Dubai has a lot of options in terms of company structures and so does the rest of the Emirates. One of the more popular types of company structure is ‘Private Shareholding Company’. To clarify, a company structure is the legal form of a business that will determine the rules of regulations that the company has to follow.
For example, there must be at least three owners for a private shareholding company formation.
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Characteristics of a Private Shareholding Company in Dubai
Here are the characteristics of a private shareholding company in Dubai:
- There must be at least three owners in a private shareholding company in the UAE.
- That is not public floatation
- The Company’s capital is AED (5.000.000) fully paid (100) %.
- The number of private company shareholders must not exceed (200) founder/shareholder
- Citizens of the UAE must own at least 51% of the shares of a private shareholding company, and the rest 49% can be owned by anyone including foreigners and locals.
- The minimum capital required to incorporate a private shareholding company in Dubai is AED 2 million.
- The nominal value of the shares must be at least AED 1 and less than AED 100.
Dissimilar to a public shareholding company, a private shareholding company can’t welcome the public for buying in its offers. It very well may be used by a minimum of 3 people.
The minimum capital required to fuse a private shareholding company in Dubai is AED 2 million.
Aside from the above-expressed stipulations, every one of the particulars of a public shareholding company apply to a private shareholding company also.
To shape it, one needs to organize the planning of an authors’ understanding, an outline or welcome for public membership upheld by a general business plan or achievability study and an evaluator’s certificate, a due constancy study, a memorandum and articles of affiliation.
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Step by Step Process of Private Shareholding Company Formation
The process of setting up a private shareholding company is straightforward. However, if this is your first time starting a business in the UAE, then it is normal to feel a bit lost. This is where Company Setup experts come to the rescue. We will take care of your private shareholding company formation in the UAE for you.
Here are the steps you need to follow in order to start a private shareholding company in Dubai:
- Register a trading name for the company.
- Get the initial approval from the Department of Economic Development in Dubai.
- Get the external approvals required according to the business activities you selected.
- Submit the required documents and complete the payment.
- Obtain the license from the Department of Economic Development in Dubai.
Document Required for Private Shareholding Company in Dubai
First: Documents required for Initial Approval
- Registration and authorizing the application, just as verification of held exchange name.
- Four copies of the Company’s Memorandum and Articles of Association appropriately verified by the Notary Public.
- Two copies of the Project’s Feasibility Study.
- Approval issued by other Government experts as per the kind of movement.
- Service of Economy goals concerning private shareholding.
- Endorsement of UAE Securities and Commodities authorization concerning public shareholding.
Second: Documents required subsequent to getting the Initial Approval
- Initial Approval receipt
- All documents submitted before so as to get the Initial Approval.
- Photocopy of office rent including the plot number.
- Rundown of Directors’ names, dates, and places of birth, occupation, and an example of the Director’s signature. If it’s not too much trouble give the first documents in addition to one duplicate of each.
- A composed assertion by each individual from the Board of Directors of tolerating the arrangement.
Dubai offers sundry opportunities and a lucrative market for setting up your company. Company Setup consultants helps businessmen, business visionaries, and financial specialists in open or set up a company in Dubai through enrollment, bookkeeping, accounting, and Intellectual Property (IP) insurance administrations.
Our specialists handle the banking, visa, legitimate, and permitting conventions, and enable you to concentrate on your company vision and goals. On the off chance that you are thinking about how to begin a business in Dubai, do connect with us.
How can Company Setup Consultants help you?
If you want to get started with your very own private shareholding company formation in the UAE but you do not know where to get started, then you are in the right place.
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Frequently Asked Question About Private Shareholding Company
What is a private company in UAE?
A private company in the UAE is a firm that is privately owned by the locals, the foreigners, or a combination of both. This means that the shares of a private company can only be owned by the people to that they are distributed among.
In other words, the general public will not have access to the shares of a private company. Additionally, the shares of a private company in the UAE are not issued through an IPO and are not available for trade on the public stock exchanges.
What is a private shareholding company?
Private shareholding companies in the UAE are defined using two distinct characteristics. Firstly, the government does not have the ownership of a private shareholding company. Secondly, the shares of a private shareholding company are not traded publicly.
Additionally, there are a few more conditions that a private shareholding company in the UAE must follow. For example, a minimum of three owners are required to form a private shareholding company.
If you want to form a company with less than three owners, then you have to go for either a general partnership or a sole proprietorship.
How many shareholders can a private company have?
While the upper limit is not defined, a minimum of three shareholders are required to form a private shareholding company in the UAE. Additionally, it is important to note that there is a difference between a private company and a private shareholding company.
For instance, any firm not owned by the government or the general public. This means that a sole proprietorship can also be considered a private firm. However, to form a private shareholding company, there must be at least three owners in the company.
How is profit distributed in a private company?
In most private shareholding companies, a sizeable portion of the profit is retained for further expansion of the business, and the rest is provided as dividends to the shareholders of the business. However, if the board agrees, then either all of the profits can be retained, or all of the profits can be provided as dividends to the shareholders.
Additionally, the general rule of thumb while distributing profits is to divide them according to the shares owned by the owners. For example, if the total amount of dividends announced is 100,000 AED and you own 10% of the company, then you will receive 10,000 AED as dividends.
What is the maximum capital of a private company?
While there is no upper limit on the maximum capital, the minimum capital you need to incorporate a private shareholding company in the UAE is AED 2,000,000. This converts to USD 544,500 according to the market rates while writing this piece.
Additionally, the shares of the company will be divided according to the contribution to the total capital. However, keep in mind that 51% of the shares must be owned by citizens of the UAE.
Can a private company have 1 shareholder?
As we have mentioned earlier, a private company and a private shareholding company are two different things. And while a private company can have one shareholder as a Sole Proprietorship, a private shareholding company must have at least 3 shareholders.
Additionally, 51% of the shares must be owned by citizens of the UAE, and the rest 49% can be owned by foreigners from anywhere in the world.
Can a privately owned company have shareholders?
Yes, a privately owned company can have multiple shareholders in the UAE. If a privately owned company has two owners, then it will be known as a General Partnership. And if it has only one shareholder, then it will be known as a Sole Proprietorship.
However, if the privately owned company has three or more shareholders, then it will be known as a private shareholding company.
