Company Formation in Dubai
Initial approval is a preliminary service required for starting a business in Dubai. Initial approval has to be obtained before applying for a trade license. Application for getting initial approval can be placed with the department of the economy before or after the reservation of trade name.
Initial approval for starting a business in Dubai is an acknowledgment depicting no objection from UAE Government for the proposed business to be established in the UAE. Though Initial approval is not granting an authority for the business investor to run or practice business activity, investors can move ahead with further procedures of business set up. Foreign investors are required to get the approval of the General Directorate of Residency and Foreigners’ Affairs before getting the initial approval for starting a new business in Dubai.
Some business activities will not get initial approval without the submission of additional approval details. Firms associated with legal, security, financial commodities, etc., are required to earn approval from respective government entities.
Types of Companies in Dubai:
- Free Zone Company: Dubai has numerous free zones, which are designated areas with special regulations and incentives to encourage foreign investment. These zones cater to specific industries, such as technology, media, finance, and logistics. Companies formed in free zones enjoy 100% ownership by foreigners, full repatriation of profits, and customs tax exemptions.
- Mainland Company: Operating outside free zones, mainland companies allow for broader market access within the UAE. However, local sponsorship is typically required, with the local sponsor in Dubai owning at least 51% of the company. This requirement varies based on the business activity and location.
- Offshore Company: An offshore company in Dubai is used mainly for international trading and investment purposes. It doesn’t allow operations within the UAE but offers privacy, tax optimization, and minimal reporting requirements.
Steps for Company Formation:
- Choose a Business Activity:
Determine the nature of your business and select the appropriate license type based on the free zone or mainland jurisdiction. - Select a Company Name:
Choose a unique name that adheres to the naming guidelines of the respective authority. The name should not infringe on any trademarks and should reflect the nature
of your business. - Choose a Legal Structure:
Depending on the type of company and jurisdiction, you’ll need to choose a legal structure, such as a Limited Liability Company (LLC), Branch, or Sole Establishment. - Obtain Initial Approvals:
Submit the necessary documents to the relevant authority for initial approvals. This may include a business plan, passport copies of shareholders, and other relevant documents. - Lease Office Space:
If required, lease office space within the chosen free zone or in mainland Dubai. Different jurisdictions have specific requirements for office space. - Submit Application:
Complete and submit the application form along with the required documents to the relevant authority. This includes the Memorandum of Association (MOA) and relevant
shareholder and manager details. - Pay Fees:
Pay the required fees for company registration, licensing, and other related services. - Obtain License:
Once the application is approved and fees are paid, you will receive your business
license. This license allows you to legally operate your company in Dubai. - Open Bank Account:
Open a corporate bank account in a UAE bank to facilitate financial transactions. - Process Visas:
If you need to hire employees, you can apply for their residency visas through the UAE’s immigration system.
It’s important to note that regulations and procedures may change over time, so it’s
recommended to consult with legal and business advisors who are up-to-date with the latest requirements for business formation in Dubai.
