How to Build Your Company in the UAE in 2021
Dubai Expo 2020, the first World Expo to break new ground in the Arab world and one of the first lavish international events since the advent of the pandemic, will be in full swing on October 1, 2021. With participants from more than 173 countries, not to mention hundreds of multilateral organizations, academic institutions, and corporations worldwide, Expo 2020 is a global grandeur that will reel in international investors, throngs of tourists, and workforce. Thus, setting up a business during this period will award you with the benefit of introducing your start-up company around the world.
How to set up a business on the mainland
Identify Your Business Activity
Before setting up a business, think carefully if your entrepreneurial venture will prosper in the UAE market. Further, your business activity will be the basis of the type of licence you must possess. There are six types of licences to choose from: industrial, commercial, professional, tourism, agricultural and occupational.
Select a Company Structure
Selecting the structure of your company is the core of your business formation in the UAE. It classifies the approach on the organization of assets and resources, handling of profits and losses, and the rules and regulations that a specific company structure is subjected to. The different types of company structures in the UAE include General partnership, Limited partnership, Limited liability company (LLC), Public joint-stock company (PJSC), Private joint-stock company (PrJSC), and more.
Register the Trade Name
• Aside from indicating the nature of the business, a company’s trade name sets them apart from other companies and makes them unique in their own right. According to the Official Portal of the UAE Government, “The trade name must:
• be followed by the business structure acronym (legal form of the company) such as LLC, EST, PJSC, PrJSC
• does not violate the public morals or the public order of the country
• be compatible with the required type of activity and the legal status of the company or business entity
• does not contain names of any religion, or governing authority, nor names or logos of any external bodies
• not have been previously registered.”
It is also essential to know the difference between trade name and trademark. The trade name is renewable and the Department of Economic Development is where it should be registered, while the trademark is registered in the Ministry of Economy.
Apply For an Initial Approval
Before applying for the initial approval, check if your business activities, i.e. security affairs, legal affairs, financial securities, etc., are required to obtain the approval of certain government entities related to your business. Moreover, foreign investors must get the mandatory approval of the General Directorate of Residency and Foreigners’ Affairs before applying for the initial approval.
If the UAE Government has no issue and does not object to the establishment of your business in the country, you have passed the initial approval. However, it does not permit you to start running your business activities just yet.
Below are some of the business activities and the ministries they are under that require government approvals.
• Ministry of Interior
• General transport
• Driving schools
• Fire equipment, alarm, and safety systems
• Used-car dealers
• Used auto-parts
• Car rental
• Ministry of Justice
• Legal activities and legal consultancy
• Local municipal department
• Architectural and engineering affairs
• Telecommunications and Digital Government Regulatory Authority (TDRA)
• Telecommunication activities
• Executive Council
• Travel and tourism
• General services
• Charter trading
• Ship and maritime agencies
• Car clubs
• Charter air transport
• Foreign company branches
• Ministry of Economy
• Insurance activities
• Insurance consultancy
• Local health departments
• Health-related activities
• Supreme Petroleum Council
• Onshore and offshore gas and oil-field services
• Onshore and offshore oil drilling operations
Draft a Memorandum of Association (MoA) and Local Service Agent (LSA) Agreement
The complexities of drafting a Memorandum of Association, where it should be consistent with the UAE Government’s mandates and at the same time it is aligned with your business interests, must be presided by experts.
Business legal forms that are required to possess a MoA are: Limited partnership, Limited liability company (LLC), Public joint-stock company (PJSC), and Private joint-stock company (PrJSC). Meanwhile, the appointment of a local service agent is the requirement for business owners who are non-GCC residents, which is attested by a notary public or the court.
Notary public, courts, and UAE-based law firms help in the preparation and the attestation of MoAs and other agreements.
Select a Business Location
Every business must have a physical address where they can run their operations, be it in an office unit or a shared workspace. In any case, the chosen business location must be in accordance with the emirate’s Department of Economic Development and local municipality regulations, including an office or warehouse agreement with the concerned real estate agency.
Collect the Business License
• The business license shall be collected at the service centers of economic departments if each step has been successfully accomplished. Upon collection, the following documents must be submitted:
• EJARI registration certificate
• External approvals (if any)
• Initial approval certificate
• Memorandum of Association (MOA)
• NOC for partners (if any)
• Other requirements by the DED (if any)
• Passport copies of partners
• Relevant government forms
• Tenancy contract
• Trade license application
• Trade name reservation certificate
The UAE Government mandates strict guidelines and requirements for business formation in the country. Fulfilling each step might be challenging but seeking help from the business consultants of FHS Law Firm will set the wheels in motion. With the combined help from our highly experienced business formation consultants and adept lawyers, your business will be in good hands.