James Swallow

5 steps to setting up a business in the UAE

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James swallow time2Launching a business in Dubai and the UAE can be completed in a relatively short amount of time if you have already organised the legal procedures. However, there are certain steps that must be taken in order to comply with the regulations and legalities surrounding such a venture.

At PRO Partner Group, the team can take on all of these aspects for you and make the process as smooth as possible. Before you contact us, consider the following five steps you need to take. When this is all in place we can help you take the step into your business development in the UAE.

  1. Select the business and ownership type

The type of business you select will determine the sort of license you need. Whether your company falls into the commercial, industrial, or professional sphere, your licence will be defined by your operations.

Some business activities will lead to the need for further approval from more government departments. These include the jewellery trade, legal consultancy, veterinary businesses and trading in food. See Department of Economic Development (DED) in Dubai for a full list of more than 2,100 business types that you can choose from. If your company type is not on this list, then you can contact the DED directly if you are looking to set up your business in Dubai.

If you wish to own 100% of your company then you may need to choose a licence within one of the free zones across the UAE. Each free zone is set up for specific business activities. Bear in mind that every free zone will have its own formalities and regulations that need to be complied with.

However, if you want to start your business Onshore (so that you can operate locally) you will need a licence direct from the UAE government. This comes with certain restrictions that must be adhered to regarding how much of the business you can own outright.

  1. Learn about the legal forms of businesses

There are different rules depending on the location and type of business you are starting. For example, if you wish to start a legal consultancy, it can only be as a stand-alone company or as a company branch. Sole proprietors are not allowed to start up this kind of business.

Every free zone has its own different regulations and restrictions surrounding the company structure that is allowed. We recommend checking the website of the zone in question to find out more about company structures in the first instance.

  1. Choose a trade name and understand share capital

The name you choose for your trading business is an important part of the legalities involved with setting up a business in the UAE. Ideally, the name of the business should be indicative of the type of business. This doesn’t apply if it’s a branch of an existing company – in this case the name must exactly match the name of the mother company.

In the majority of cases, you won’t need to pay in the share capital when you set up your business. The share capital should be set out in the Memorandum of Association that must be drawn up for your proposed company.

  1. Shortlist office premises and line up employees

When you have all your documentation and legalities ready to be processed, it’s a good idea to build up a shortlist of potential office space, along with costs and other information. This will mean, when the legalities have been formally accepted, you will have a clear way forward.

If you are setting up a company in a free zone then you will get formal assistant to find office premises that work best for your requirements. You will also receive assistance in setting up amenities, including electricity and internet. Office space is mandatory on almost all licences within the UAE.

In most Onshore, or mainland, business types you will need to have a manager in place to oversee the set up and ensuing operations. You might have to have a manager in place before your approval is granted. However, this isn’t true in every case and normally you are not  allowed to hire until the trade licence is fully completed and the new company is registered with the Immigration and Labour departments..

  1. Line up your local partner

For business types set up Onshore, you need a local partner, agent or sponsor in place. This is mandatory and the partner will also hold a 51% share ownership in the business. We would always advise that you choose a company as a local partner or local service agent, rather than an individual. It is also important that the local partner or agent is able to provide you with operational support for licencing and visas as the local partner or agent will be the main point of contact for government liaison. For more information on the best way to choose a local partner, and for guidance on all aspects of setting up your business in the UAE, contact us at PRO Partner Group.

James Swallow is Director of Middle East based PRO Partner Group, which specialises in company formation and support services in Abu Dhabi, Dubai, the wider UAE and Oman.

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