Guide To Business Setup in Dubai Mainland
Setting up a business in Dubai is quite challenging if you are not aware of the process and legislations involved. It is advisable to seek professional assistance in setting up your business in Dubai. The main regulatory body is Dubai Department of Economic Development (DED) which is also a license issuing authority of Dubai Mainland Business. However, the companies of specific nature require additional approval from relevant Ministry or Government Department. Following are the eight (8) easy steps to setup your business in Dubai if you decided to choose “Dubai Mainland” jurisdiction to setup up your company.
Should you require assistance at any stage of getting a DED business license, please contact me.
Step 1: Selecting your Business Activities
Selecting a business activity is the most crucial part of business setup in Dubai. Dubai Department of Economic Development has classified business activities into several groups and sub classes. There are more than 2,000 business activities available in Dubai, which fall into different classes and groups.
Business activity builds the form of business license i.e. professional or commercial. The form of business license develops the legal structure of business i.e. Limited Liability Company or Sole Establishment. Therefore, it is most critical to seek expert advice on selecting business activity of your business.
Please note that some of the business activities require approvals from government bodies other that the DED. Contact me to know more about these activities.
Step 2: Selecting a Legal Form for your business
When you select a legal form for your business, you must take into account the business type, business activities, the number and the nationality of owners and the ownership options.
Companies in Dubai can take various legal forms. Depending on your particular business activity not all of these legal options may be open to you. Please ask your consultant/adviser about business activities and their legal forms in UAE.
Step 3: Selecting a Trade Name of your Business
Trade Name refers to the company name or your official business name. This name will be reflected on your trade license and other official document. This is also your brand for marketing purposes. It is a basic requirement to obtain your final license.
General Guideline of Selecting Trade Name
When choosing a name for your business or company you should follow general trade name guidelines. Your trade name should not contain the following components:
- The name must not be obscene, indecent, or discriminatory, or offending to the general public
- The name should not mention “Allah” or God’s name.
- Family Names cannot be used as a name however, first and last name can be considered.
- The name cannot use a country or government.
- The business activity should be reflected in the trade name. You cannot have XYZ as a name but it should be XYZ Auto Spare Parts Trading LLC
- There shouldn’t have punctuation marks
- The name cannot use existing brands in Dubai
- Avoid putting international, middle east or global at the start of the name.
- Trade name includes foreign words that cannot be translated into Arabic, for example, “Platinum” – Fee: AED 1000
- Trade Name includes regional references, for example “East”, “West”, “International”, “American”, “European” – Fee: AED 1000
- Part of the trade name is a trade mark – Fee: AED 1000
- Trade name includes numerical digits, for example “United Kingdom 2000 Trading”. Writing numbers in letters is excluded, for example “United Kingdom One” – Fee: AED 2000
- Trade name includes foreign words – Fee: AED 2000
- Trade name includes the word “Gulf” – Fee: AED 2000
- Trade name includes an abbreviation, for example A.L. Trading – Fee: AED 2000
The best practice is to reserve your company’s trade name through an authorized document clearing office or through a law firm.
- A Trade Name Certificate is valid for 60 days
- It can be renewed online only once
- It has to be renewed within one week before it is due to expire
- A Trade Name Certificate that has already expired cannot be renewed
Step 4: Apply for Initial Approval
This refers to the approval of the business activity or activities for your company. An Initial Approval Certificate is a document which says that the Dubai Government has no objection to you starting a business and means you can take the next steps to getting a business license.
There are various ways to apply for your Initial Approval Certificate, depending on the legal form of your business. The best practice to apply through a document clearing office or a law firm. You need to bring the following documents.
Documents required for initial approval are:
- Business license registration Form (BR1), typed up in Arabic or English
- Passport copies of all shareholder(s)
- Passport visa page copy of the foreign partner(s)
- UID Number of the foreign partner(s). In case they are on visit visa
- No Objective Certificate (NOC) from foreign partners’ sponsors
- Khulsat al Qaid for local members, if they do not have existing licenses
- Emirates ID of the local member.
- If you are professional company. You may need to submit an attested degree certificate of your professional qualification. The DED will match your qualification type with the license activity.
- If you are a Private Shareholding Company, you also need a No Objective Certificate (NOC) from the Ministry of Economy, your company bylaws or statutes and a feasibility study. Your application will be studied by an internal committee from DED prior to issuing you with an Initial Approval Certificate.
- If you are a Public Shareholding Company, you need an NOC from the Securities and Commodities Authority
- Representative offices as well as branching of foreign companies performing commercial activities must first register with the Ministry of Economy.
The best way to apply for initial approval is through authorized document clearing agent or the law firms. You can apply for any of the following legal forms.
- Individual Establishment (Sole Proprietorship)
- Civil Company
- Limited Liability Company
- Partnership Company
During the application process, DED issues a payment voucher or a transaction number, which you can pat through an authorized document clearing office.
- You have pay for your Initial Approval within seven days of applying for it
- You must have an Initial Approval Certificate and Initial Approval Form to obtain a license
- The Initial Approval Certificate records partners, legal type and activities of the license
- It is valid for six months and is not renewable
Step 5: Drafting and Notarization of Memorandum of Association or Local Service Agent Agreement
After obtaining Initial Approval and Trade Name approval you can now proceed drafting the bylaws of the company. This is essential part of the company incorporation considering that this will define the relationship of the shareholders or the agreement between you and the local partner/service agent. Therefore, it is advisable to get it drafted by the lawyer or the Notary public.
It depends on the legal form of your company that you may need Memorandum of Association (MOA) or Local Service Agent (LSA) agreement with a UAE national, who will represent your business with regards to licensing and compliance.
If your business activity is commercial or industrial, you will have to draft the Memorandum of Association (MOA). MOA refers to the constitution of the company.
The MOA or LSA requires legal translation intro Arabic by the Ministry of Justice approved legal translator before presenting to Notary Public for notarization. The best way to process this step is to get it drafted by the legal translators sitting at Notary public and present the same. Translators sitting at notary public have good knowledge of the general clauses and fixed and changeable components of MOA/LSA.
Here are some important components of the MOA:
- The partners of the company – this clause will refer to the name the partners of the company; this will be the shareholder(s) and the UAE National.
- Name of the company – this clause will refer to the name of the company which you got approved in the third step.
- Object of the company – this clause will refer to the business activities of the company which you got approved in fourth step.
- The Capital of the company – this clause will refer the minimum share capital of the company which is AED 300,000. This can be divided into 300 shares and the value of each share is 1,000 AED. As an expat you can have 147 shares and your Emirati partner will have 153 shares.
- Transfer of Shares – The 51% of the shares can only be transferred to a UAE National. 49% of the expat’s shares’ can be transferred to another expat. This requires approval from competent authorities and subject to approval.
- Management of the Company – this clause will refer to the appointment of Managing Director. You can appoint yourself as one, as this is the best practice and first step to secure your interest in the company.
- Financial Management of the Company – this clause will refer to prepare the balance sheet and annual financial reports of the company.
- General Assembly – this clause will refer to the board resolutions. You may resolve to open new endeavors and acquire other companies.
- Profits and Losses of the Company – this clause will refer to the profit and loss division of the company in accordance with your agreement with local Emirati partner. By law, the Emirati can take 20% profit and losses and the expat can take 80% of the profit and losses.
- Dissolution of the Company – this clause will refer to the terms and conditions for the dissolution of the company.
Please seek professional advise and assistance for notarization of MOA or LSA.
Step 6: Finalize your office location and obtain office lease agreement
Selecting a Location:All businesses in Dubai must have a physical address within the permissible commercial area of Dubai. The minimum size of 50 sqm is required to register a company. The number of visas that a company can apply for depends on the amount of office space that the company has leased and the activity of the company.
Here are some CONSIDERABLE POINTS for selecting an office location;
- The office should be within the Emirate of Dubai. There are towers in free zones that are authorized by Dubai DED for licensing. In such cases you need to ask the Land Lord or the real estate agent which licensing authority the building falls under.
- Business location must be declared as commercial spaces by the Dubai Land Department. Most of the villas are residential however; if you select to have your office or business location in villa the same needs to be converted into commercial property. You may ask the owner for proof of the transaction to be certain.
- You can also choose to locate your company in an authorized business center, in which case you do not need location-related approvals from Dubai Municipality.
- If you or one of your business partners is a UAE national and has a license in a specific location already, you can add your new business to the same site as long as the space is bigger than 500 sq. ft. For registering multiple business licenses to a single location, you will need to submit an approval from existing partners to DED
- You will need to prepare a letter on your company letter head, stating that the company has no objection to introducing a new license on its location. The letter has to be signed by all the existing and new partners.
- An interior fit out company is require to design and plan the interior of the office or shop as per Dubai Municipality standards. These standards are laid down by Dubai Municipality as per business activity.
- You cannot move from one office to the other without notifying Dubai Department of Economic Development DED and making amendments in your license application.
Planning Section Approval
Before you finalize the location of your business, the Dubai Municipality Planning Section has to confirm the property’s availability and suitability and compliance to public health and safety requirements.
Following steps are involved to obtain approvals for your business location;
- Once you have identified a location for your business, you will need to visit Dubai Municipality Planning Section to provide the selected plot number, size, the landlord’s name and your business activity. They will confirm the location’s suitability for your business.
- Then you can sign your tenancy contract with the landlord and open an account with the Dubai Electricity and Water Authority (DEWA).
- The next step is to register your tenancy contract with Ejari for attestation. Ejari is a Dubai Government initiative to regulate the relationships between landlords and tenants in Dubai. To register with Ejari, take your tenancy contract and DEWA account number to any authorized service center.
- You then need to take your Ejari registered tenancy contract, your Initial Approval Form and your Initial Approval Certificate back to the Dubai Municipality Planning Section, which will approve your business location and, if everything is in order, stamp the Initial Approval Form.
- Dubai Electricity and Water Authority (DEWA) account number
- Lease Agreement
- Passport copy of the Land Lord
- Passport copy of the share holders
Step 7: External Department Approval
Some business activities require special licensing approvals by different government departments. For example, if you want to set up a hospital, it is not enough to get licensing approvals from DED only but also from the Dubai Health Authority.
Take advice from your consultant if your business activity requires additional approval by various government bodies. If yes, you need to contact the relevant government departments to find out what documents they need before starting the company incorporation process.
Business activities that fall under DED control do not require any additional activity-specific licensing approvals.
Step 8: Final Approval From DED
This is a step to get final approval of license from Department of Economic Development. Following documents needs to be submit to obtain final approval.
- Trade Name Certificate
- Initial Approval Certificate
- Initial Approval Form with required stamps
- Ejari registered Tenancy Contract
- Approvals and NOC’s on your selected business activity from other government departments, if applicable
- One set of MOA or LSA (in case of commercial LLC license)
- Local Service Agent agreement – LSA (in case of professional license)
Depending on your business activity, the processing of your business license ranges from 1 – 7 days.
When you submit your documents, you will be issued with a payment voucher or a transaction number, which you can use online to check the status of your Business License. When your business license is ready, you can contact authorized document clearing agent or pay at Banks, Emirates Post and law firms who will collect the payment and issue your license.
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