Joint Venture Company Formation

A Joint Venture or Consortium in Dubai refers to a contractual agreement between a foreign party and a local party licensed to conduct the desired business activity. The equity of the local party in the joint venture must be at least 51%, but the profit and loss distribution can be based on the terms decided upon by the partners. Generally, no exclusive license is issued in the company's name, since the license belonging to the original partner is enough for the execution of the project with the collaboration of the other partner who participates in the running of the company.

In a Joint Venture, the partners agree by contract to share the profits or losses of 1 or more commercial enterprises, which can, in the name of 1 of the partners. Contracts of joint ventures may be written or oral, and are not required to be notarized. Third parties have recourse against only the partners with whom they deal. However, all the partners are liable to the third parties should the joint venture be disclosed.

There is no need to license the joint venture or publish the joint venture agreement. The foreign partner deals with third parties under the name of the local partner who - unless the deal is publicized - bears all liability. Joint ventures in UAE are ideal for companies working together on specific projects.

Features of a Joint Venture Companies in Dubai

  • The local equity participation in the joint venture must be at least 51%.
  • Profit and loss distribution can be mutually agreed upon.
  • There is no need to license the joint venture or publish the agreement.
  • In the practice of joint ventures are seen as offering a suitable structure for companies who are working together on specific projects.

How to Set up a Joint Venture Company in Dubai?

In practice, the joint ventures are seen as offering a suitable structure for companies working together on specific projects. The Department of Economic Development (DED) and the Dubai Municipality is responsible for reviewing and approving the joint venture's business registration. The steps are undertaken for the formation of joint venture business are -

  1. Decide on the business activity and trade name of the joint venture
  2. The parties involved in the company must register a Joint Venture Partnership agreement with the DED Dubai
  3. DED will issue a form which must be signed by the parties in front of a public notary
  4. Once the contract is drafted, get initial approval from the DED
  5. If approved, submit the additional documents
  6. Pay fees and get an office space

The documents required for initial approval are -

  • An application form duly filled
  • Reserved trade name certificate
  • Passport copy and ID of the applicants
  • NOC issued by the local sponsor
  • Approval of the business activity undertaken
  • A resolution from the company management board
  • Dubai residence permit (for foreign applicants only)

The applicant must also submit a few documents to the Dubai register.

  • Initial approval from the DED
  • The documents registered for approval
  • A copy of office lease agreement
  • A copy of association agreement notarized by a public notary

Many companies that extend their activity in a new region rely on a joint venture to optimize the start. By finding the right partner, both businesses have the chance of more effective growth and increased profits. By establishing a joint venture partnership in Dubai, one can benefit from the local staff and technology, which will improve business performance. There are many reasons to invest in Dubai. Even if it is a foreign place for some, the local contribution coming from the business partner is going to be extremely helpful by giving the company increased access to the new market.

How can we help?

Business Setup in Dubai can prove to be a wise choice. Dubai provides the commercial and infrastructural amenities at par with any developed country in the world, in addition to tax benefits and a progressive business environment. We have our team of business consultants in Dubai to help you with your business setup process. Commitbiz approach to company formation is centered around your business vision and objectives. For any help or queries on company formation in Dubai, do contact us – we'll be glad to help you.