Starting a business in the UAE isn’t just about deciding on a name and renting an office – there are many legal factors to be considered. Some of the most important considerations can be found in the UAE Commercial Company Law No 8 of 1984.
If you are an expat and looking to start an onshore company (as opposed to one in a freezone, which is deemed offshore), you will have to create a Limited Liability Company (LLC).
Your company must have a local partner who owns at least 51 per cent of the firm (although this is not applicable to GCC nationals). The local partner is expected to take an active role in the overall running of the company. Your company is legally required to have a minimum paid-up capital of Dhs300,000. And as an LLC your company cannot carry out insurance and banking services, or invest funds for others.
If you are still keen to take the plunge, there are a number of things you still have to do, in order to abide by current UAE legislation. LLC companies must keep a register of the company’s partners, and the firm’s managers will be held responsible for the accuracy of this list.
The firm’s management also have to prepare financial statements and the annual report of the company must meet strict deadlines. Companies also have to hold an annual general meeting (AGM).
There are even rules about what happens at your AGM. Minutes (notes) must be taken and they shall indicate the names of all the shareholders present either in person or by proxy. They must include details about the number of shares held by those present, any resolutions made, votes cast for and against, and a list of the main discussion points raised at the meeting.
Now, these laws do not apply if your company is incorporated within a UAE freezone, for example, or if its main activities are in finance or insurance. However, I hope that by listing the legal requirements of setting up onshore in the UAE, I’ve given you some measure of the importance of fully researching the local laws before you decide to embark on any new venture. In business, it pays to look before you leap.
