Holding Companies In UAE

Holding Companies In UAE | Make These 14 Decisions Upfront

Holding companies in UAE: Type of company, registration agent, keep the information ready, name approval, documents required, signature & passport, UID number, no visas, LLC suffix, contact details, banking, UAE visit, renewal, and zero tax

1. Is this the type of company you are looking for?

Holding Companies in UAE: The first free zone offering this license is Sharjah Media City [SHAMS], Sharjah, one of the 7 Emirates of the United Arab Emirates [UAE]. They have defined holding company activity as:

“Units that hold the assets owning, controlling, levels of equity of a group of subsidiary corporations and whose principal activity is owning the group.

The Holding companies in this class do not provide any other service to the business in which the equity is held i.e. they do not administer or manage other units.

This class excludes active management of companies and enterprises, strategic planning, and decision making of the company” – SHAMS Holding Company Package, July 2018.

The holding company’s registered office address will be the SHAMS free zone office address. However, you can rent your own PO box in Sharjah, outside the free zone.

The onboarding form will require a one-line description of what the company will do exactly. It cannot directly do trading, a consultancy. And can only invest or own assets including shares.

The information given here should be consistent with the information you will give to your bank at the time of opening an account.

Banks generally check the activity of the license if the transactions in the company account look suspicious so please adhere to the licensed activity. Also please ask your company registration agent to check which bank will open the account for holding companies as all banks won’t.

Holding Companies In UAE | Make These 14 Decisions Upfront

Holding Companies In UAE

Holding companies in UAE: To get your holding companies started click here

2. Have you appointed a company registration agent?

All holding company registrations can be done only via SHAMS appointed agents, and not directly. So before you start an action, find an agent that you can work with and sign Terms & Conditions [T&C] agreement with them.

Annual renewals are required for all company and trade or business licenses. Generally, the costs are 65% to 75% of the initial registration costs. These renewals are done through your registration agent.

3. Holding companies in UAE: Keep the information required for the registration ready

Your company registration agent may want additional information in order to complete the SHAMS onboarding process. The additional information you may need to provide is spelled out in the rest of this page.

Registration agents usually will start work only after complete payment for that part is made.

They may also ask you to fill out a Customer Information Form. This form will have fields that require information of you that is not available from either your passport or your proof of address. E.g. Name of shareholders and directors, % shareholdings, power of attorney authorizations, the name of managing shareholder, and others.

Have you received their consent? They have to be comfortable signing legal documents.

4. Prepare 3 alternative company names for approval

Before filling the SHAMS company registration onboarding form, you will need your company name. Give 3 names to your agent who will seek formal approval from SHAMS. A formal name approval email will be received from SHAMS which can be used in the application.

Note that place names and religious names are not allowed. You can use numbers in the name though. All names will also need to be written in Arabic. Phonetically translation is acceptable.

Holding companies in UAE: To get your holding companies started click here

5. Have your documents required ready

You can start the process with just your passport and a proof of address.

In the UAE you will find that your passport copies will be required at the drop of a hat. So don’t be alarmed. Your passport must be valid for at least 7 months from the date of application.

A proof of address document is also required for each shareholder and director. This can be in the form of a

  • Utility bill
  • A bank statement
  • A tenancy contract
  • A phone bill with the shareholder’s address on it
  • It must be less than 3 months old

More documents will be required if you want other services e.g. a bank account. These documents will be generated by the registration process itself so you needn’t worry at this time.

6. Remember how signature, birthplace, and name as per passport will impact the process

Your signature as it appears on your passport will be the golden standard. Every time you sign any document in the UAE, whether it is for a bank account or any other government application, your signature will be compared to the way it appears on your passport. So please take care.

Also, all your names as they appear in your passport will be used. Sometimes they may not sound the same in Arabic because they are translated phonetically.

While SHAMS doesn’t care about your place of birth, some banks and jurisdictions may create objections if the country of birth is on a banned or pre-approval list. The countries on this list keep changing based on geopolitical realities.

If you have any doubts, ask your agent to apply for pre-approval at an extra cost.

7. If you have multiple passports, decide the one you will use everywhere and note UID number you will get from UAE immigration when you visit

If you have multiple passports, please use the same passport in your application like the one you traveled to the UAE on.

If you have applied for a visa to enter UAE, your visa will have a Unique ID [UID] number that’s generated by the Immigration Department and will be required in different applications subsequently. So keep track of your visas and UID number.

If you use different passports, you may face delays or refusal in your applications because of the confusion it will cause.

If your passport has been renewed in the meanwhile, keep both together so that the old one is available for confirmation.

Holding Companies In UAE | Make These 14 Decisions Upfront

Holding Companies In UAE

Holding companies in UAE: To get your holding companies started click here

8. You are OK with this company without visas and office space

This license doesn’t allow you to either have office space or any visas. Which is why the license is a better value for money than other free zone licenses, if a holding company activity is what you want.

Note that you may need a NOC from your Sponsor in case you have a resident visa.

You can convert this license into a regular free zone license by paying the additional fee.

These licenses are very useful for special purpose vehicles or for special sets of investors.

9. Understand the advantages versus an offshore company

There are many similarities between this Holding company license and offshore companies in the UAE.

Both are lower cost, don’t allow visas or office space, and have more stringent requirements from banks to open accounts.

The major difference though is in the suffix. Holding companies are domiciled in a free zone and have a suffix ‘LLC’ vs UAE offshore companies that have a suffix ‘Ltd’.

The holding company option becomes more attractive when you need an LLC suffix.

10. Decide on communication recipients clearly

Very often, who to communicate with and how are overlooked as by the way issues. Take this seriously.

Be sure to decide your

  • Email ID
  • Mobile and
  • Whatsapp numbers

you want to register with your registration agent. The agent can note these, as can the jurisdiction so that your communications don’t get lost and reach only the intended recipient.

This becomes more critical when there are multiple shareholders, but only 1 managing director and all communications must only go to that person.

Also, you must ask and receive the email ID and Whatsapp and mobile numbers of the person who is working with you at the registration agent’s office.

If he or she has a LinkedIn profile, then get acquainted with build confidence in your relationship with your client service person.

11. Be satisfied with your due diligence before you start

Different issues should be explored.

Since holding companies are a new product, banks will inevitably be more careful in opening accounts. They may require larger minimum balances or other compliances.

Ask your agent to check and get confirmation with the banks on the terms you need to comply with. Will you be able to?

Be prepared to answer questions e.g.

  • What type of shares will be held
  • Type of business in the home country
  • Domicile of subsidiaries
  • What will their business be

12. What system do you want to put in place for annual renewal of the company

All companies in the UAE must be renewed annually. Holding companies have to be renewed via the company registration agent only.

Would you like him to remind you when the renewal is coming?

The same is true if you wish to close the company.

13. Decide when you want to visit the UAE to apply for your company bank account

For the company registration, the onboarding documents can be couriered to you. You can sign them and courier them back for submission.

However, banks require that you sign their applications in their presence. So plan a trip to set up the bank account once the company is registered.

14. Accept that there is limited confidentiality and that there are no tax implications at this time

No corporate taxes are paid in the UAE at this time. So no capital gains, income, or dividend taxes are levied.

Also, no funds are to be deposited with the jurisdiction

The holding company information is not published in the SHAMS directory, however, there are no confidentiality laws that this type of company.

Holding Companies In UAE | Make These 14 Decisions Upfront

Holding Companies In UAE

Holding companies in UAE: To get your holding companies started click here

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Holding Companies In UAE was last modified: May 11th, 2020 by ramapati@varaluae.com

ramapati@varaluae.com

He strives for excellence in all he does and brings out the best in his people through guidance, a strong vision and support. He is exceptionally open-minded, flexible, dependable, understanding and straightforward in all words and actions and encourages personal as well as professional growth.

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