Global (عربي)
KSA (عربي)
Global (عربي)
Establishing a business in the UAE takes many forms and paths, depending on the type of business activity, sector and foreign ownership requirements, the structure of the company, which emirate the business is set up in and whether it is in a free-zone or in the mainland.
Each of these factors comes with its own licensing procedures and regulatory requirements. Today, we look at the procedures and steps required to start a conventional business in the UAE using the guidance from the UAE’s Economy Ministry.
As noted in a previous entry, there are six types of business licenses you can obtain to start a conventional business in the UAE.
1-Industrial
2- Commercial
3-Crafts
4-Tourism
5- Agricultural
6- Professional.
That is not to say that these are the only types of licenses available in the UAE, but that most conventional businesses generally operate under one of these six categories.
It is worth noting that the UAE recognizes over 2,000 business and economic activities, and that a license can include more than one business activity.
In general, there are six legal forms a business can take:
1- Partnership
2- limited partnership
3- limited liability company
4- public joint stock company
5- private joint stock company
6- branch of a foreign company.
Deciding which path to take will depend on the nature, projected size of the business and its requirements, as well as the number of shareholders involved and the extent of their participation.
It is also vital that the legal form must be consistent with the business activity you plan on engaging in.
To find out which legal form is consistent with which activity it is crucial to check with the Department of Economic Development (DED) of the emirate in which the business will operate.
The trade name is there to distinguish the business when it comes to licensing and can be registered at the DED of the emirate the business will operate in.
There are a number of conditions for filing to reserve a trade name:
1 -The trade name and logo must be unique and not used by another.
2 -The trade name must be followed by abbreviation of the legal form (for example LLC).
3 -The trade name must not violate public decency laws.
4 -The trade name must be approved by the DED and the trademark approved by the Ministry of Economy.
A preliminary approval is required to show that the UAE government has no objection to you establishing the entity and is a precursor step to obtaining a license.
It however, does not give you permission to begin business operations.
A number of activities require prior approval from certifying bodies before an initial approval application can be submitted, such as establishing a legal office.
Also, foreigners must obtain the approval of the General Directorate of Residency and Foreigners Affairs before obtaining the initial approval.
A memorandum of association is a legal document that defines the company’s relationship with the outside world.
It acts as a charter for the company and defines the limits in which the company can operate. It outlines the scope of the company’s activities, its legal identity, and its objectives and includes:
- The company name
- A Legal form
- Purpose of the company,
- Share capital
- Liability of partners,
- Registered address,
- Signatures of the founding shareholders.
In the UAE, all legal forms of a business require a memorandum of association with the exception of a foreign company branch.
All companies in the UAE must have an actual address for the economic activity and the address must comply with the regulations of the DED of the emirate as well as obtaining municipal and zoning approvals.
A certified lease agreement is required for offices and warehouses, while lease contracts in Dubai must be registered with the Ejari offices.
Before obtaining a license a number of additional approvals must be obtained from federal or local authorities.
Some are general requirements that all businesses must have, such as approvals from the Interior Ministry for hazard and safety measures at the business.
Others are required depending on the type of business activity and approvals must be obtained from the relevant government authority or ministry regulating that activity.
For example, industrial licenses may require additional approvals from the Ministry of Industry.
Once the previous steps have been taken and the required documents and approvals have been made, the business owner will then apply for a license from the DED service branch or online platform.
A fee must be paid within a certain time frame from submitting the required documentation (usually 30 days).
Some business activities may require membership in the chambers of commerce of the emirate in which the business will operate before operations can begin. This can be done through the website of the relevant chambers of commerce.
Read more about: How UAE Legislation Protects Investors?
Disclamer:
This post is for educational purposes only, and does not constitute investment advice or a solicitation to take any financial action. It should not be relied upon when making investment or financing decisions.
