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The company law of the United Arab Emirates provides for a multitude of subsidiary forms.
These range from a representative office to the setting up of a capital company. It should, however, be noted that in respect of the setting up of a capital company in the U.A.E., a local holding of 51% is (still) required. In this case corresponding agreements which offer adequate security to the foreign (minority) companies have to be made with a local partner.
Alongside this there exists the possibility of setting up a company in the numerous free-trade zones, where 100% of company shares can be held by foreign investors.
In addition exemption from taxation is guaranteed in the free-trade zones for up to several decades.
With regard to the subsidiary forms in detail:
Branch office of a foreign company
Foreign companies may routinely set up a branch office in the U.A.E. They remain the 100% owner of this branch office.
By law the branch office is treated as a part of the parent company, and has no independent legal identity. For this reason, its name is identical to the name of the parent company.
Branch offices though do need a local service agent. The national service agent does not, however, have an obligatory holding in the business, and undertakes specific services in respect of the company.
Setting up an LLC
Arguably the most widespread legal form of a company, above all with the involvement of foreign investors, is the so-called limited liability company (LLC). This is a legal form comparable to the German GmbH.
Here it is (still) necessary that a local company has a 51% holding of the company shares. The share capital routinely amounts to a minimum of AED 150,000.00. In Dubai, however, the minimum share capital stands at AED 300,000.00. As such, e.g. in the case of a capital company, 100% of the shares may be held by a foreign investor.
Setting up companies in the free-trade zones
In the United Arab Emirates there are numerous free-trade zones which are normally structured according to areas of interest.
Furthermore, within the free-trade zones – unlike outside these areas– the setting up of a one-man capital company is possible, the so-called Freezone establishment. In addition to this however multi-person companies are also permitted, so-called Freezone LLCs.
The basic difference between a Freezone establishment and a Freezone LLC lies in the minimum capital conditions.
The minimum capital for a FZ-LLC stands at roughly AED 500,000.00 – there are fluctuations within individual free-trade zones. For a Freezone establishment on the other hand, AED 1,000,000.00 is demanded.
The salient features of aFreezone Company are:
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