Sole Proprietorship Formation in Abu Dhabi

The United Arab Emirates (UAE) has one of the most modern legislation covering business incorporation, and it allows for both large and small scale business investors to set up according to their budget. For example, – if large enterprises can set up private and public companies, individuals can register a sole proprietorship in any of the Emirates.

The pro-business environment of Abu Dhabi allows investors to set up their activities through varied corporate forms. As mentioned earlier, according to the budget and needs, foreigners can invest in Abu Dhabi in any of the legal forms, one of which is a Sole Proprietorship.

What is Sole Proprietorship in Abu Dhabi?

Abu Dhabi nationals or those from countries which are members of the Gulf Cooperation Council (GCC) can open sole trading companies in Abu Dhabi. A sole proprietorship is an entity owned by an individual with a valid trade license issued in his or her own name. The owner of the business, also called as a sole trader assumes all the financial responsibilities of the entity, including all its financial liabilities.

Unlike an Abu Dhabi Limited Liability Company (LLC), which requires that at least 51% of shares must be registered to a UAE/GCC national sponsor, a qualified foreign investor that sets up an establishment or sole proprietorship to practice a professional service is permitted 100% ownership in the company.

Characteristics of a Sole Trading Company

  • A commercial or industrial type sole proprietorship can be owned only by the UAE or GCC nationals
  • The owner of a consultancy type of sole proprietorship should have a scientific qualification for the activity selected
  • A sole proprietorship company can have only one manager
  • A sole proprietorship has no minimum requirement for business capital
  • The trade name should be related to the activity
  • A sole proprietorship can have branches, which can perform all activities included in the license of a parent firm
  • The firm and its branches can be sold, but the industrial or commercial type of firm can only be sold to UAE nationals or GCC nationals

Sole traders in Abu Dhabi can be individuals of any nationality but need to make proof of their professional skills. Foreign investors in Abu Dhabi can appoint a commercial agent to act on their behalf in business activities performed by a sole trader. This Local Service Agent can help you if you want to act as a medical professional or engineer in the Emirate.

Benefits of Setting up a Sole Proprietorship in Abu Dhabi

  • Sole proprietorships in Abu Dhabi address to investors willing to have 100% ownership and full responsibilities for losses and profits
  • The business activities of sole traders can also be established in Abu Dhabi’s free trade zones
  • Entrepreneurs can operate in the medical or IT fields or can offer financial management and consultancy services in Abu Dhabi
  • Foreigners are allowed to invest in Abu Dhabi as sole traders in their name
  • No restrictions on the location where the company can rent/buy office premises

Procedure to Start a Business in Abu Dhabi

The Abu Dhabi sole proprietorship must be registered with the Abu Dhabi Department of Economic Development (ADDED). The steps to incorporate a business in Abu Dhabi are simple and straightforward.

  1. Decide the type of business activity to apply for obtaining a business license
  2. Decide on a trading name and register the same. The trade name must be unique and should not match with the name of an existing business in Abu Dhabi
  3. Submit the required documents to the DED and pay fees
  4. Obtain a license and get membership from the Chamber
  5. Get a rented office space (if required)

Documents Required

  • Certified passport copy for the shareholder
  • Copy of the UAE residence visa, if applicable
  • No Objection Certificate (NOC) from current UAE residence visa sponsor, if applicable
  • Proof of education, professional qualification or experience, if required
  • Certified passport copy for the General Manager
  • Two copies of Certified proofs of address for the General Manager
  • One copy of CV for the General Manager;
  • One copy of the Professional/bank reference letter for the General Manager

Note that the documents mentioned above must be attested and notarized.

Even though the steps are simple, it can be complicated for someone who is not well-versed with the legal aspects of the UAE. That is where business setup consultants like Commitbiz come into the picture.

How can we help?

Commitbiz Management Consultants has been in the consultancy business for more than 13 years and are well-versed with the legal proceedings in the UAE. Our specialists can handle all the business setup requirements of an entrepreneur and make the process smooth and hassle-free. Our services include –

  • Business Registration
  • Business License
  • Intellectual Property
  • Accounting and Bookkeeping
  • Corporate Secretarial Services
  • Local Sponsor
  • PRO Services
  • Office Space in the UAE

Contact us today for more information.