When it comes to setting up a business in Dubai, the United Arab Emirates (UAE) law requires investors to specify the value of the capital in the company's articles of incorporation and articles of association. However, there is no minimum amount required for limited liability companies. On the other hand, certain structures such as public and private limited companies, limited liability companies, and companies limited by shares do require a minimum share capital. Share capital is the amount of money that each founder or shareholder contributes when opening a company.
It is important to note that the national agent is not required to own shares or participate in the administration of the branch or representation. It is possible to establish branches of foreign companies in the free zones of the UAE or set up a free zone entity. Some foreign companies prefer to appoint an agent in the UAE who can search for and market customers, manage logistics, sponsor employees to obtain residence and work visas in the UAE, and coordinate the sales process on behalf of their foreign directors. Companies operating in the free zones must obtain an appropriate operating license from the appropriate free zone authority and enter into a lease agreement.
Unlike other entities in the UAE, companies operating from free zones do not need a partner or agent from the UAE. The UAE Companies Act requires a company to have one or more local shareholders who hold 51% of the company's share capital. It is important to draft commercial agency agreements carefully and seek legal advice before entering into any agency agreement. It is also possible to conclude an agreement with the national partner of the UAE to protect and define the interests of the minority partner, especially when they provide all the capital of the company.
The private limited company in Dubai must have a share capital of AED 2,000,000 (fully deposited at the time of company registration) and at least 3 shareholders. The private limited company cannot trade its shares on the stock exchange. In most free zones, both free zone establishments and free zone companies will have limited liability; however, this varies between free zones and must be taken into account when determining whether limited liability is granted to a single shareholder company. Additionally, some free zones are aimed at specific industries such as Dubai Knowledge Village which attracts companies providing services to educational and academic sectors, and Dubai International Financial Center (DIFC) which provides services to financial sector.
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