How to Go About LLC Formation in Dubai?

by Zaara 20, Mar 2018

Dubai holds several advantages for modern businesses. The developed banking and economic sectors have attracted investors to set up business in Dubai and the UAE. Business setup in Dubai is an effortless task if one abides by the law.

One of the most important aspects while setting a corporation in Dubai is to decide upon the type of legal entity you want to establish. It may depend upon the product, location, strategic objectives, and where you are going to operate your business – locally or internationally. In the UAE, a company can be formed under 3 jurisdictions, namely, Mainland, Free Zone, and Offshore. This blog is dedicated to providing information on how to form a Limited Liability Company (LLC) in Dubai, which is a standard type of company in the UAE mainland.

What is an LLC?

A limited liability company is one of the most common forms of entities preferred by a businessman while setting up a company. It can be defined as a company in which the liability of its partners is limited only to the extent of their shares in the capital. It is a separate and distinct legal entity. This means that an LLC can get a tax identification number (TIN), open a bank account and do business, all under its own name.

Why Form an LLC in Dubai, UAE?

If the purpose of your company is to make a sale within the region, then it is recommended you opt for an LLC company in Dubai. A mainland LLC company in Dubai can trade anywhere within the UAE and/or the extended Gulf Cooperation Council (GCC) states. However, it should be noted that the company should have one local sponsor who holds about 51% of the total shares in the company, according to the UAE Commercial Companies Law (CCL). Unlike a free zone and an offshore company, an LLC in mainland does not allow 100% foreign ownership to an investor. They are accountable for the remaining 49% shares of the company. Recent amendments removed the requirement for minimum shares (previously AED 300,000 in Dubai) allowing the shareholders to decide the limit which could be less than earlier prescribed bottom line. Additionally, an LLC can be formed with a minimum of 2 and a maximum of 50 shareholders, whose liability is limited to their share in the business capital.

How to Set Up a Limited Liability Company in Dubai?

  1. Choose a proper legal structure for your company
  2. Select the name and the activities involved under the company in the application
  3. Choose a location depending upon factors like nearness to the market, easy transportation, etc. for your LLC formation in Dubai
  4. Gather all the necessary documents and submit them to the Department of Economic Development (DED) of the UAE
  5. If your business requires some special activities, you have to get an approval from relevant regulatory and government authorities
  6. Get a physical/virtual office/warehouse/land for the company operations
  7. Obtain a Trade License, Certificate of Incorporation, Memorandum of Association (MOA), Share Certificate and Tenancy Agreement for your LLC company setup
  8. Get visas, labor cards and other legal documents processed

Documents Required to Set Up an LLC in Dubai

  1. Certified passport copies of all the shareholders and managers
  2. NOC letter from the sponsor if the partner or the Manager has a residence visa in the UAE, if applicable
  3. Registration application form from the DED
  4. Trade name reservation
  5. Initial approval from the DED
  6. Tenancy contract for the office/warehouse attested by the Planning Department and Civil Defense Department of Dubai municipality along with location plan
  7. Memorandum of Association (MOA) duly attested from the public notary
  8. Professional/Bank reference letter for each shareholder

All the documents are required to be notarized and attested in both the applicant’s home country and at the relevant UAE consulate. The notarization process should be commenced as early as possible because it can take a significant time. They must also be translated into Arabic by an official translator before they can be presented to the authorities in the UAE. The requested documents should be submitted to the Sovereign, which will then manage the application process from start to finish.

The application is thoroughly investigated by the state government legal department authorities for their authenticity. After you get a green signal from the authorities, the company name is included in the Commercial LLC business register and the MOA gets published in the Economy and Commerce Ministry bulletin. The approximate time required to form an LLC company in Dubai from the date of receipt of all required documents in around 1-2 weeks. The LLC formation cost (documents) is around AED 10,000.

Advantages of Setting Up an LLC in Dubai

  1. No restrictions on the number of visas that can be obtained
  2. An LLC may conduct any type of business activity excluding insurance, banking, and investment
  3. The investors of an LLC enjoy investor’s visa under which they can get investor status in the Emirate along with their family
  4. Easy to open global/corporate bank accounts and avail credit facilities
  5. A mainland company is not required to pay the standard 5% customs duty on imported goods
  6. No restrictions on real estate ownership
  7. They have the option of commencing branches

The most important advantage Dubai LLC offers is unrivaled access to the wider UAE economy. Over the past decade, Dubai has emerged as a top destination to operate a business also attracts millions for LLC formation. If you want to set up an LLC in Dubai, we at Commitbiz have our team of experts to help you with company formation, registration, and counseling. You can contact us, even if it’s just for a friendly advice.