Representative Office / Branch Office Of Foreign Company in Dubai
Dubai Mainland Company is the most common type of business entity in the emirate of Dubai. It has several benefits for which many foreign investors choose this basic type of structure for their company formation. But there are few shortcomings in this type of business formation also. The most important one is that foreign company owners only get 49% shares of Dubai Mainland Company while local sponsor holds remaining 51% shares of a foreign company.
But a foreign company can easily avoid this condition and gain complete ownership of its business by opening a branch office or representative office in Dubai. There is a slight difference between branch office and representative office of a foreign company.
Difference between Branch/Representative offices
Branch office of a foreign company is allowed to perform any business activity similar to that of its parent company. It can also earn profits with these business activities.
Representative office can only do marketing and promote products and services of its parent company. It is not permitted to earn profit through business activities.
A foreign company in Dubai holds 100% shares of its business through a branch/representative office. As compared to Dubai Mainland Company, they don’t need local sponsors.
The only requirement of representative/branch office is to appoint LSA (local service agent). These agents have no part to play in operations or management of a company. They only perform administrative functions.
Branch office is allowed to do business activities on behalf of its parent company. It can earn profit through these activities.
A representative office can’t earn profit but it is allowed to market products and services of its parent company. Through this way, it can provide exceptional benefit to its parent company by introducing its services in Dubai and other parts of UAE.
Branch or representative of the foreign company is required to submit a bank guarantee of AED 50,000 in favor of Ministry of Economy as it is a part of the license processing procedure.
To open a branch or representative office in Dubai, a manager must be appointed to represent the company; the manager must have an approved motion by the Board of Directors to open the branch.
What Riz & Mona Offers
Getting approvals and permissions from concern departments
Preparing the obligatory documents and MOA
Identify a trusted and qualified local service agent
Assistance in opening the bank accounts
Assisting to find suitable office premises
Handle other documentation formalities
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