Establishing Business in the UAE
Business investors can establish their own businesses in the UAE within a very short time .Establishing a conventional business in various emirates of the UAE by the conventional means requires a series of procedures and approvals from the Department of Economic Development and the other concerned authorities for official registration of the entity.
Steps in Establishing a Conventional Business in the UAE
The process of establishing a business in the UAE has a number of steps including:
1. Identifying the nature of the activity
- The nature of the economic activity defines the legal form of the company and the type of license required.
- There are six types of licenses, namely industrial license, commercial license, crafts license, tourism license, agricultural license, and professional license.
- A license may include more than one business activity.
- There are more than 2,000 various economic activities to select from in the list of businesses in the UAE.
2. Identifying the legal form
- The legal form mainly depends on the business requirements and identifies the laws and regulations to be complied with.
- One of the following legal forms may be selected in the State: Partnership, limited partnership, limited liability company, public joint stock company, private joint stock company, branch of a foreign company.
- The legal form must be consistent with the economic activity.
For the requirements of each economic activity and its legal form, please contact our business consultant for best advise.
3. Reservation and registration of the trade name
The trade name is the name which distinguishes a license from other licenses to avoid confusion for the customer. The trade name must be related to the type of license or anything indicating the same.
The terms and conditions for selection of the trade name:
- The trade name must be followed by abbreviation of the legal form (i.e. the legal form of the company), for example (LLC).
- The trade name must not include improper words and must not violate the public sense.
- The trade name must be consistent with the economic activity performed.
- The trade name must not include the names of Almighty Allah, the names of government authorities, or the names or logos of third parties.
- The trade name must be available and not registered by another company.
- The trade name is approved by the Department of Economic Development and the trademark is approved by the Ministry of Economy.
- Trade name certificates are renewable.
4. Application for initial approval
Initial approval means that the UAE Government does not have any objection to establishing the entity in the UAE and indicates that the next step for obtaining the commercial license could be taken. It does not constitute authorization to operate or to begin the practice of the business immediately.
Foreign investors must obtain the approval of the General Directorate of Residency and Foreigners Affairs (GDRFA) before obtaining the initial approval.
Certain activities require, prior to submission of application for initial approval, obtaining the approval of the government authorities relating to the activity, such as:
- Activities relating to legal affairs.
- Activities relating to security entities and the Securities and Commodities Authority.
5. Memorandum of association
- Depending on the legal form of the company, a memorandum of association may be required to be prepared and signed.
- A memorandum of association shall be made if the company takes any of the following legal forms: Partnership, limited partnership, limited liability company, private joint stock company, public joint stock company.
6. Selection of the location or address of the commercial activity
All companies in the UAE must have an actual address for the economic activity. The commercial building and location must meet the requirements of the Department of Economic Development in each Emirate and the regulations of zoning by the municipality or the competent authority.
A lease contract must be provided for the office or the warehouse. Certain Emirates require a certified document. In Dubai, the lease contract must be registered through Ejari offices.A19
7. Obtaining the additional government approvals
In certain cases, the activities require obtaining special approvals for licensing from (federal or local) government authorities regulating such activities.
Below are examples of activities which require such approvals:
- Ministry of Justice: Legal activities.
- The Municipality Department in the relevant Emirate: Engineering and architectural activities.
- Telecommunication Regulatory Authority: Telecommunication activities.
- Executive Council: Tourism and travel – public services – trading charter – shipping and marine agencies, car clubs – air transport charter – branches of foreign companies.
- Ministry of Economy: private joint stock companies, auditors.
- Health Authority in the concerned Emirate: Health related activities.
- Supreme Petroleum Council: oil and gas field services, oil drilling services.
8. Receipt of license
Upon completion of the above steps, the customer may receive the commercial license through the service centers of the economic departments or through the electronic service platforms of the department.
Documents required for issuance of licenses for all legal forms:
- Initial approval and all the submitted documents receipt.
- Copy of the lease contract registration certificate.
- Duly certified memorandum of association.
- Approvals by the other government authorities of the activity, if required.
The fees must be paid within a specified period (usually 30 days) from issuance of the payment receipt.
Failure to make payment results in cancellation of the application.
9. Registration with the Chamber of Commerce
Membership of the Chamber of Commerce of the relevant Emirate might be required before proceeding with carrying on the economic activity.
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