Businesspersons sometimes may look for a faster way of incorporating a business in Dubai. That's when purchasing an already existing shelf, or a vintage company can be a preferable option. What makes vintage or shelf companies for sale an opportunity worth exploring? We'll explain why, and how to go through the procedure to start doing business in Dubai.
What is a Shelf Company?
You must have heard of a shelf, vintage or an off-the-shelf company in the business world. But the one thing you should know is that these are the terms that are used interchangeably to refer to the same concept.
A shelf company is a ready-made company that has already gone through a relevant incorporation procedure in the jurisdiction but is not active until someone purchases the entity—therefore understanding that it is available for the purchase.
The main benefit of buying a shelf company is that you can begin the operations faster as you are switching personal information into your name from the entity that initially formed the new shelf company. It makes the company formation process faster than creating an entity from scratch.
What are the Benefits of Buying a Shelf Company?
Here's why you would want to buy a shelf or vintage company in Dubai -
When action must be taken quickly, shelf companies are ideal, for example, when an arrangement must be closed while all parties are in the same room or when an asset must be transferred instantly. You do not have to go through the name application procedure. If you are a lawyer, accountant or other intermediary and the client's preferred company names are rejected, you would have to go back to the client until proper names are approved. The chance that a shelf company would no longer be available when you get back to the seller is smaller. Additionally, you do not have to wait for documents to be prepared. The buyer will generally be impressed with the efficiency and will be happy to get down to business immediately. Online incorporations may have reduced incorporation time considerably but getting a shelf company is still faster and you dont have to engage with an unfriendly website.
It is usually hard to think of good names when you are asked to. If you cannot think of a right name, then you can pick one up from the list, already incorporated. If you choose a young shelf company, then you will probably pay the same amount as new incorporation, i.e., there will be no aged company premium. Alternatively, if the buyer is not concerned with the name and wants a company, and this is often the case if the company will be a simple holding company, you can pick any company on the shelf list.
How to Buy a Shelf Company in Dubai, UAE?
According to our consultants, the key to buying a shelf company in Dubai, UAE as a whole, is to make sure you keep your due diligence in order. Why? That's because an offshore business is not subject to any financial reporting requirements. As such, it makes evaluating a shelf company for sale more challenging than in a jurisdiction that has a financial reporting requirement.
Let us understand the simple steps of buying a shelf company in Dubai.
1. Decide on the Jurisdiction
The first step to buying a shelf company is choosing a shelf company either onshore (mainland) or in the free zone. Depending on where you want to carry out your operations, and if you are aiming to serve the Emirati market or the wider region, you will want to look for a shelf company where you want to set up.
The most common type of corporate entity is the Limited Liability Company, also known as an LLC.
Another feature of Dubai companies is that you have to apply for the licence that covers the activities you plan to carry out in your business. If you are interested in purchasing a shelf company in a Free Zone, you must decide what Free Zone permits your chosen business activity. The large majority of cases do not allow you to transfer a company's domicile from one Free Zone to another.
2. Due Diligence
We believe it is better to go ahead and open a new company in Dubai since new company formation is streamlined in most cases. Nevertheless, should you opt for the shelf company route, we need all our customers who acquire shelf companies to pass a previous test that our team of due diligence specialists performs. Why do we insist on such a high standard of quality? That's because full compliance is a hallmark of our service and we want to ensure that since there is no accounting requirement, you are aware of all possible liabilities. These outcomes, whether financial or otherwise, could go into an acquisition beyond the records you could find in the list of shelf businesses on the UAE Companies register by checking the business name.
An expert partner like Commitbiz will look into the context of the entity, as well as perform a comprehensive check of the shelf company's financial and credit history, so you know everything behind the shelf corporation you are about to transfer into your name.
3. Making Necessary Changes
Before you can begin full trading once the company is purchased, there are some final steps you must complete to finalise the company registration process. You will have to amend the Memorandum and Articles of Association to reflect the names of the new shareholders and directors of your enterprise. If you would like to change the trade name, this is the moment where you can choose to modify it. Then, as we mentioned before, you'll also have to apply for the relevant business activity licences, so you have the authorisation to run your business as you wish.
Commibiz | One-Stop-Shop to Purchase a Shelf, Vintage Company in Dubai
The team of Dubai company formation and offshore company formation experts at Commitbiz is ready to guide you through the process of choosing a reputable shelf company that passes through the due diligence standards needed to make a smart acquisition. Would you like to begin the process? Don't hesitate to contact us today.
What is a shelf company?
A shelf business is a ready-made company that has previously gone through the required incorporation procedure in the jurisdiction but is not active until it is purchased—hence the term "available for purchase."
What is the prime advantage of purchasing a vintage company?
The biggest advantage of buying a shelf business is that you can start operations sooner because you are transferring personal information from the corporation that founded the new shelf company to your name. It speeds up the company formation procedure compared to starting from scratch.
Which jurisdictions to consider if intending to buy a shelf company in Dubai?
You can purchase a shelf company either on the mainland or in the free zones.
Which is the most common type of a Dubai corporate structure?
It is a Limited Liability Company in Dubai.
What are the other necessary changes besides amending the MOA & AOA while buying a Dubai vintage company?
You can modify the trade name, apply for the relevant business licenses, etc.