Company Formation UAE

Companies in the UAE must be registered and licensed with the UAE Federal Ministry of Economy and Commerce and with the appropriate authority in the Emirate in which its office will be located. There are also requirements determining minimal capital contributions, the number of directors and shareholders, and incorporation procedures.

Under Federal Law No. 8, company formation UAE may take one of seven forms:

* Public Shareholding Companies
* Private Shareholding Companies
* Limited Liability Companies
* General Partnerships
* Limited Partnerships
* Partnerships Limited by Shares
* Shareholding Companies

The law for company formation UAE sets forth the general rule that participation of UAE nationals should never be less than 51 percent in any commercial enterprise.

Some business forms and structures are generally not available to foreign investors, as will be elaborated below.

* Public Shareholding Company:

Public shareholding company formation UAE is a company with a capital divided into equal negotiable shares. In such companies a shareholder's liability is limited by the number of shares held by him. Minimum capital required to form a public share holding company in UAE is AED 10 million with a nominal face value of AED 1 to 100 shares are registered in a share register and cannot be issued lower than the nominal value.

All shares must have equal rights. The Board of Directors must have a minimum of three and not more than twelve directors. The chairman, as well as a majority of the board, must be UAE nationals for public share holding company formation in uae.

* Private Shareholding Company:

Another company formation UAE is private share holding company. A private shareholding company must have a minimum of three shareholders. The minimum share capital to form a private share holding company is AED 2 million. Shares may not be offered to the public. The Chairman and majority of the Directors in a private shareholding company must be uae nationals.

* Limited Liability Company:

This type of company formation UAE is widely accepted way to business. Under the Commercial Companies Law or CCL (Federal Law No. 8 of 1984 Concerning Commercial Companies as amended by Federal Law No 1 of 1984 and Federal Law No 13 of 1988, Federal Law No. 15 of 1998) foreign investors are permitted to hold up to 49 per cent equity ownership in UAE companies, 51 per cent of the equity must be held at all times by one or more UAE nationals. A limited liability company can be formed by a minimum of two and a maximum of fifty persons.Non UAE nationals may own up to 49 percent of an LLC. The Companies Law provides that an LLC may engage in any lawful activity except insurance, banking and investment of money for others.


Shareholder liability is limited to the value of shares held in the company capital. The minimum capital required to establish a limited liability company is AED 150,000 in other emirates and AED 300,000 in Dubai. Non UAE nationals may own up to 49 percent of an LLC. The Companies Law provides that an LLC may engage in any lawful activity except insurance, banking and investment of money for others.

* Partnerships

* General Partnership:

According to the article 23 of UAE Federal Law No 8, A General Partnership is a type of company formation UAE where all the shareholders are jointly liable for the company liabilities to the extent of their assets. All the partners should be UAE nationals.

General partnerships are formed by two or more UAE nationals who are jointly and severally liable for its debts. Interests of a partner can be transferred as stipulated in the partnership agreement or with the approval of all partners.

* Limited Partnership:

A limited partnership is composed of one or more general partners who are jointly and severally liable for all of its debts, and one or more limited partners who are liable for the limited partnerships debts only to the extent of his capital contribution. A partnership limited by shares has both general partners with unlimited liability and partners whose liability is limited by their shares in the capital. The capital must be at least AED 500,000 and has to be divided into negotiable shares of equal value.

* Joint Ventures:

According to the article 56 of the UAE Federal Law No 8, Joint Participation is a form of company formation UAE that consists of two or more partners for carrying out a single or multiple businesses by one of the partners in his own personal name. A joint venture is a contractual agreement between a foreign party and a local party licensed to engage in the desired activity. The local equity participation in the joint venture must be at least 51 percent, but the profit and loss distribution can be prescribed.

There is no need to license the joint venture or publish the agreement. The foreign partner deals with third parties under the name of the local partner who unless the agreement is publicized and bears all liability. In practice, joint ventures are seen as offering a suitable structure for companies working together on specific projects.

Structures Available to Foreign Investors:

* General: A foreign investor may chose to participate with up to 49 percent in a company formed in one of the structures open to foreign investors despite the requirement that the majority of shares must be held by UAE nationals.

* Branches: A foreign company may establish a branch in the UAE but a local sponsor or agent is required who must be either a citizen of the UAE or a company wholly owned by citizens of the UAE. A branch must be registered with the local chamber of commerce and the municipality. Since February 1990, branches of foreign companies including those already in existence are also required to register with the Ministry of Economy and Commerce.

* International company offshore: The most common uses of offshore companies are for business and investment purposes in order to protect your assets by minimizing your taxes. The minimum number of shareholders is one person and maximum is 50 persons and they can select their own minimum capital in order to set up the company. Name of the company must include the suffix Limited or Ltd to denote limited liability.

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