What Should I Know to Start a Business in Dubai?

The commercial capital of the United Arab Emirates, Dubai springs up first when a foreigner entrepreneur like you thinks of establishing a new company or expanding the existing business abroad. Home to world’s tallest 828-metres-high “Burj Khalifa”, the “city of many superlatives and firsts” is the first choice of most investors the world over. The reasons are endless just like the business opportunities that Dubai offers to the world. Whether you wish to start your own digital marketing company, a day care centre, a beauty salon, a real estate business or an e-commerce firm, Dubai doesn’t disappoint. But still setting up a business overseas is not as easy as walking in the park as everything is new for you from rules & regulations and relevant authorities to environment & culture to location & market. Despite approachable business setup procedures, investor-friendly policies and a tax-free regime that Dubai, one of the fastest-growing cities in the world, offers, you might stumble upon surprises that can slow down your business formation process or hinder your way making your very first entrepreneurial journey overseas difficult.

Furthermore, you can make the most of the business opportunities and innovative commercial modules for enterprises from around the world that the lively emirate of the UAE provides only if you are already aware of the things that might impact your business. It’s always wise to know how you can benefit from the government’s myriad schemes and perks while opening a company in Dubai. Here’s a scoop on things you must know when starting a new business in Dubai.

Make sure the business you are planning to run is allowed in Dubai, UAE

Just like other countries, UAE also has certain limitations when it comes to allowing foreigners to do business in any of its seven emirates. You need to obtain various consents from relevant authorities in order to be able to start your business in Dubai. Furthermore, the country of your choice has standards of legislation and the local customs here are based on Islamic law. The religious principles of the nation are the guiding points in all the aspects of life, and business is no exception to it. Therefore, it is vitally important to know about the certain types of commercial and economic activities that are prohibited in the UAE such as gambling, selling and production of alcoholic products, goods and semi-finished products made of pork, creation and distribution of magazines and videos with pornographic content. According to Law No. 13 of 2011, the Dubai DED is the accountable body to decide, regulate, classify, permit and license all economic activities. However, this is not applicable to free zone businesses and offshore incorporations. Thus, the first and foremost thing to do business is to double check whether your business squarely fits in the standards of Dubai, UAE.

Choose the right jurisdiction for your business

You may find mainly three types of businesses in zonally-segregated UAE – Mainland companies, Free Zone firms and Offshore businesses. This means location wise you may either go for mainland or free zone keeping your business model, preferences and budget in view if you have no plans for offshore or virtual company formation. Most business persons opt for mainland company formation due to the recent change in law that allows them to fully own their company without the need of an Emirati national and coughing up much towards the business setup expenses. Depending on the location you decide for your company, the business activity you are going to conduct and the nature of the business, you are required to pick the right jurisdiction when starting your company in Dubai, UAE.

Decide the shareholding structure of your company

It’s the shareholding structure that determines the company incorporation in Dubai. This will also set apart the legal form of your business. You may opt for any of the shareholding structures mentioned below that is in line with your business operation and preferred jurisdiction.

  • Limited Liability Company
  • Sole Proprietorship
  • General Partnership
  • Partnership in Commendam
  • Public Shareholding
  • Private Shareholding
  • Joint Venture
  • Shared Partnership
  • SME License
  • Representative Offices
  • Branch Offices
  • Limited Partnership

Find a valid business/trade name and have it registered with the DED

The process of business formation in Dubai sets off with reserving a trade name with the DED. Whether it’s you or your business, the name should say it all. The name of your company must meet the naming criteria set by the Department of Economic Development (DED). It is always advisable that the trade name you pick communicates the type of the business licence you have. Trade name registration usually takes 24 hours and it is valid for a period of six months. However, DED might take three working days in the entire process of registering and reserving a company name.

Steel yourself for external approvals in Dubai

At the time of getting initial approvals from DED, if you get to know that your business activity comes under the special category, be prepared to acquire external approvals. Here’s the catch. In order to be able to do some specific activity or action in your business in Dubai, at times businesses have to obtain confirmation or approval from a 3rd party governmental establishment apart from DED.The DED insists on acquiring external approvals when your business activity is liable enough to create a deep impact on the public’s day to day lives such as financial services. Typically, these consents are received by the non-governmental and semi-governmental bodies in order for their license to be issued and remain valid. Other businesses and activities that might require an external approval or two are travel & tourism activities, gym & fitness centres, training institutes, educational establishments, social club registration & licencing and banks & financial institutions, just to name a few.

Rent a business premise/office space

If you think your office is just a compendium of cubicles then look beyond. Renting office spaces in Dubai is imperative for your business. Just like you have an address your business also must have an address. The location and type of property that houses your business plays a pivotal role in your day-to-day operations and of course the image of your brand. Moreover, having a physical existence of the business is obligatory in Dubai which means only after receiving the tenancy agreement, Real Estate Regulation Authority (RERA) documents, and EJARI, DED gives initial approvals. The initial approval is also accreditation from the DED to start your business in Dubai and continue the process of obtaining the trade licence.

Draft the MOA/LSA for your business

As a business owner, you must draft the Memorandum of Association (MOA) or the Local Service Agent (LSA) agreement. The MOA details the share of limitations and liberty every partner has within the company, while the LSA outlines the role of the agent and satisfies the compliance that has to be performed. Both MOA and LSA are legal documents and have to be drafted under the supervision of a legal advisor. The documents are also required to be translated into Arabic.

Adhere to all of the company registration and business license procedures

In Dubai, the company registration process can go hand in hand with the business licensing process. You may duly apply for and collect the business licence as soon as the company is registered by DED. Business licenses are granted as per the nature of the business activity and the jurisdiction your business comes under. Commercial licence, industrial licence and professional licence are the most renowned licences for business incorporation in Dubai. Usually, it takes about a week or so to get the trade licence from the time you receive your initial approval however depending on the business activity and the external documentation the process can take more than one week. Here is the general list of documents and certifications that are required for business setup in Dubai.

  • License Application
  • Attested LLC agreement
  • Governmental forms
  • Name reservation certificate
  • Initial approval certificate
  • External departments approval
  • Tenancy contract
  • EJARI registration certificate
  • Passport copies partners and NOC for partners (if any)
  • Dubai Chamber of Commerce and Industry Registration
  • Endorsements from Governmental Agencies (for gas and oil companies)
  • UAE Central Bank Approval and License (for financial institutions)
  • Finance and Industry Ministry Certification (for manufacturing companies)
  • Economy and Commerce Ministry Certification (for insurance companies)
  • Health Ministry Certification (for medical & pharmaceutical firms)

Collect your business license to start your business

Just one more step to become a full-fledged business entity – make the payment and collect your trade licence. You will receive a payment voucher or transaction number from DED on submission of all the required documents to make the final payment to be able to collect the business trade licence.

You might have got a fair idea by now that how extensive the process of Dubai company registration is! Be that as it may, you can save your time, effort and costs by appointing a business setup consultant in Dubai, UAE. With an experienced business advisor at every step of your way, you can eliminate unnecessary hassles and chances of errors in documentation. Plus, business setup consultants are hands-on with the procedure; your company incorporation can be quick and cost-effective.

Let’s meet…

To know how Adam Global can help you in setting up a new business in Dubai, UAE. We are here to help you ace your entrepreneurial game. With our qualified Dubai business advisors by your side, you don’t have to worry about a thing while forming a company in Dubai or any part of the UAE. Feel free to call us today and book your free consultancy.

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