Step by step guide before starting a business in UAE | RAALC
This article provides an insight on how commercial regulations govern the business enterprises, in terms of formation, practice and application, to make it hassle-free for the business entrants. The following steps are thus recommended to be followed:
- Personal Research
Before even deciding about starting any business in UAE, you must be thorough with the knowledge about the following:
- UAE region in general. Eg –Cultural aspects, legal provisions, etc.
- Business Sector you aims to operate in
- Market conditions including present competitors
- Financial Requirements
- Scale of autonomy needed in the decision making, etc.
- Aligning your Research with Business Regulations
Research material prepared under stage 1, now needs to be aligned with UAE’s business regulations discussed below. This is because:
- Your type of business will determine the kind of license you require, varying from commercial, professional to industrial licenses. Certain activities like food trading, jewellery trade, veterinary activities and legal consultancy require further governmental approvals.
- Your preference of ownership and autonomy level will determine whether you go for mainland or free-zone company, or sole proprietorship. While the list of perks and downfalls in a mainland vs. free-zone debate is quite long and detailed, the principle point of difference is that the 51% shares has to be given to a local Emirati citizen/company in former with unlimited business scope, and 100% ownership is assured in latter with restricted business scope.
- Your preference between mainland and free zone will determine the applicable laws. UAE Federal Law No. 2 of 2015 on Commercial Companies governs the Mainland companies. While a Free-Zone Company is governed by the laws of the particular Free-Zone authority in which that company is set up. Specific laws relating to the type of business activity you conduct in that Free-Zone will also govern your business.
- A ‘legal form’ is also required by the law to be submitted with all these description of your business like business activity, company type, capital investment, nationality of owners, etc.
- Trade mark registration is required by law that should reflect your business activity. The Department of Economic Development (DED) has certain rules for booking the trade names.
- Depending upon your need for number of employees, as per legal forms of the DED, you need to hire a manager before your registration. While in other cases, you may not be allowed to hire at all.
- Depending upon your investment capabilities, while commercial company law require a minimum share capital for mainland companies, free-zone companies do not require so.
There are other business laws too that are generally applied on all the businesses to govern labour rights, consumer rights, intellectual property rights, environmental rights, etc.
Thus, setting up a business can be arduous and complicated as it involves making several decisions like choosing between various corporate structures, selection of a local sponsor, choosing the best from 38 free-zones, finding the most suitable business location, visa permissions for owner(s) and employees, business registration, and the list is long. Before finalising decision, taking guidance from the local legal experts like us can save you time, money and from strenuous dilemmas. Eg – While company registration and licensing can take a month, our services can provide the same within 24 hours.
Sunil Ambalavelil | Legal Consultant | Lead Partner
Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and for more detailed and specific opinion please write to me on email@example.com