Dubai is increasingly becoming an ideal place for any new business venture for foreign investors and businessmen. The social, economic and political environment is considered to be conducive for any such new venture. In addition to that, the government of the UAE have also made the rules and regulations a bit easier for businessmen and investors. As there are many types of business for example financial services, health services, printing and publishing services, food trading, etc. All of these different kinds of business require different kinds of licenses and registrations.
There are generally 3 types of licenses that are issued in Dubai for registration of a company. Some of these types are listed below:
Commercial License: This License is issued to any entity that is engaged in any kind of trading activity.
Industrial License: This is a License that is issued only to those companies who are involved in manufacturing activity.
Professional License: This License is issued to service providers like artists, craftsmen, professionals etc. It is important to note that all these licenses are issued by the Dubai Department of Economic Development.
- Criteria For Business Licensing: Now it is necessary to meet certain criteria for setting up any kind of business in Dubai. The government of the UAE has to approve the criteria before any license is issued or registration done. Some of the important criteria for licensing of companies are listed below:
- It is necessary to get the approval of UAE Central Bank before a license is issued for setting up of financial institutions.
- For issuance of licenses for any kind of manufacturing unit, approval from the Ministry Of Finance and Industry is required.
- Similarly, for any company that is engaged in the insurance business or relevant business must have the approval of the Economy and Commerce Ministry.
- For issuances of licenses for medical and other pharmaceutical business, it is a mandate to get approval from the Health Ministry.
- For entities which are involved in the energy sector like oil and natural gas production, additional endorsements and approvals are required from other government agencies of Dubai.
- It is also important to know that all kinds of business registrations must have the involvement of Dubai Chamber of Commerce and Industry.
- Requirements of Business Ownership: Every company that has been set up in Dubai or elsewhere in the United Arab Emirates is required to have no less than 51% of shareholding by UAE nationals. Only those companies which are set up with professional license and those companies which are set up in Free Zones are an exception to this rule. There are some other conditions also which can make this requirement an exception. Some of the conditions are listed below:
- In cases where the law requires that there should be 100% ownership by locals.
- The company is set up in one of the Free Zones.
- In such cases where the company is wholly owned by the Gulf Cooperation Council and enters into a partnership with another company that is wholly owned by UAE nationals.
- There is a premise in certain activities that allows 100% ownership of GCC nationals or entities.
- In professional and handicrafts companies where ownership by foreign nationals is allowed.
- In cases where a foreign entity is registering a branch office or a representative in the UAE.
- Also in cases where a professional license is being applied for such as a Medical Professional, an artisan etc. Here the ownership can be 100% foreign. However, it is required that a local national must be taken as a ‘service agent’
- Kind of Legal Business Structure required for Issuance of License: Registration of any new business is dependent on the kind of business structure one has. As the laws of UAE defines the seven legal structures for any business organization. These seven legal structures are:
- General Partnership
- Partnership in Commendams
- Public Shareholding
- Private Shareholding
- Joint Venture
- Share Partnership
- Limited Liability
- Establishment of a Representative or Branch Office: A branch or a representative of a foreign company is also entitled to certain privileges under the registration procedure in Dubai. This privilege is given only on the condition that if a local agent is appointed in the foreign entity. This local agent must be of 100% UAE nationality.
- Procedures of Company Registration in Dubai: Registration and issuance of licenses to foreign entities are dependent on certain key factors. These key factors are:
- Choice of a Sponsor: This is considered to be one of the key essential factors as a sponsor can be used for various services. Some of the services are listed below:
- A sponsor can be beneficial in resolving issues related to governmental procedures.
- A sponsor can just lend his name on the license for registration purposes.
- The kind of fees a foreign entity is willing to pay a sponsor.
- Approval of a Trade Name: Getting approval for a trade name and also the kind of activity from the Department of Economic Development in Dubai.
- Choice of Location and Tenancy Contract: All business in Dubai must have a Tenancy Contract as evidence for registration purposes.
- Making of Memorandum Of Association: It is necessary to have a Memorandum of Association (MOA) with the sponsor before submitting it for registration. Moreover, special arrangement should be made specifying the ownership percentage amongst all members.
- Submission of Memorandum Of Association and License Application: It is important to note that all the required legal documents along with Memorandum Of Association, Tenancy Contract and License Application have to be submitted at the same time tot the Department of Economic Development Dubai. Furthermore, it is advisable to pay all fees during this procedure.
- What are the advantages of Business License: As per laws in Dubai, it is mandatory to acquire a business license for any kind of business-related activity. There are benefits also attached with this kind of license. Some of the benefits are listed below:
- Local and International Trade: Businessmen have the option to import or manufacture all kinds of goods mentioned in this kind of license. They can further either distribute these products in the market in Dubai or export them internationally.
- Tax-Free Benefits: Another added advantage is that the various good that come under this kind of business license are tax-free.
- Large Number of Products: One of the most important advantages under this kind of license is that almost all the goods allowed in Dubai are registered under this. So it becomes beneficial for businessmen to do business in a large number of goods as they come under a single license.
- Simple Process: Another of the key advantages is that it is quite easy to obtain this kind of business license. It can be obtained within one week after the submission of all the required documents.
- Easy Sponsorship of Dependents: Under this kind of business license, it becomes quite easier for investors to apply for visas for their employees and their dependents. The businessmen can also apply for a visa under this kind of business license for their dependants in a quite hassle-free manner.