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Setting up an LLC? What should you consider?

October 5, 2022
Author
Amal Eeckhout
set up an llc

Setting up an LLC? What should you consider?

For the business world, Dubai is an attractive country. With fast trade connections to Europe, Asia and Africa, you are in a prime location in Dubai. Setting up an LLC in Dubai is an excellent opportunity for smart entrepreneurs to become successful.

Doing business in Dubai can be achieved with different types of companies

Foreign investors and entrepreneurs in Dubai can choose between two types of companies. A Limited Liability Company (LLC) or a Freezone company. In this article, we will discuss the requirements you have to meet to establish an LLC in Dubai.

Setting up an LLC in Dubai: what should you consider?

If you are interested in setting up a small business in the UAE (United Arab Emirates), then an LLC in Dubai is the most common choice. With an LLC, you own 49% of the company. The UAE Commercial Companies Law of 2015 (CCL), Article 22 stipulates that the majority stake is at least 51% owned by an Emirati national.

Generate 100% profit with a Limited Liability Partnership

Another profit-sharing arrangement of the LLC in Dubai is possible. For example, foreign investors can set their profit and loss sharing at 80/20. It is also possible to stipulate that the Emirate national only receives an annual profit or a percentage of the total turnover, so that 100% profits can be retained.

You can choose your Dubai partner - also called Emirati sponsor - as long as this person is able to prove that he is an official UAE national. This may also be a company that is fully owned by the Emirates. Many Emirati sponsors do not require a profit percentage from the company nor will they interfere with your business operations. With such a silent partner, you can make 100% profit in exchange for an annual fee.

We at Emifast can support you in finding a suitable Emirati corporate partner.

Other requirements for setting up an LLC in Dubai

To set up an LLC in Dubai, you need a physical office. As part of the licensing fee to establish an LLC, you have to pay 5% in rent of the office space's market value. This requirement applies also when you set up a virtual company and intend to work from home.

setup an llc

Benefits of establishing an LLC in Dubai

There are many advantages to establishing an LLC in Dubai:

  • Tax-free: an LLC in Dubai makes 100% tax-free profits.  
  • Limited liability: your liability as a shareholder is limited to your unpaid capital investment.
  • Two shareholders: to form an LLC you only need 2 shareholders.
  • One manager: you need at least one manager for the LLC. This can be someone from outside the UAE.
  • No minimum capital: you do not require a minimum capital to start.
  • Foreign profit: 100% can be achieved with the right selection of the Emirati partner.
  • If you own an LLC in Dubai, as a foreign investor you will have the opportunity to obtain a UAE residence visa for yourself, your family members and your foreign employees.

The name specification of your LLC in Dubai

It is important that you take some time to think about naming your LLC in Dubai. There are a couple of requirements involved.

  • A business name must be unique and must not resemble an existing name or be a part of a brand name.
  • The name should not have a reference to a religion.
  • Your business name reflects the activities of your LLC company and the name should end with LLC. This implies that if you set up for example a marketing agency, your company name will consist of "XXX Marketing LLC".
  • Additional license fees are charged if you add "International", "Emirate" or other words to your company name that are related to your company's location.
  • Registration of your LLC in Dubai

Once the location, name and shareholders of the LLC are known, an application for a business license can be submitted to the (Department of Economic Development (DED). When the initial approval is received, you will visit a notary to sign and file an establishment contract. This contract will be written in both Arabic and English.

The next steps to obtain your business license in Dubai

With an establishment contract signed and filed, you are free to carry out the next steps:  

  • Open a Dubai based banking account for your LLC;
  • Obtain a certificate issued by the bank verifying the deposit of the equity;
  • Rent an office;
  • Publish your establishment contract on the Ministry of Economy's business platform;
  • Appoint a business auditor.

After you have completed these steps, you will be able to apply for a commercial license from DED. Once this license is obtained, you can enroll at the Dubai Chamber of Commerce and get started with your business!

The above steps should be carried out precisely in order to save time and additional costs. Therefore, it is wise to get help from a company that is familiar with the requirements and the authorities involved. Please contact us if you are interested in starting an LLC in Dubai!