One of the seven Emirates of the United Arab Emirate, Fujairah, is well known as a tourism destination. It is the only Emirate positioned on the East Coast of the UAE and provides some of the most modern technologies for companies and the highest living standards for citizens. The Emirate has also become an attractive location for foreign investors.
Like other emirates, before 1984, the Emirate also followed its guidelines governing the operations of foreign business wellbeing in the Emirate. In 1984, Federal Law No. 8 of 1984, its modification by Federal Law No. 13 of 1988 - the ‘Commercial Companies Law” and its by-laws have been given out. The rule makes it conditional that the companies be wholly owned by nationals or that nationals own at least 51% of its shares, while the outstanding 49% may belong to non-nationals. The law provides that commercial companies incorporated in the U.A.E must take any of the following legal forms:
1.Limited Liability Company
An LLC in Fujairah is the most preferred corporate structure by the investors. It can be formed by a minimum of two and a maximum of fifty shareholders in the company’s capital. The minimum equity participation by the UAE national is 51%, and the requirement of minimum capital is AED 150,000. Profit or loss dissemination can be prescribed, and accountability of the management of an LLC can be bestowed in the foreign or national partners or third party. The shares of such business are not open for subscription by the public, and they do not issue negotiable shares.
A joint venture in Fujairah is the one where two or more partners agree by contract to share the profits and losses equally or by the ratio of shares invested in the company. The agreement is not mandatory to be notarized and can be oral or written. Third parties can remedy only to the partners with whom they deal. However, if the Joint Venture is revealed to the third parties, all the partners are responsible for the third parties. Existence of Joint Venture may be shown by any method of proof.
3.Sole Proprietorship (to practice profession)
A sole proprietor is the one who practices a specific type of business activities allowed for non-nationals without having a national partner. Such actions are engineering consultancies, medical services, legal practice and consultancies, and similar services delivered that such an investor holds a lawful and legitimate UAE residence permit. However, under such condition they must have a local service agent and accordingly a service agency contract needs to be entered between a UAE national and investor.
4.General Partnership Company
Under this business entity, two or more partners who are jointly and severally responsible for all the firm’s liabilities. Partnership companies are confined to UAE nationals as partners are responsible towards the debts of the firm by all their assets, which may not be applied for foreigners as in most of the cases the assets are usually abroad.
5.Public Shareholding Company
It is also referred to as a Public Joint Stock Company (PJSC) is a company with a capital divided into equal negotiable shares. In such companies, the liability of the shareholder is limited by the number of shares in the company. A PJSC shall have ten founding members, and its management should be assigned in a board of directors comprising of a minimum of three to a maximum of fifteen peoples whose term of office may not exceed three years.
6.Private Shareholder Company
Also called as a Private Joint Stock Company, a private shareholding company is incorporated by a minimum of three members. Unlike a Public Shareholding Company, this business entity cannot invite the public for subscribing in its shares. The least share capital to form a private shareholding company is AED2 million. The Chairman and majority of the Directors in a private shareholding business must be the UAE nationals.
7.Establishment (by GCC Citizens)
The states of GCC Saudi Arabia, UAE, Oman, Kuwait, Qatar, and Bahrain signed a United Economic Agreement in Riyadh intending to coordinate and unify financial, economic, monetary, and commercial legislations and the UAE endorsed this agreement in 1982. This agreement permits a GC citizen to conduct business operations in the UAE where the investor has to be a natural person residing in the UAE and practise the needed activity by himself and have a license to practice the business in his country of origin.
Should you decide to start a business in Fujairah, one of the steps is to choose a required corporate entity. In which, you can select any of the types above. We at Commitbiz can help you choose the appropriate business type suitable for your venture and help you register your company in Fujairah. Contact us today.