Consultancy

Company Representation

SUNDUS can facilitate foreign company setup in the UAE

 

INTRODUCTION

It is possible for foreign companies to operate and retain 100 per cent foreign ownership of their companies in the United Arab Emirates (UAE) by opening a branch or representative office. These offices do not have a separate legal identity but are treated as an extension of the foreign company, which remains liable for their activities.

 

A branch office can engage in commercial activity in the UAE and can earn profits. It is licensed for the purposes set out in its commercial licence but may only engage in activities similar to those carried out by the foreign company in its home jurisdiction.

 

A representative office is not permitted to earn profits within the UAE and the activities it may undertake in the UAE are limited to marketing and/or promoting its foreign parent company’s products and services.

Branch and representative offices share many similar features, as both operate under the authority of a commercial registration and licence in the name of the foreign company – and both are required to appoint a Local Services Agent (LSA) , who must be a UAE national. SUNDUS can act as your LSA to establish your company representation in this country.

 

OVERIEW OF THE PROCESS

 

1. Identify a Local Services Agent (LSA)

One of the key features of a branch office and a representative office is that both are required to appoint a Local Services Agent (LSA). The LSA must be either a UAE national or a company wholly owned by UAE nationals.

 

The LSA is not responsible for the branch or representative office, nor does it take part in any operations, management or ownership of the office. Technically, the role of the LSA is restricted to administrative functions such as the obtaining of licences, permits, visas etc., in return for a fee.

 

The appointment of the LSA is effected through a written agreement, which must be signed by the parties before a notary public in the relevant Emirate. There is no prescribed form of agreement and it will therefore be a matter for negotiation.

 

2. Trade Name Reservation and Initial Approval

Application must first be made to the relevant Emirate’s Department of Economic Development for a trade name reservation and initial approval of the proposed branch or representative office registration.

 

3. Application to the Ministry of Economy

Following initial approval pursuant to (2.), an application must be made to the Ministry of Economy (MOE) (the UAE Commercial Companies Law, article 314).

 

The Application

The application form requires full details of the foreign company (including share capital, head office, overseas activities, home jurisdiction); the nature of the proposed activities (these must be consistent with activities in the home jurisdiction); and the name of the proposed general manager in the UAE. The form must be accompanied by the prescribed documents.

 

The MOE will then issue their own initial approval, at which point additional documents must be submitted to the MOE.

 

The MOE will then approve the establishment of the branch or representative office. Business cannot commence, however, until the following further steps have been completed.

 

4. Obtain Licence from the Department of Economic Development

The MOE will issue a formal approval to either the Abu Dhabi Department of Economic Development or the Dubai Department of Economic Development, as appropriate (collectively referred to as the DED).

 

Once the DED has received this approval, the applicant is then required to make a further application to the DED. This requires similar items to those submitted to the MOE; in addition, the applicant will need to include the proposed office address in the UAE.

 

The DED will then issue a commercial licence to the branch or representative office, usually valid for one year and renewable annually.

 

Completing Administrative Tasks

Once the commercial licence has been issued, the foreign company may enter into the proposed lease for office space, open bank accounts and obtain visas and labour cards for its employees.

 

5. Becoming a Member of the Chamber of Commerce and Industry

The final step is for the branch or representative office to register as a member with the Abu Dhabi Chamber of Commerce and Industry or the Dubai Chamber of Commerce and Industry, as appropriate. The procedure is largely the same. It will be necessary to complete an application, and provide copies of the commercial licence and office lease agreement along with passport copies of the authorised signatories of the branch or representative office.

 

FEES

The various fees arising during the process vary from Emirate to Emirate (although the MOE fees are the same). The fee payable for the commercial licence may also vary, depending on the activities to be undertaken in the UAE.

 

NOTARISATION AND TRANSLATION OF DOCUMENTS

The foreign company will have to present all mandatory documents for authentication at the foreign ministry of the country in which the company is incorporated and subsequently to the UAE consulate. Before they can be presented to the authorities in the UAE, they must also be translated into Arabic by an official translator. The notarisation process should be commenced as early as possible as it can take a significant amount of time. Where the responsible UAE embassy is not located in the country of incorporation, the process can be delayed further.

 

TO BEGIN YOUR JOURNEY TO SETTING UP YOUR COMPANY’S BRANCH IN THE UAE