In Dubai, a Private Shareholding Company (PSC) is a popular choice for entrepreneurs looking to establish a business in the UAE. This type of company setup requires a minimum of three shareholders, with at least 51% of the shares owned by UAE nationals.

The Ministry of Economy mandates a minimum capital requirement to ensure the company is well-capitalized to support its business activities. Setting up a PSC involves careful planning, including choosing a suitable company name, drafting a Memorandum of Association, and ensuring that the majority of the directors are UAE nationals. With Dubai’s strategic position and business-friendly environment, forming a Private Shareholding Company offers significant advantages for those looking to tap into the region’s thriving economy.

Features of a Private Shareholding Company in UAE

Limited Liability:

Shareholders in a PSC have limited liability, meaning they are only liable for the company’s debts up to the amount of their investment in the share capital.

Private Shareholding

Shares in a PSC are privately held and cannot be publicly traded. This provides greater control over ownership and management but limits liquidity.

Flexibility in Ownership Structure

PSCs can issue different classes of shares, allowing for flexibility in assigning voting rights, dividend preferences, and other privileges.

Governance Structure

The company is managed by a board of directors, ensuring structured oversight. The board must meet regularly and maintain minutes of the meetings.

Operational Freedom

A PSC can engage in a wide range of business activities, including commercial, industrial, and service-oriented enterprises, offering significant operational flexibility.

Corporate Governance

The PSC must adhere to stringent corporate governance standards, including annual audits and compliance with the UAE Commercial Companies Law.

Conversion Potential

A PSC has the potential to convert into a Public Shareholding Company (PJSC) if it meets specific performance and regulatory criteria after operating for a certain period.

Local and Foreign Ownership

While mainland PSCs require 51% UAE national ownership, free zone PSCs allow for 100% foreign ownership, depending on the business location.

Succession and Continuity

The structure of a PSC allows for continuity in operations, even with changes in ownership, through the transfer of shares in accordance with the company’s AOA.

Regulatory Compliance

A PSC is subject to regular compliance checks by the relevant authorities to ensure adherence to UAE laws and regulations, safeguarding the interests of shareholders and stakeholders.

Requirements for Setting up a Private Shareholding Company in Dubai, UAE

  • Minimum Shareholders

    A PSC must have at least three shareholders to be legally established.

  • UAE National Ownership

    At least 51% of the company’s shares must be held by UAE nationals if the company is set up on the mainland.

  • Minimum Share Capital

    The Ministry of Economy mandates a minimum share capital of AED 5 million, which must be fully paid up at the time of incorporation.

  • Trade Name Registration

    The company’s trade name must be approved by the Department of Economic Development (DED) and should comply with Dubai’s naming regulations.

  • Corporate Governance

    A PSC must appoint a board of directors, where the majority must be UAE nationals, and establish clear governance policies.

  • Physical Office

    The company must secure a physical office in Dubai, fulfilling the requirement for a legal business address.

  • Regulatory Approvals

    Initial approval from the DED and other relevant authorities is required, depending on the business activities planned.

  • Financial Compliance

    The company must adhere to financial regulations, including maintaining a corporate bank account, fully paying the share capital, and undergoing annual audits.

Steps to Private Shareholding Company Formation in Dubai

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Determine Shareholders:

Ensure you have at least three shareholders, with at least 51 % UAE national ownership (if on the mainland).

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Register a Trade Name:

Choose and register a compliant trade name with the Department of Economic Development (DED).

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Prepare MOA and AOA:

Draft and notarize the Memorandum of Association (MOA) and Articles of Association (AOA).

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Obtain Initial Approval:

Apply for initial approval from the DED for your business activities and trade name.

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Lease Office Space:

Secure a physical office in Dubai and register the lease through Ejari.

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Open a Bank Account:

Open a corporate bank account and deposit the minimum share capital (AED 5 million).

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Appoint Directors:

Form a board of directors with a majority of UAE nationals.

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Submit Documents:

Submit all required documents to the DED for final review.

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Obtain Business License:

Apply for and receive your business license from the DED.

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Register with Ministry of Economy:

Register your company with the Ministry of Economy.

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Register for VAT:

If applicable, register for VAT with the Federal Tax Authority.

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Documents Required to Start a Private Shareholding Company in Dubai

  • Founders’ Agreement:
    A legally binding agreement among the founding shareholders outlining their roles, responsibilities, and shareholding structure.
  • Memorandum of Association (MOA):
    A notarized document that outlines the company’s objectives, shareholding structure, and operational guidelines.
  • Articles of Association (AOA):
    A complementary document to the MOA, detailing the company’s internal governance, including board structure, voting rights, and meeting procedures. This also needs notarization.
  • Trade Name Registration Certificate:
    Proof of the trade name registration, which must be approved by the DED.
  • Initial Approval Certificate:
    A certificate from the DED indicating that the proposed company name and activities have been preliminarily approved.
  • Board of Directors’ Resolution:
    A resolution signed by all founding shareholders appointing the initial directors and outlining their duties.
  • Passport Copies and Emirates IDs:
    Copies of passports and Emirates IDs (if applicable) for all founding shareholders and directors.
  • Lease Agreement (Ejari):
    A registered lease agreement for the company’s physical office space in Dubai.
  • Bank Account Certificate:
    Documentation proving that a corporate bank account has been opened in a UAE bank with the required share capital deposited.
  • Auditors’ Certificate:
    A certificate from a recognized audit firm confirming that the required share capital is fully paid up.
  • Securities and Commodities Authority Approval:
    Required for companies engaging in financial activities, ensuring compliance with regulatory standards.
  • Governmental Approvals:
    Various approvals from relevant UAE ministries or government bodies, depending on the nature of the business activities (e.g., Ministry of Economy).
  • Feasibility Study:
    A comprehensive feasibility study may be required, particularly for certain industries, to demonstrate the business’s viability.
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Riz & Mona Consultancy is renowned as one of the top business setup consultants in Dubai, with over 15 years of experience facilitating a wide range of businesses throughout the UAE. Our deep connections with government officials and key authorities, combined with our extensive expertise in consultancy, streamline the process of establishing your business in Dubai. Additionally, we offer comprehensive financial, legal, and corporate services to support our clients throughout their business endeavors.

We are here to provide comprehensive support in setting up a Private Shareholding Company in Dubai, from preparing your documents to completing the process. Connect with us now to begin your journey with a FREE consultation!

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FAQS (Frequently Asked Questions)

What is the maximum capital of a private company?

There is no maximum capital limit for a private company in the UAE; the capital structure is determined by the shareholders based on the company’s needs.

What are the benefits of forming a private shareholding company in Sharjah?

Benefits include full foreign ownership in free zones, tax exemptions, strategic location, and access to a growing economy.

How many types of Private Shareholding Companies are there in Dubai?

There are generally two types: those owned by non-governmental organizations and those with limited public stock trading.

How is profit distributed in a private company?

Profits in a private company are distributed among shareholders based on the proportion of shares they hold.

Who owns shares in a private company?

Shares in a private company are typically owned by a select group of individuals, such as founders, investors, or family members.