Dubai is the commercial capital of the UAE that provides vast business opportunities and innovative commercial modules for enterprises from around the world. It is an ordinary men dream to start a business in Dubai. There are benefits of starting business in Dubai which includes flexibility, unlimited number of visas amd more business activities for licensing.
For new entities to understand the procedures to start a business is quite difficult. Here are the step by step procedures to start a business in Dubai:
Setting up a business involves raising capital investment, paying for licences and employee visas. The cost of setting up a business depends on the two factors: nature of the activity and license required; be it is commercial, industrial or service-oriented and legal form of the company; be it is an establishment, a company, or a branch of a company.
Step 1: Decide your business and register trade name for approval
The first and foremost step is to confirm the nature of the business you want to begin. Not all types of business can be started in UAE. There are certain restrictions on the same. So, make sure before taking the next step if the business meets the standards of the country. The Dubai Department of Economic Development lists over 2,000 activities which your business can fall into different classes and groups: industrial, commercial, professional and tourism activities.
Step 2: Choose the premises based on the business nature, capital requirements and shareholding structures
Business areas in Dubai are mainland areas, freezones and offshore business establishments. Choosing the premises is wholly based on the nature of the business you want to conduct.
Capital requirements for a company on the mainland vary according to the legal form of business.
For PJSC, the minimum capital is AED 30 million.
For a PrJSC, it should not be less than AED 5 million paid in full.
For other type of businesses, the capital should be mentioned in the Memorandum of Association that should fulfil the purpose of the business.
For foreign companies to establish a Limited Liability Company (LLC) in the UAE, they should seek guidance regarding minimum share capital.
The nationality of partners is important to determine what type of business they can set up on the mainland. Only UAE nationals may set up the following types of companies:
- Joint liability companies
- Simple commentate companies
- An industrial or commercial type sole proprietorship
- License for home-based businesses
- SME license
Company types that require a UAE national partner are LLC companies, Public Joint Stock Companies (PJSC) with at-least 5 founding members who are UAE nationals, owning between 30 per cent and 70 per cent of the capital shares, PrJSC Companies or civil company with an engineering activity
Company types that require LSA are professional type sole establishment, civil company with no engineering activity or foreign Company Branch.
Step 3: Partner with UAE Nationals
For DED licenses, it is mandatory to have a local agent, partner or sponsor and this is a great support for foreign nationals. For free zones, it is stated that the UAE local partner will hold 51% of partnership.
In terms of freezone, this is not mandatory as Dubai is the business market that boasts easy set-up for all businessmen regardless of nationality. If you’d like 100 per cent ownership of your company, you need to opt for a license in free zones of the UAE.
Step 4: Trade name registration with the DED
The company name is your identity which indicates the nature of business, unless it is a branch of another company and naming should solemnly meet the standards mentioned by DED. They dispenses trade license to businesses and deals with investors. All the rules regarding trade names can be seen on the DED official website. Registration time takes around three working days and is valid for a period of six months.
Step 5: Approval from DED
According to the Law No. 13 of 2011, the Dubai DED is the department body to decide, regulate, classify, permit and license all the economic activities. However, this is not applied to freezones and offshore business setups. If you are planning to set up a private joint stock company, approval of Ministry of Economy is required first.
Step 6: Rent a place
Once the legal procedures are completed, the next step to shortlist offices with costs and other details suitable at your budget. The tenancy agreement, Real Estate Regulation Authority (RERA) documents, and EJARI which was initially approval is granted by the DED needs to be submitted.
In free zones, you will get assistance to find premises suitable to your requirement along with help to set up electricity, internet, water and other amenities.
Step 7: Initial approval from DED
Department of Economic Development seeks the initial approval and registers the trade name. You can do that either by visiting their office or through e-services. After the initial approval, you can proceed for additional approvals of other authorities which is required in case of certain business/trading activities.
Step 8: Draft MOA/LSA
Drafting the Memorandum of Association (MOA) or the Local Service Agent (LSA) agreement is an important task. The MOA specifies limitations of shares and liberty every partner has within the company. The LSA describes the role of the agent and fulfils the compliance that will be performed. Both MOA and LSA are legal documents that should be drafted with the help of a legal advisor. They also need to be translated in Arabic which is mandatory in UAE.
Step 9: Follow all company registration and business license procedure.
Once the company is registered by DED, the business license will be processed can be collected. Business licenses are provided depending on the nature of the business activity. The licenses for business setup in Dubai are commercial license, industrial license, and professional license which takes around one working week or more to get the trade license from the time you receive your initial approval. Below are the general list of documents and certifications required for business setup in Dubai:
- License Application
- Attested LLC agreement
- Governmental forms
- Name reservation, EJARI registration, external departments approval, and initial approval certificate
- Tenancy contract
- Passport copies of 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
Step 10: Maintain payment voucher or transaction number which will be provided by the DED upon submission of the all the listed documents.
Step 11: The final payment needs to be made to collect the business trade license. Once you collect your trade license, you become a full-fledged business entity.
All these steps seems to look a long process but we assure it going to be worth a try. You can also hire business setup consultant who can help make things easier as they are well-versed with the procedure, company formation can be instant.
We wish you the best in your new business!