What are the options to Start a Business in Dubai Free Zone
Contributed by PMC Solutions
06 February, 2020
Dubai, the commercial capital of UAE delivers enormous business opportunities and pioneering commercial modules for businesses across the globe.
International exposure and an investor-friendly government are the two major contributing factors that encourage businessowners to start a business in Dubai. Startups in Dubai also receive tax advantages in comparison to other nations.
Despite the friendly business setup procedures, it can be quite challenging for a new entrant to setup their business.
Speculating on how to setup your business in Dubai?
Here is an introduction to what you need to learn about starting a company in Dubai
1. Decide Your Business Activity: Not all business activities are allowed in the UAE, there are a few limitations. Before you setup your business in Dubai, various permissions are needed. Thus, the first thing you have to do is decide if your company fits in with the Dubai norms.
2. Pick the Right Jurisdiction: Dubai provides onshore business establishments (Mainland / LLC), Free zone business formations, and offshore business establishments. Choosing the correct jurisdiction relies on the company activity you wish to perform and the nature of the company.
3. Choose the Shareholding Structure: The shareholding structure determines the company set-up in Dubai. This will also differentiate your company's legal form. The composition of the shareholding must be consistent with your company activity and preferred jurisdiction. Here are the shareholding structures for which you can choose:
- Limited Liability Company
- Sole Proprietorship
- General Partnership
- Partnership in Commendams
- Public Shareholding
- Private Shareholding
- Joint Venture
- Shared Partnership
- SME License
- Representative Offices
- Branch Offices
- Limited Partnership
4. Local Sponsorship: It is a mandatory to partner with a UAE national to start a business in the mainland of Dubai. Finding a trusted and reliable UAE company partner is the task.
It is indicated that 51% of the contract will be held by the UAE local partner.
A business would involve a local service officer as far as freezone is concerned, who would operate for a nominal fee.
It is recommended to get into a contract with a silent partner- this will assure security and total control over your company.
5. Trade Name Registration: You need to register your trade name with the DED. You need to give your business a name according to the norms listed by the Economic Development Department (DED).
The trade name functions as your business ' identity, and therefore DED emphasizes to associate the name according to the type of permit. The registration of a trade name requires about three days and is valid for a period of six months.
6. Approval of Your Business Activity: In Dubai, only a few commercial activities are not permissible, some activities have constraints, while others are totally forbidden! The Dubai DED is the body responsible for deciding, regulating, classifying, allowing and licensing all financial operations according to Law No. 13 of 2011. This does not apply to free zones and offshore business setup, however.
7. Check on External Approvals: DED grants business licenses and deals with investors. But sometimes in order to start your company, you may need external approvals. In general, the non-governmental and semi-governmental bodies acquire these permissions.
8. Office Space: Renting an office space in Dubai while forming a business is compulsory. You cannot start your business in Dubai without renting an office.
It is necessary to submit the tenancy agreement, documents of the Real Estate Regulation Authority (RERA), and EJARI, after which the DED grants the initial approval.
9. Initial Approval from DED: The initial approval is the accreditation from the DED to start your business. At this point, you can start your company and proceed to obtain your trade licence permit.
10. Draft the MOA/LSA for your business: The MOA specifies each partner's share of limitations and freedom within the company, while the LSA describes the agent's role and fulfills the compliance that will be executed.
MOA / LSA are legal papers and should be drawn up with the assistance of a legal consultant.
11. Business License Process: Once DED registers the company, the business license is processed. Business licenses are issued primarily based on the nature of the business activity and the company's jurisdiction.
The most prominent company licenses in Dubai are: commercial license, industrial license, and professional license. Getting the trade license permit It takes around one week or more from the time you receive your initial approval from DED.
Here is the general list of documents and certifications that are essential for business setup in Dubai.
- License Application
- Attested LLC agreement
- Governmental forms
- Name reservation certificate
- Initial approval certificate
- External departments approval
- Tenancy contract
- EJARI registration certificate
- Passport copies partners and NOC for partners (if any)
- Dubai Chamber of Commerce and Industry Registration
- Endorsements from Governmental Agencies (For Gas and Oil Companies)
- UAE Central Bank Approval and License (For Financial Institutions)
- Finance and Industry Ministry Certification (For Manufacturing Companies)
- Economy and Commerce Ministry Certification (For Insurance Companies)
- Health Ministry Certification (For Medical & Pharmaceutical Firms)
12. Collect your Business License: The DED will provide a payment voucher or transaction number when all the listed papers are submitted. In order to obtain the company trade permit, the final payment must be made. You become a full-fledged business entity once you obtain your business license.
Based on the information above, it is obvious that registration of a business in Dubai business is an extensive process! However, by appointing a company setup consultant, you can make it fast and cost-effective.
PMC Solutions DMCC are the trusted business setup consultants in Dubai, UAE.
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