UAE is a wonderland for foreign entrepreneurs when it comes to setting up a company. UAE offers two different types of options to establish a business. These options are mainland and free zones. Both economic zones have their own set of benefits and are suitable for various kinds of businesses.
There is another type of company that expat businessmen can open in Dubai i.e. civil company. This type of company offers numerous advantages as well. But before they can set up a business, entrepreneurs need to obtain a civil company license in Dubai. This guide will take you through the extensive process of issuing the license along with company formation in the UAE. Read on to learn everything you need to know about the procedure.
What is a Civil Company in Dubai?
A civil company, also known as a civil partnership or establishment is a group of two or more qualified professionals in specialist industries who work together to offer a number of professional services. These experts include consultants, medical professionals, accountants, attorneys, and engineers. Company owners must own professional qualifications in their field of expertise and can form a civil company as partners.
The shareholders of a civil corporation formed in Dubai are allowed to be professional partners having any nationality. But, an LSA (Local Service Agent) is required to support the civil company license if the owner or shareholder is a national of a country other than the GCC or the United Arab Emirates.
The duties of a service agent include providing the business with essential services. such as assistance from the Department of Economic Development (DED), the Ministry of Labor, and the Department of Immigration. They have no debts or commitments to the business, either outside or inside the respective Emirate.
Although civil companies do permit fully 100% foreign ownership, working via a Local Service Agent (LSA) in the UAE is still necessary in order to conduct business from the mainland in Dubai. Unlike local sponsors, LSAs have no financial ownership of your company. The LSA’s sole responsibility is to communicate with governmental authority bodies on your behalf, helping with things like submitting applications for visas, approving licenses, work permits, and other similar tasks. In exchange, they receive a set fee or a share of the business’ revenues.
There are some extra requirements to regulate shareholding for some activities. For instance, out of two business partners, one partner must be a national of the UAE for architectural engineering work. At least 51% of the company must be owned by this nationality holder. Furthermore, this partner should also possess proven work experience in the field and the necessary qualifications related to the service being offered or business activity being conducted. It is best to confirm with the DED (Department of Economic Development) about the required work experience, compliance standards, and educational requirements for the civil company license’s planned business activities.
What Makes Civil Company Different from Others?
Professionals in the UAE prefer civil company formation since it takes less time and is less expensive than an LLC. As mentioned earlier, an LSA closely collaborates with the business to shrink the gap between the government and the company. But it has no influence over the business decisions or day-to-day operations. Even though it may seem convenient and simple to open a company in the UAE, before beginning a business in Dubai, one of the most dynamic cities in the world, a fresh entrepreneur should always consider the risk involved with having unlimited liability.
Let’s find out what sets civil companies apart from other private companies in Dubai, UAE. Consider the following points:
Depending on the size of the civil company, the company owners are able to apply for more than one visa. The typical allowance for office space per visa is 100 square feet. However, the Department of Economic Development can negotiate this (DED).
The corporation must only participate in professional operations in order to maintain its civil company license. The best examples of experts who fit within this group are carpenters, doctors, web designers, lawyers, and engineers. These companies’ shareholders should be knowledgeable and skilled in their particular fields of industry.
Local Service Agent (LSA)
Even if you completely own your civil company 100 percent, a Local Service Agent will be chosen to represent it when applying for official approvals. This local service agent is also called Wakeel Khidmaat. These approvals include work permits and visas. The LSA can be a business with UAE citizenship or a person.
A civil company shareholder or owner is entitled to 100% liability of the company, in contrast to a Limited Liability Company (LLC). This implies that you are accountable for all of the company’s responsibilities including debts.
Sponsorship of Employees
You can sponsor your company’s employees for residence visas if you are a shareholder in a civil company.
The minimum number of shareholders required for a professional company setup in the UAE is two, and the maximum number is 50, either individuals or corporations.
Professional licenses do not allow trading activities.
Conditions to Setup a Civil Company in UAE
In the process of forming a civil company, there are some specific rules and regulations to follow. These conditions are as follows:
- Any party or company can sell out a civil company or a branch office in Dubai. A change in legal form can also be made by the owners in accordance with DED procedures.
- DED business regulations allow partners of any nationality to practice professional activities.
- You must get a detailed Civil Agreement between the ex-pat partners of the civil company license
- A Service Agent Agreement is required to appoint a Local Service Agent for the company
- Civil establishments or civil companies in Dubai can only appoint a limited number of managers on a civil legal form.
- A business’s trade name should reflect its commercial activities and be consistent with them
- There can be more than one branch of a civil company in Dubai. Branches may carry out one or all of the activities that fall under the primary trade license.
How to Setup a Civil Company in UAE?
Documents Required for Civil Company License
Before moving on to the steps, here’s a list of required documents for obtaining a civil company license in Dubai, UAE:
- Initial permission application form properly signed by a UAE national legal service agent and all international partners
- Telephone numbers and addresses for creating an LSA (Legal Service Agreement)
- Certificate of registered trade name
- A Legal Service Agreement with a national of the United Arab Emirates, notarized at the Notary public
- All partners’ passport copies (including the Local Service Agent’s family card and Zinsia copy)
- A partnership contract between international partners, including profit-sharing information, money, and ownership, must be notarized before a notary public
- Tenancy Agreement certified by the Land Department
Follow these steps to start your civil company in Dubai, UAE:
Step 1. Choose a Name for Your Company
Choose a trade name that complies with UAE government rules and regulations. Companies must have unique names that comply with the rules and regulations of the Department of Economic Development.
Step 2. Choose a Business Activity
In order to determine what type of business license to apply for, you must decide what kind of operations you plan to perform. Based on the location, select your business activity from the permitted list.
Step 3. Hire a Local Sponsor
Local Emiratis are local sponsors who can assist you in any legal matter. Hire them to stay on the safe side and ensure everything goes smoothly.
Step 4. Receive Initial Approval
Initial approval must be obtained from Dubai’s Department of Economic Development (DED).
Step 5. Pick a Location for Your Office
Picking an office space is essential for business registration in UAE. It is even possible to work from a virtual office depending on your business activities.
Step 6. Make a Partnership Agreement
An agreement between foreign partners of a business is called a partnership agreement. It should be drafted and implemented by the honorable court.
Step 7. Make a Local Sponsor Agreement
An agreement between the local sponsor in the UAE and the overseas business partners that outlines how the company operates outside of the country is known as a local service agent agreement. Prepare and execute the final application for the company from either the DED or court and then submit it.
Step 8. Finalize the Company’s Formation
You would have to submit the proper documents to the jurisdiction you chose for establishing your company in Dubai.
Benefits of Establishing a Civil Company in Dubai, UAE
As with any other company formation, starting a civil company in the United Arab Emirates has many advantages. Below are a few positive sides of opening such a company:
Instant Company Setup
In Dubai, establishing a civil company is a quick and simple process. You will be able to quickly get a civil company license from DED, thanks to the recently passed provisions of the UAE government.
Sponsoring Dependents is Simple
If you are an owner or shareholder of a civil company, you are eligible to sponsor dependents’ residency permits. These might be relatives, domestic helpers, and other people. But, you must meet the requirements. Other than that, the process of opening a civil business is easy to follow and quite beneficial.
A civil company can be formed for comparatively less money than other licenses or businesses. There is no need to invest any kind of capital. You only need to pay the fees for the professional license. As a result, your company’s overall launch costs are relatively less than those of the competition.
No Limit on Visas
Civil corporations are one of the most popular forms of large businesses. Civil company owners can apply for more than one visa at a time. There is no top restriction, however, you must have 100 square feet of office space for each visa. For larger companies that need hundreds of visas, this becomes a little unrealistic. But you are allowed to negotiate with the DED to find a solution for this issue.
FAQs – Frequently Asked Questions
How can I start a civil company in Dubai?
Follow the given steps to start your civil company in Dubai:
Step 1. Choose a trade name
Step 2. Choose a business activity
Step 3. Hire a local sponsor
Step 4. Get the initial approval
Step 5. Choose a location for the business
Step 6. Make a partnership agreement
Step 7. Make a local sponsor agreement
Step 8. Finalize the company’s formation
What is the difference between an LLC and a Civil company?
LLC company has different benefits. Whereas a civil company has its own benefits. You can choose a company structure that suits your business the most. The major difference between a civil company and LLC is a Local Service Agent.
How much does a company license cost in Dubai?
A company license cost in Dubai varies from case to case. You can get in touch with any company formation experts in Dubai such as Riz and Mona for more information on the fees of a license.
Are civil partnerships Recognised in UAE?
Since they are not marriages, civil partnerships are not recognized in the UAE. However, civil marriages between non-Muslims that take place abroad are recognized as long as the marriage license has received official government authentication.
How Riz and Mona Can Help You
Riz and Mona are the leaders in company formation in the UAE and provide top-notch business consulting services. With the guidance of industry experts at Riz and Mona, You can instantly obtain a civil company license and set up your company in Dubai, UAE. We offer easy business registration for people looking to form a company here. Contact us today and launch your civil company or any other business in an error-free manner.