Introduction
The Dubai LLC or Dubai Limited Liability Company is one of the two most popular types of company incorporation in Dubai. The Dubai LLC is a very popular and accepted company structure for the following reasons;
- The Dubai LLC is widely used and therefore widely accepted and understood by the business community in Dubai.
- The Dubai LLC is very easy to set up – it just takes 3 steps to set up a Dubai LLC
- The Dubai LLC has one of the highest capital adequacy requirements in the world – you need to show a minimum capital of UAE Dirhams 300,000 (approximately USD 83,000) in cash, deposited and verified by a bank in Dubai.
Note: The Dubai Government has established a unique Dubai LLC incorporation procedure which aims to achieve the following;
- A very quick incorporation
- Making sure that the investor is completely aware of all the requirements for starting and running and business before the incorporation process starts.
Step 1: Initial Approval
Obtaining the Initial Approval is the most important part of the Dubai LLC incorporation process. The Initial Approval is a document issued by the Dubai Government licensing authorities which approve the following;
- The Business Activity: Unlike other jurisdictions where you incorporate a company and begin trading, Dubai is different in that each and every business activity that you wish to undertake must be approved first by the Dubai Government.
- Company Structure: This depends largely on the activity/activities that you have chosen to undertake. Activities defined by the Dubai Government as “Commercial Activities” are incorporated as Dubai LLCs, whereas activities defined by the Dubai Government as “Professional Activities” are incorporated as Dubai Professional Licenses. For example if you wish to set up a rent-a-car company which is considered a Commercial Activity, you will have to set up a Dubai LLC. To see if your intended business activity falls under a Dubai Limited Liability Company or a Dubai Professional Company, please fill in our Obligation Free Questionnaire and we will reply with a detailed proposal.
- The Partners of the Company: As per Dubai Law, at least 51% of a Dubai LLC’s shares must be owned by a UAE Citizen commonly called a Local Sponsor. At the time of the Initial Approval, you will be told if the Local Sponsor you have selected is allowed to sponsor your company. For example; if you wish to start an Audit Firm, then your Local Sponsor should be a qualified Chartered Accountant registered with the Ministry of Economy.
- The Company Name: Dubai has very strict laws regarding the naming of companies. The primary concern is to make sure that the company’s name does not misrepresent the business of the company. Unlike other jurisdictions around the world which have rules regarding the naming of companies, Dubai applies a very strict interpretation of the law. It is not uncommon to see companies with names such as “ABC Passenger Transport by Rented Buses LLC.” Here ABC is a company that provides passenger transport by renting out buses.
Step 2: Fulfilling the Conditions of the Initial Approval
The Initial Approval Document contains a list of conditions that must be fulfilled before the final license is issued. These are usually;
- Renting an Office: Dubai has very strict zoning laws. You cannot register a company at your home. You cannot even use your friend’s office – it is a strict one company per office rule in Dubai.
- Courts and Notary Procedures: The Memorandum and Articles of Association (M&As) must be created and attested by the Dubai Courts Notary Public Section. For those of you not familiar with the Memorandum and Articles of Association, this is the document that acts as the constitution of the company.
- Related Ministry or Related Department Approval: If you are setting up a straightforward trading company you will not be required to obtain any further approvals. However, there are many business activities where the Dubai Government has to make sure that you are competent to carry out the intended business – or there is legislation in place so that a Ministry or Department oversees and approves the licensing procedure. For example, if you wish to set up a rent-a-car company, you must satisfy the conditions set forth by the Dubai Roads and Transport Authority.
Step 3: License Issue
Once all the conditions have been fulfilled, the Licensing Authorities take about 1 – 2 days to check all the documents. A payment voucher will be given to you – in effect an invoice – covering the license fees. Once you pay the license fee – the Final License will be issued.
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