Company Incorporation In Dubai | 6 Local Company Types To Choose From
Company incorporation in Dubai: General & limited partnership, public & private shareholding company, LLC, and joint ventures
Company incorporation in Dubai: Prospective entrepreneurs have to choose from among the different business incorporation types in the United Arab Emirates (UAE).
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1. General partnership
This type of company incorporation in Dubai is available to UAE nationals only. It is established by two or more partners who are responsible for the company’s “profit-and-loss” performance, and, more specifically, are liable (in common and separately) for the debts of the company.
The actual partners’ names are the only ones allowed for inclusion in the company name
A partner’s interest can be conveyed in either of two ways:
1. Approval of the other partner and or all partners
2. Expressly indicated in the partnership agreement
The individuals comprising the management must all be UAE nationals. Said Managers may either be partners or not.
The dissolution of a partnership occurs in the happening of the following four events:
a. Withdrawal of a partner
b. A bankruptcy of a partner
c. The insanity of a partner
d. Death of a partner
The partnership may, however, be continued in the event the rest of the partners unanimously decide on it. Such a decision, in this case, must be duly entered in the commercial register.
2. Limited partnership
This type of company incorporation in the UAE is also known as Partnership in Commendams. It is made up of two types of partners:
- General partnership – The general partners, who must be UAE nationals, are liable for the partnership’s debts.
- Limited partnership – Partners are liable for its debts only up to the value of their contribution to the capital. Furthermore, the limited partner can neither be part of the management nor have his name be included in the partnership’s name.
3. Public shareholding company
This type of shareholding allows for the most number of participants or shareholders.
In fact, it is required that a public shareholding company must have no less than 10 founders. The exception here is where a UAE government entity is involved, in which case the required number of founders may be less than 10.
The minimum number of directors that must compose the Board of Directors of a public shareholding company is 3, while the maximum is 12. The Chairman and the majority of the directors must be UAE nationals.
AED. 10 million [~US$ 275,000] is required as the minimum amount of capital, 25 % to be paid on subscription. 55% of the shares must be made available to the public.
The liability of a shareholder is limited to the value of his capital contribution. All shares, which have equal rights, and are entered in a share registry. Issuance of shares is guided by the nominal value – that is, the nominal value is pegged as the minimum price.
A general meeting of shareholders must be called by the board of directors when there is considerable financial loss ie. when the company loses 50 % or more of its capital.
This meeting will discuss all issues. For example, whether to continue the company or dissolve it. Partners are free to approach the court to seek the company’s dissolution if the board of directors failure to conduct the meeting.
4. Private shareholding company
Similar to a public shareholding company, a private shareholding company is required to have no less than 3 shareholders. Its minimum capital is set at AED 2 million.
Shares are not offered to the general public in this setup. This is the reason why it is required that the incorporating papers of a private shareholding company expressly exclude in advance any offering of shares to the public.
5. Limited liability company
This type of company incorporation in Dubai is widely used in the UAE. It can be set up by at least 2 but not more than 50 persons. A shareholder’s liability is hedged against the value of his shares.
In Dubai, the required minimum capital for this setup is AED. 300,000 [~US$ 82,000]. This figure different for different activities and jurisdictions.
Foreign ownership of shares is allowed, which must not be more than 49% of the company’s capital.
Also, an LLC company formation in Dubai is allowed to undertake any legal activity except banking, insurance, and such other activities involving money investment on behalf of other parties or entities.
6. Joint venture
The joint venture also referred to as “consortium”. A joint venture is formed by two or more legal entities or natural persons.
The carrying out of a joint venture may be done only under the private name of one of the partners, who must be a UAE national.
It must be stated here that in any of these six business incorporation types in UAE, the participation of UAE nationals must never go below 51 percent.
However, in free zones, foreign nationals can own 100%.
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