered in the name of a UAE national who can be a natural person or a legal person. In practice PSPs often play the role of being the nominee shareholder, it means that these PSPs own fifty-one percent of shares as the payor to the foreign investor. When LLC adopts PSPs and the foreign investor has a one-hundred percent interest in the LLC, the LLC’s AOA usually states that all offices and powers for its operation and management shall be vested exclusively in the foreign investor.
In Dubai and the UAE company law, knowledge of ownership and extensive bodies that have special rights apart from the company’s control and power entails, for instance, the board of directors and general manager appointment powers and other officers in their official capacities. Therefore, when setting up a company in Dubai, knowledge of ownership aspects of extensive legal frameworks under the UAE business law plays an integral role in successful company establishment.
Contractual safeguards can further protect the foreign investor. Often, the foreign investor and the PSP enter into contracts, commonly referred to as side agreements, establishing a contractual relationship that maximizes legal protection for the foreign investor. An LLC in mainland Dubai offers significant advantages, including the absence of territorial restrictions on business activities or office premises, and no minimum capital requirement. It’s worth noting that while a tax regime is in place, it is not currently enforced, and there is a 5% customs duty imposed on all imports.
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Foreign Company Branch
Another available option under UAE business law is setting up a branch of a foreign company in mainland Dubai. A branch, legally considered an extension of its parent company, does not possess an independent legal personality. It can conduct all activities of its parent, except for trading in the UAE mainland.
When setting up a branch, one must appoint a local service agent (LSA), who must be a UAE national (natural or legal person). Unlike the foreign ownership restriction for LLCs, the LSA requirement is purely procedural. The LSA has no role, interest, or right in the business or the assets of the branch. Typically, the LSA’s role is to liaise with government offices to open labor and immigration files for branch employees’ visas. Normally, the LSA is paid an annual fee for providing such services.
The free zones
Free zones serve as one-stop shops to facilitate the establishment of corporate entities, aiming to fulfill all their needs, from licensing and registration to labor and immigration, providing a business-friendly environment as well as access to required services. Across the UAE, designated territorial areas are considered distinct legal jurisdictions from the UAE government, allowing free zone jurisdictions to regulate, license, and register corporate entities independently. Dubai boasts more than 30 free zone jurisdictions. Understanding the regulations under UAE business law is crucial for operations within these free zones.
The opportunity for foreign investors to forward entities 100% foreign ownership without necessitating a UAE national be an agent benefits as per free zone law UAE. Such laws as also offers additional benefits that ensure no tariffs are imposed on imported goods for company use, a 50-year tax-free period, and no limitations on capital or profit repatriation. This area falls under UAE corporate law.
Conclusion
Dubai’s business image is informed by an amicable environment and the legal prowess of firms such as Khairallah Law Firm, the top lawyers in Dubai. The ideal location for multinationals is mainland Dubai and free zones; UAE business law covers 100% foreign ownership and tax-free periods. Corporate law is fundamental in the achievement of profitability in the vibrant Dubai economy.
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