Registration in the free economic zones
Each company existing in the UAE belongs to one of two types: 1) local companies; 2) companies in free economic zones. Of course, it is more profitable for foreign businessmen to open a business in free economic zones, which were created to attract foreign investors.
Companies registered in DMCC, Dubai can work using 100% of foreign capital, while the local companies should own only 49% of the foreign capital and 51% of the local capital (capital owned by the local residents and that owned by foreigners). Other important advantage of registering a firm in free economic zones is the absence of taxation and simple documentation.
What is DMCC in Dubai? Now there are more than 30 free economic zones in the UAE, which include Dubai World Central, Dubai Airport Free Zone, Hamriyah Free Zone, Fujairah Creative City Free Zone, etc. Each zone can have its own distinctive features and requirements regarding the creations of the new enterprises in its territory, which should also be considered.
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Direction of activity and type of registration
In the UAE, all companies are also divided by the types of DMCC business setup. So, if your company is engaged in providing various services and execution of custom works, it belongs to professional companies, if it is engaged in trade – to the commercial, and if it is devoted to production and all related tasks – to the production firms. Depending on the type of activity, you may also need to follow DMCC Dubai rules and regulations.
Main organizational and legal forms of enterprises in a DMCC free zone
- Limited liability company (LLC). Such companies are found in the UAE most often, especially when it comes to the large business. For a foreign entrepreneur, an obstacle to the company formation in DMCC, Dubai may be the fact that at least 51% of the capital of the enterprise must be owned by a UAE citizen. The minimum share capital is 150000 AED. Foreign employees can obtain a resident visa.
- Company in a free economic zone (1 type). Such companies have the full name “Free Zone Company”. To open, more than one founder is required (the best option is 2-5 founders). The minimum authorized capital is 500000 AED. Foreign citizens can own the authorized capital in full. Foreign employees have the opportunity to obtain a resident visa in a DMCC free zone in Dubai.
- Company in a free economic zone (2 type). It is called “Free Zone Establishment”, and the minimum amount of authorized capital will be1 000 000 AED. Such a firm can have only one founder. For the rest, it has no significant differences from the companies of the 1 type.
- Offshore company. There are almost no restrictions. The number of founders is unlimited, and the minimum authorized capital is not established. However, foreign employees of an offshore company cannot obtain a resident visa.
DMCC free zone rules and regulations to grant a license for doing business in DMCC, UAE will depend on the Emirate in which this application is filed.
These are the main types of legal forms of DMCC company setup. Apart from them, there are partnerships, limited partnerships, private corporate enterprises and public corporate enterprises. However, as a foreign investor, you’re unlikely to encounter such type of companies.
Documents required starting a DMCC Free Zone Company
- Permissions and licenses (depending on the type of activity);
- Package of constituent documents;
- A certificate of opening a bank account;
- Company name registration;
- Certificate of registration in the Commercial register;
- Certificate of registration in the Chamber of commerce and industry.
When registering a DMCC free zone company, you will probably face many unpleasant bureaucratic peculiarities, which are impossible to evade. To make this procedure a little easier, you should opt for the establishment of a joint Arab-foreign company.
The purchase of a ready-made business in a DMCC free zone usually passes quickly and without problems. You will not need to register a company in a DMCC free zone in Dubai, enter into all kinds of contracts with banks and other institutions and prove that you have the necessary amount to contribute the authorized capital. A sole task is to conduct successful negotiations with the seller of the business and find the optimal price of the enterprise, which will suit both parties.
By the way, the Arabs have their own peculiarities of negotiating. For example, they never directly refuse a business proposal. You will hardly hear a word “no” from the Arabs, but if they tell common phrases like “I need to consider your offer” or “I can give you an answer later”, you should be ready for refusal.