Creating a Subsidiary in Dubai
17 March, 2015
A subsidiary is different from a branch office, although a number of people often confuse the two. It is important to understand the difference between the two. Whereas a branch office is a part of the main office and parent company, and the parent company is liable for their actions, the subsidiary is actually a separate legal entity. This means that the subsidiary is fully liable for their actions and business operations. The subsidiary will have a main place of business or a headquarters, and the management all takes place in Dubai. This means it is subject to the rules and the taxes of the emirate.
Opening a Subsidiary in Dubai
If a company wants to open up a subsidiary, they will first need to appoint a local service agency to help them with the matter. The agency will take care of getting the licenses, as well as the permits and visas needed by employees who will be coming to work in Dubai at the subsidiary. The Dubai Company Act allows foreign companies to open up subsidiaries in the city, but they must all abide by the regulations in the Act.
You will have a number of things to consider when setting up a subsidiary in the free zones. The different zones have different requirements for capital to set up a company, as well as different business licenses and costs. It is possible to set up a subsidiary outside of the free zones. However, when you do this, 51% of the share capital needs to be owned by a national from the United Arab Emirates.
When registering a subsidiary, you will need the trade name of the company, as well as approval of registration from the Department of Economic Development. After you receive these, the founder needs to have additional approval from the Licensing Section of the DED for business activities. They also need approval for the trade name, and they need to identify the managers. Additionally, they will need to have notarization of the articles of association and memorandum.
Once they finally get approval from the DED, the founder then needs to apply for registration through the Trade License and Commercial Registration Department. In order to apply, they need to have a number of different documents including the application form, letter that states approval of the name, memorandum of association, and a letter from the Committee of Limited Liabilities Companies that shows the approval. They also need to have copies of ID documents from the partners. On the application form, they need to include details of the foreign company, as well as the name of the general manager for the subsidiary and the types of activities they will perform.
The Ministry of Economy and Commerce then passes the application to the Economic Department in order to get approval from the government. It then goes to the Federal Foreign Companies Committee for authorization. After all of the approvals, the Ministry will finally issue the license. Some types of companies may actually have additional requirements, and it may be beneficial to get help from a third party to get started with setting up a subsidiary.
« Go Back to Blogs