Fortunum Investments Ltd.

Introduction

The simple answer to this question is YES! However, you will have to understand that to 100% legally exploit any loophole, you will have to spend a little extra money during your Dubai Company Incorporation Process.

The Loophole

Dubai has a rule that branches of foreign companies have to carry the same name as that of the parent. For example, if you parent company is called the “General Motors”, you cannot call the Dubai Branch of your company “Final Motors.” The naming rules in Dubai dictate that your Dubai Branch will be called “General Motors – Dubai Branch.”

How-To

What we prefer to do in this case is to set up an offshore company – usually in Switzerland or in the British Virgin Islands, with the name that you wish to call your Dubai LLC or your Dubai Sole Establishment. We then apply to open a branch in Dubai. As per Dubai rules, your branch will carry the same name as your parent company.

Are there any disadvantages to this approach?

There are no disadvantages as such, but you have to fulfill certain requirements to set up a branch of a foreign company;

• The Parent Company should have been in operation for two years or more – you cannot incorporate a company today and expect to register a branch in Dubai tomorrow. We overcome this problem by buying a company that has been incorporated for over two years or more and changing the name to the name that you want.
• The Dubai Licensing Authority will also request to see audited statements for these two years. Therefore we have to look for a company that is more than two years old WITH audited statements – or at least accounts for two years or more that can be audited.
• The Dubai Licensing Authority may or may not wish to see at least 6 – 12 months bank statements of the parent company along with a reference letter or letter of introduction from your banker.
• Ministry of Economy Approval: If you are going to conduct any commercial activities (as opposed to Professional Activities) The Dubai Licensing Authorities will request that you first register your company with the Ministry of Economy. This registration requires a deposit of AED 50,000 to be placed with the Ministry and the payment of an annual fee of around AED 15,000.

Besides overcoming the naming conventions in Dubai are there any other advantages to using this structure? There is certainly a big advantage. Any company in Dubai that wishes to undertake commercial activities must register as a Dubai LLC – i.e. 51% shares owned by a UAE Citizen and 49% shares owned by the foreign investors. Many investors are nervous when they hear that they have to give up majority control when registering a Dubai LLC. However, when you open a Branch of a Foreign Company in Dubai, this branch is 100% owned by the foreign parent. You still require a local sponsor, but this local sponsor will not own any shares in either the parent company or the Dubai Branch. This way you have majority ownership – 100% control!