This type of company allows for a joint venture between UAE national (local) and foreign (expatriate) partners. Foreign partners are permitted to hold shares not exceeding 49% of the capital, with the national partner holding the remaining 51%. A LLC company formation in Dubai is the most common type of entity for retail business in UAE. There may be a requirement to have some level of share capital paid up to a local bank, depending on the type of business being set up. This is decided by the Economic Department on a case by case basis, and normally will only apply to those in financial services or insurance. It is standard to have an annual fee payable for the services of the “local partner”. Despite the split in shareholdings, it is common for the local partner not to be involved in the day to day running of the company. The expatriate partner may undertake management of the company.
If a client wants to provide a professional service in the UAE, (and not necessarily supply a product), then it is possible to apply for what is known as a “Professional License”. This involves the issuance of a license in the name of an individual who must hold a relevant professional qualification (originals of which must be notarised and presented to the local authorities).
A UAE national must still be appointed as a “Service Agent” whose role is to facilitate visa applications and other administrative issues. The Service Agent is not a shareholder in the company (which differs from their role in an “LLC”), and the shareholding of the entity can be 100% foreign. Normally the local Service Agent will be paid an agreed lump sum which is subject to negotiation depending on the “standing” of the local involved.
We at RedSeal help our foreign companies establish a branch or representative office in the UAE. Branches and representative offices may, subject to obtaining the necessary licenses, carry out promotional activities and facilitate contracts only. They cannot sell or manufacture goods locally. It is a requirement that the parent company is well established, usually with the ability to present at least 2 years worth of audited accounts.