Dubai has been a top destination for international entrepreneurs and businesses for quite some time. With favorable geographic positioning, excellent infrastructure, and supportive business policies, setting up an LLC in Dubai has now become a very tempting option. Among the very recent exciting developments is the opportunity for 100% foreign ownership in Dubai for LLCs. This guide covers all the necessities of this opportunity in clear, simple terms, as well as the steps to take for an easy company registration process.
Latest on UAE Foreign Direct Disinvestment Law
Until now, it had been an incoming foreign national or foreign entity, desiring to set up a business in Dubai/UAE (or wholly owned by UAE nationals) that made shareholding by UAE nationals, 51% for all mainland (i.e. simply outside of freezones) activities, a basic rule here in the UAE. This was encompassing to the UAE Companies Law. Although most often the perception must be so that the economic interests of such foreign and local shareholders can be altered to some extent (many a time such arrangements on the side have been entered into between the foreign investor and local shareholder), it has forever created suspicion on how effective any such arrangements were.
What was Changed in the Modification?
It appears to us that the amendment to the Companies Act through the new law would abolish the general requirement of 51% shareholdings by UAE nationals and provide for 100% foreign ownership of limited-liability companies under UAE mainland jurisdiction whereby UAE national agents will no longer be required for foreign companies’ branches. In short, any company in the UAE mainland can now be 100% owned by anyone without considering nationality. This is a major departure from the controlled sectoral approach enshrined within the FDI Law, and we understand that it will soon be repealed once the new law comes into effect.
We understand that local licensing authorities in every Emirate shall exercise some discretion in imposing an element of UAE national ownership, though we believe that some strategically important sectors-certainly oil and gas, telecommunications, and utilities-will continue to be kept free from any degree of foreign ownership. This being said, reports suggest that most of the new provisions will come into effect on June 1, 2021. There will be a one-year grace period for compliance, however, for all companies to comply with changes brought by the new law.
What Does 100% Foreign Ownership Mean?
Prior to now, prospective investment foreigners were compelled to link up with a local partner or sponsor for setting up businesses in the UAE. However, with the following step of 100% Foreign Ownership in Dubai, the nationals would now be in a position to totally own their companies without engaging a local Emirati partner. The advantages are many regarding this approach –
1. Full Control – A Business Owner is in total control of company operations, strategies, and profits.
2. Simplified Ownership Structure – A local partner would complicate decisions and profit sharing.
3. An Enticing Facility for Investors – It is such total ownership that attracts worldwide investors, favoring investments with sole control.
Who Can Benefit from 100% Foreign Ownership?
In fact, this is quite a viable idea for an entrepreneur or business from any sector. From a startup to an already-established entity, 100% foreign ownership in an LLC would sound attractive for an organization that is looking to broaden its global reach. Some of the beneficiaries include –
- Tech Startups – Innovating and growing with the facilitation of Dubai is the growing tech sector that manages to utilize the policies.
- Trade and Commerce – Companies trading will take advantage of the location and extensive agreements for trade with Dubai.
- Consulting Firms – The Business sector has flexible ownership and business set-up which any professional service or consulting company can take advantage of.
- Manufacturing and Logistics – Production and distribution benefits as well as logistics easily leverage Dubai’s connectivity.
Step-by-Step Guide to Setting Up an LLC in Dubai with 100% Foreign Ownership
Navigating the process of setting up an LLC in Dubai might seem overwhelming at first, but breaking it down into manageable steps can make the journey smoother. Here’s what you need to know –
1. Choose Your Business Activity
Prior to applying for registration of your LLC, it is very important to determine what the business activity is to be. This is because Dubai has its own regulatory specifics depending on the sector; hence the business activity needs to be in alignment with local laws and policies. Keeping in mind this first step, the registration can thus determine what kind of business license, as well as permits, will be appropriate for carrying out your business activity.
2. Select a Suitable Jurisdiction
Dubai has various jurisdictions offered for company registration, free zones, or the mainland for business establishment. Each of them holds specific rules over business operations and ownership. Free zones provide full ownership of companies, and as per the latest regulation, now mainland companies too can enjoy 100% Foreign Ownership in Dubai in certain sectors. Assess all your business needs carefully to determine which jurisdiction is suited for you.
3. Prepare Legal Documents
Gather and prepare all the legal documents such as business plans, passport copies, and individual identification papers. However, by consulting business setup consultants in Dubai, you will be able to expedite the entire legal document preparation, ensuring that all documentation adheres to the local criteria.
4. Find the Right Partner
If you fall outside the free zones or into specific considerations, it would probably be good to get some business setup services Dubai has to offer. These services not only assist in legal matters but impart local understanding as well, ensuring that your business meets the regulatory standards and is thus set up for good uprooting.
5. Registration and Licensing
Once documentation is cleared, next comes registration. Once application submission is done, the authorities riverbed. During this time, discussing with business setup consultants in Dubai can help avoid any delays while ensuring the proper submission of your application. They will advise you on the licensing process and perhaps answer any questions that might arise with the authorities.
6. Opening a Corporate Bank Account
Once your LLC has been formally registered, you must set up a corporate bank account. The banks of Dubai provide a variety of services that meet different business requirements. It is best to approach a bank with adequate knowledge of international businesses, as they are aware of the idioms used in business setup in Dubai and thus can provide more personal services.
7. Office Space and Operational Setup
Identifying the best office space available is very important. Many free zones in Dubai provide flexible office solutions designed to cater to new and growing businesses. Ensure the office location suits the scale and nature of your operations. As a guide, business setup services Dubai may offer you package deals providing office space alongside legal and administrative support.
Final Thoughts
The complete 100% ownership of onshore companies by foreigners is going to be a game-changer for the business expansion of UAE and Dubai and for all investors who wanted to invest in the UAE Mainland but were put off from such a possibility by the earlier law that a local must hold 51% of the share capital. The old law dictated that a local sponsor held the majority of shares in your business, all without much involvement on his end; hence some foreigners favored setting up their businesses in the Dubai Freezone with full ownership instead of remaining confined to 49% in the Mainland.
Start Any Business (SAB) is a team of business set-up specialists that specializes in delivering company-building services for probable investors. We offer full-blown business set-up services. Team SAB is knocking at your door to help you freely from the hassle of company formation in Dubai.
