Setting up the Branch of a Foreign Company in the UAE
The Companies Law, in article (313) it allows a foreign company to exercise its main activity in the UAE by opening a branch or a representative office.
The following is the difference between foreign company and Representative office –
-A Foreign company which opens a branch in the UAE can exercise freely the activities for which it is licensed and It is now allowed for foreign professional and service companies to open their Branch in UAE without Ministry of Economy registration.
-A Representative office may practice only promotional activities for the products and services provided by the parent company. foreign companies registering their presence as a Representative Office must obtain registration with the Ministry of Economy.
Unlike a foreign branch, a representative office cannot conduct a business operation or market its product. So In order for a foreign branch to conduct its operation in UAE and it should obtain a license from the Ministry of Economy prior to obtaining the license from the Department of Economic Development. The main condition for opening a representative office or a branch of a foreign company in the UAE is to appoint a Service Agent who should be a UAE national.
A foreign company is required to submit the following documents to the concerned authority(s) and obtain necessary approvals for registering the branch in the UAE:
- Memorandum of Association
- Certificate of Incorporation
- Good legal standing certificate – showing the parent company is validly existing at the county of registration
- Board Resolution calling for opening the branch and appointing the Manager
- Power of Attorney to the Manager
The Additional documentation shall be asked by the relevant authority(s). (This depends on which activity segment the company seeks the registration).
Setting up a branch office in UAE
The UAE Commercial Law provides two options to foreign companies wanting to setup a branch of a foreign company (foreign branch office) in Dubai, Abu Dhabi, Sharjah and the UAE. The first is a full branch of a foreign company in UAE, which can practice the same activities as the mother company and The second is a Representative Office, which is a marketing office and cannot commercially trade.
Each of these legal forms gives the company varied amounts of access to function in the local market and both allow foreign companies to establish a presence in the UAE while retaining 100% ownership. Thus, the branch functions as an extension of the parent company and has no separate legal identity. Therefore, the parent company remains completely liable for all activities conducted under this license. A local service agent is required for the registration of foreign company in Dubai for both legal form.
The difference between a Foreign Company Branch Office and a Representative office
Branch of a Foreign Company in UAE:
Setting up a foreign branch office in UAE permits you to perform all activities offered by its parent company and this is subject to approval on activities as specified in the license at the time of incorporation and approved by the Ministry of Economy.
Representative Office in UAE:
A Representative Office allows you to market the services or products offered by the parent company, however its office cannot commercially trade or sign contracts in the UAE.
Both these legal forms need a service agent, either as an individual or corporate vehicle to complete the incorporation process. A service agent’s responsibility is to render labor and immigration services for the company. They also hold no financial liabilities or obligations related to the company inside and outside the Emirate.
We also handle all the necessary paperwork which includes visa, licenses and obtaining labor quotas. In addition, we also assist with translation services and the opening of corporate bank accounts.
- Your company retains 100% Management Control and 100% Financial Control.
- It is Suitable for entrepreneurs, SMEs and MNCs entering the UAE market.
- We keep you informed every step of the way thus, making us transparent and reliable.
Required are the key steps for setting up a foreign branch office in Dubai and the rest of UAE
- It is mandatory for any foreign company to appoint a local service agent to handle the process. The agent must be a UAE national or a company owned completely by a UAE national.
- The agent then completes the trade name reservation process and process this through the Department of Economic Development (DED).
- Obtaining Approval from the Ministry of Economy and a license from the Department of Economic Development.
- The Ministry of Economy (MOE) will issue the initial approval letter to either Abu Dhabi Department of Economic Development (ADED) or Dubai Department of Economic Development (DDED).
- Documents required include, MOE initial approval, copy of proposed lease in UAE (Tawtheeq in AD, Ejari in Dubai). Required copies of documents submitted to MOE and an engagement letter from a locally registered UAE auditor confirming company existence.
- The DED issues a commercial license for one year and is subject to annual renewal.
- Office Space and Bank Accounts.
- Apply for visa and labor cards for the employees.