5 Effective Ways To Structure Your Ownership Of Business In Dubai
The trend of setting up a business in Dubai is catching on fast. Every investor hoping to start a business by Dubai 2020 is confronted with the dilemma of structuring his business ownership by safeguarding the risks. This makes it highly essential to understand the local laws and the different licensing options available to you to effectively structure your company. In Dubai, there are 2 jurisdictions for administrating businesses – the mainland and the free zones. Depending on your type of business and its related activities, the 2 jurisdictions offer different advantages.
- Free zone
It is a designated area free of certain taxes and restrictions on business. It is not necessary to have local partnerships hence the investor/foreign investor will have complete ownership of the business. The main disadvantage of free zones is the restriction on trades with the outside local markets.
It is an area where private businesses are entitled to operate their business without any restrictions in Dubai as well as in international markets. The ownership regulations differ in the mainland from those of the free zones. Some of the licensing options available in the mainland are:
- Limited Liability Company (LLC): The foreign investors enter into a local partnership; the foreigners are allowed to hold a maximum 49% of the shares while the locals hold a minimum 51% of the shares. Total profits belong to the foreign investor while the local partner is paid for by a stipulated annual fee in the contract.
- Sole proprietorship: Here, the business is owned by an individual. The foreign investor can be the sole owner provided he caters only to the Service sector by appointing a Local Service Agent. Total profits belong to the foreign investor.
- Civil Company: This is a partnership opportunity for recognized professionals such as doctors, lawyers, accountants, etc. The foreign investor is the sole owner and all profits belong to him; the appointed LSA is remunerated by a stipulated amount in the contract.
- Branch of a foreign company: The branch is owned by the parent company but an LSA has to be appointed if the owner is a foreign investor. A branch can run professional, commercial or industrial activities.
- Representative office: A business activity that a branch can conduct; it can only promote and market the parent company’s business, not operate it. An LSA has to be appointed if the parent company is owned by a foreign investor.
It is essential for entrepreneurs to seek advice from Business Consultants regarding the type of license they need by pertaining to the local laws and regulations. For more details about structuring your ownership, get in touch with companysetup.ae.