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Business Setup in Abu Dhabi

Abu Dhabi Economic Department is the licensing authority in Abu Dhabi which issues licenses for all kinds of business in Abu Dhabi except for the free zones. The licenses issued in Abu Dhabi are:

An Expatriate can choose either LLC or Free Zone to set up his new Company according to his/her requirements.

Limited Liability Company (LLC)

Limited Liability Company  where the liability is fixed according to the capital shown by the Company. In Abu Dhabi the minimum required capital for a company is AED 150,000 (US$ 41,000). The law also specifies for a foreign nationals ownership in this type of company is pegged at 49% and 51% would be held by a UAE national. 

Fifty-one per cent participation by UAE nationals or company owned 100% by UAE nationals is the general requirement for the Limited Liability Companies. Therefore the normal shareholding pattern for an LLC is:

Local sponsor - 51% 
Foreign Shareholder (s) - 49%
Only Limited Liability Company allows the company to trade directly in the local market. Majority of the Companies established in UAE are LLC’s.

Maximum number of shareholders allowed 50
Minimum number of shareholders allowed 2
Paid up capital of the Company should be AED 150,000
Minimum share value AED 1,000
Minimum shares held by UAE national 51%
Can profit ratio be deferred from share ratio Yes
Activities allowed Trading, Construction, Logistics, Manufacturing, Consulting, etc..
Activities restricted Insurance Banking Investment of funds etc…
Approximate time for incorporation 1-2 weeks
An expatriate can be the managing director Yes
Physical office Required

In Abu Dhabi professional activities (by expatriates) has to be set up as LLC.
The time required to form a company will be approximate 1-2 weeks (depends on the activity and approvals required) from the date of receipt of all the documents. The procedure and cost breakup will be given upon request.

Branch of a Foreign company

Foreign companies can set up their branches / representative offices in Abu Dhabi and owned 100%. The law only requires that a local service agent (UAE national) be appointed for such branch / representative office.

The branch is part of the parent company and it can carry on the business according to the activities (subject to approval) mentioned in the parent company’s license.

Only UAE nationals or companies 100% owned by UAE nationals may be appointed as local service agents. Local service agents - also sometimes referred to as sponsors - are not involved in the operations of the company but assist in obtaining visas, labour cards, etc and are paid a lump sum fee per annum. The time required to form a branch of a foreign company is approximately 3-4 weeks (depends on the activity and approvals required) from the date of receipt of all the documents.

The application for establishing the branch should be accompanied with the parent company’s financial statement of last two years and other related documents.

For companies related to construction and engineering the application must contain the details of executed projects and current projects are required to be submitted before the licensing authority.

Retail companies cannot apply for the license for setting up the branch only manufacturing companies can set up their branch in Abu Dhabi.

A representative office, on the other hand, is limited to promoting its parent company's activities, i.e. to gather information and soliciting orders and projects to be performed by the company's head office. Representative offices are also limited in the number of employees that they may sponsor. Procedures are same for representative office setup except two year financial statements are not mandatory.

Parent company shall be Manufacturing Company, Consultancy firm, Construction Company
Parent Company shall not be A Trading Company
The local service agent should be Only UAE nationals or companies 100% owned by UAE nationals may be appointed as local service agents.
The local service agent can be helpful in obtaining visas, labour cards, etc
Minimum years of existence of parent company 10 years
Documents required List of documents can be provided upon request
Physical office Required
Approximate time for incorporation 3-4 weeks

The detailed procedure and cost breakup can be availed via a request.

Branch of a Local Company (UAE)

For carrying on business in Abu Dhabi it is compulsory to have a license issued by Abu Dhabi Economic Department. For a company established in any other emirate can carry on their business in Abu Dhabi. A company having a valid license issued by the Economic Department of any Emirate can establish their branch in Abu Dhabi. There is no requirement for appointing a separate sponsor for setting up the branch in Abu Dhabi.  The activities allowed in the branch license would be the same(subject to approval)as the parent company’s.

Any Company having valid license issued by any emirate in UAE can establish their branch in Abu Dhabi there is no requirement of capital or vintage.

The detailed procedure and cost breakup can be availed via a request.

Free Zones

Free zones are established as independent jurisdictions which allow the expatriate entrepreneur to own a company wholly (100%) and offers single window administration. Free zones also do away with the requirement of appointing UAE national as partner / service agent (branch). This type of company is incorporated for carrying on international trade as business with local market (UAE) is restricted.

For local (UAE) supply of goods the company has to pay 5% as customs duty and should be supplied through local distributors.

Free Zone issues licenses for:
  • Commercial trading.
  • Consultancy
  • Branch of Foreign Company

List of Free Zones in Abu Dhabi

  1. Masdar City
  2. Two Four 54
  3. ADAFZ (Coming up)
  4. Zones Corp (ICAD I, II, III, Al Ain Industrial City)
  5. KIZAD (Khalifa Industrial Zone Abu Dhabi)

 

Special Approvals

Special approval are required according to the activity of the Company, such approvals are issued by the Ministry / Departments related to such activities;

  • Medical pharmacy etc – Medical council
  • Food and beverages – Abu Dhabi Food Control Authority
  • Air transport. air cargo etc – Ministry of Civil Aviation
  • Financial institutions, Banks, money exchange etc – Central Bank
  • Education, training etc – Abu Dhabi Education Council (ADEC)
  • Agriculture, veterinary etc – Ministry of Agriculture and Department of Health
  • Customs clearance, fright forwarding sea cargo etc – Abu Dhabi Customs Authority
  • Telecommunications - Telecommunications Regulatory Authority
  • Branch of foreign company, insurance company, chartered accountants firm etc- Ministry of Economy
  • Oil and Gas – Supreme Petroleum Council
  • Electromechanical Engineering – Abu Dhabi Distribution Company

Please contact a Commit executive for more details

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