Ras Al Khaimah (RAK) is the Emirate that prides itself on being the heart of traditional shipbuilding and trade; and is at the lead of manufacturing, quarrying, and tourism. Ras Al Khaimah has steadily grown and gained credibility as an attractive hub for business with a vibrant and diversified economy. During the; last few years, Ras Al Khaimah (RAK) has progressed towards its goal of becoming a thriving investment destination, as well as one of the top tourist destinations in the Gulf region.
There are many reasons why an entrepreneur prefers RAK as their destination for setting up a business in the UAE. With its diverse landscape, including expansive desert, pristine coastline, and pleasant wadis and oases in the Hajar Mountains, picturesque RAK was ranked 6th on FDI magazine’s list of Top 20 Middle Eastern Cities and first on its list of ‘Cities Most Attractive for Foreign Investment,’ accompanied by Dubai and Abu Dhabi. To set up a business in RAK, one has to decide on the legal form for their company, and public/private shareholding company is of the options that an entrepreneur chooses.
Public Shareholding Company in Ras Al Khaimah
Also called the Public Joint Stock Company (PJSC), it is governed by the CCL and refers to any business whose capital is divided into equal value negotiable shares. A PSC is very similar to the public limited company in the United Kingdom. According to the CCL, the shareholders of PJSC are liable only to the value of their shares in the capital of the company. The nominal value of each stock of a PJSC should not be less than AED 1 and not more than AED 100, and the minimum share capital requirement is AED 10 million for a general company, AED 40 million for a banking entity and AED 25 million for insurance and investment company.
Requirements of PSC in RAK
- A PJSC must have at least ten founding members, and its management should be vested in a board of directors consisting of a minimum of three and a maximum of twelve persons whose term of office may not exceed three years.
- Directors can be re-elected when their term of office has expired.
- A PJSC is required to have a chairman of the board of directors who must be a UAE national. Besides, the majority of the directors on the board must be the Emirati nationals.
- At least 10% of the net profit must be allotted to a general reserve account until such reserve account amounts to half of the total paid-up capital of the business.
- UAE nationals should hold at least 51 percent of the shares of the PJSC
- The founding members must subscribe to a minimum of 20 percent and a maximum of 45 percent of the share capital of the PJSC.
PJSC has become increasingly popular in recent years vis-a-vis the privatization sector, and there are currently more than 100 PJSCs in the UAE. Besides, as it is the only business vehicle which allows shares to be offered to the public, thereby enabling businesses to potentially raise substantial amounts of capital, mainly where large-scale projects are concerned, this allows small foreign and local investors to participate in such projects. It should also be noted that, where one is contemplating a business venture which involves insurance, banking, or investment of funds on behalf of third parties, such activities can only be carried out through a PJSC. It should also be noted that where one is contemplating a business venture which involves insurance, banking, or investment of funds on behalf of third parties, the establishment of PJSC is a legal necessity. No other type of company may be established for such activities.
Private Shareholding Company in Ras Al Khaimah
Private Shareholding Company refers to possession of a big business corporation in two diverse behavior —first, referring to ownership by non-governmental organizations and second, referring to ownership of the company's stock by a relatively small number of holders who do not trade the stock publicly.
Requirements of a PSC in RAK
A Private Joint Stock Company is essentially the same as a PJSC, with the following differences:
- The minimum capital requirement is AED 5 million
- The shares of a Private Joint Stock Company may only be offered to the public after two financial years have been completed and upon conversion to a PJSC (and other requirements are met)
- It is supervised by the Ministry of Economy (as opposed to regulated by SCA); and
- Only two founding members are required
Considering the lower capital requirement of AED 5 million, Private Joint Stock Companies are more popular with foreign investors than PJSCs.
How to Set Up a Public/Private Shareholding Company in RAK?
- Decide on the type of business activity and submit it to the RAK Department of Economic Development (DED)
- Get an initial approval for setting up the RAK business.
- Draft a Memorandum of Association
- Pay fees and obtain a business license.
- Get an office space
How can we help?
Company formation in RAK is a lucrative proposition, and one must select the most appropriate legal entity to represent one's business. Commitbiz offers a wide range of highly consistent business management services that can help you realize your business initiatives in Sharjah. Our professionals specialize in company incorporation, registration, accounting, tax advisory, and bookkeeping services. If you are looking to set up a company in Sharjah or anywhere in the UAE, do contact us. We'll be glad to assist you.