The Legal Formalities for Investing in Dubai
Overview of the UAE Investment Laws
The United Arab Emirates (the “UAE”) is a federation of seven Emirates: Abu Dhabi, Dubai, Sharjar, Ral Al Khaimah, Umm Al Quwain, Ajman and Fujairah. The statutory code is the primary source of UAE’s Civil Law Jurisdiction. It has been highly influenced by the legal system of Egyptians, who themselves follow French and Roman law.
Under United Arab Emirates law, there are majorly five types of business investments allowed to the foreign entities interested in establishing a formal presence in UAE. You can invest and create a permanent establishment, establish a branch office, create an entity in a UAE free zone, create a civil company that is currently limited to Sharjah and Dubai or enter into a commercial agency agreement.
In order to invest in Permanent Establishments, you need to follow any one of the following methods:
- General Partnership: This investment is possible and the entity may only be established between UAE nationals, where both are responsible for the company’s liabilities.
- Limited Partnership: You can operate your business from your location as a silent partner in this method.
- Joint Venture: All the partners will share the equal loss or profit.
Branch Office/Liaison Offices
A branch office has the same legal identity as of its parent company and conduct a business under the name of its parent company. Under this type of entity, you can carry out various types of activities, obviously the approved ones. Branch offices are considered fully-fledged business investment.
On the contrary, the UAE allows foreign businesses to operate within “free zones”. Free zone allows foreign investors the 100% ownership and is subject to reduced trade barriers and tariffs. There are different types of licenses that can be issued in free zone. They are:
- General Trading License
- Trading License
- Industrial License
- Service License
- National Industrial License
In this type of investment method, the entity is established as sole traders operating under a license. As of now, to set up a civil company is only possible in Sharjah and Dubai.
Commercial Agency agreement
An UAE agent will become the distributor and will offer, sell and provide goods or services within the UAE on some commission or profit basis. That agent will now represent the foreign company, which wants to invest in UAE.
In addition, there are far more investment Opportunities in UAE options available. However, my advice would be, it is sensible to exercise due diligence on every investment law in the industry to establish your business successfully.
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