Since being a part of UAE, Dubai is known for adopting business-friendly policies. The emirate has now turned in to one of the world’s most preferred locations for entrepreneurs around the world. Dubai is providing business opportunities of various levels for different types of business structures. Business opportunities are available on both mainland and free zones.
Mainland provides to all types of businesses. But a foreign company may face restrictions of having a maximum of 49% of ownership while 51% share has to be given to a local Emirati sponsor. But this condition is not applied if a foreign company establishes a branch or representative office in UAE, including Dubai. It means that the foreign company will hold 100% shares of its branch or representative office in Dubai. In this case, the appointment of only a local service agent is required.
Different between branch and representative office
It is also important to note that there is a clear difference between a branch office and a representative office. A Branch Office can perform any business activity similar to its parent company while a Representative Office is only allowed to provide advertisement and marketing of the goods and services of the parent company. But the requirements and benefits of setting up a branch office and representative office of a foreign company in Dubai are similar.
Steps to follow for branch/representative office formation in Dubai
Following are important steps that must be followed for establishing a branch/representative office of a foreign company in Dubai.
- As stated above, a local service agent (LSA) is required for a branch/representative office and appointing LSA is the first step of this process. An LSA could be a local Emirati citizen or a local company owned completely by Emirati nationals. The LSA will be used for renewing licenses, permits, visas, etc. and also to perform PRO functions. It will be excluded from playing any role in the operations, management, and ownership of the company
- After appointing LSA, the company will reserve a trading name and submit an initial application and all the required documents to the DED (Department of Economic Development). It is necessary for initial approval of a branch office
- After initial approval of this application by DED, the next application will be made to the Ministry of Economy (MoE). After approval, MoE will issue formal approval to DED
- After receiving approval from MoE, DED will issue a commercial license for opening of a branch/representative office in Dubai. The license is valid for one year and can be renewed annually
- In the next step, the foreign company can open bank accounts and obtain visas and labor cards for its employees
This is a lengthy process that needs a lot of traveling, preparation of documents, meeting with officials, etc. But the whole process of establishing a branch/representative office can be made extremely easy by taking services of an experienced consultancy firm like Riz & Mona Consultancy. With our assistance, you can achieve the task of setting up a representative office of a foreign company in Dubai without any nuisance. You can contact us via our WhatsApp # 971-54-5821012.