4 Types of Companies in Dubai Could be Registered?

Dubai, a global hub for trade and innovation, attracts entrepreneurs from all corners of the world.  With its strategic location, world-class infrastructure, and tax-friendly environment, Dubai offers a fertile ground for businesses to flourish. 

But before embarking on your entrepreneurial journey in Dubai, it’s crucial to understand the different types of companies you can establish. 

Khidmath Corporate Services can be your trusted guide, helping you navigate the legalities and complete the process of setting up your dream company in Dubai.

The Company Law in Dubai

Dubai’s company law offers a flexible framework for businesses, catering to various needs and ambitions. The Company Act  establishes the legal framework for opening companies in Dubai, outlining the different types of companies (referred to as “legal forms”) you can choose from. 

Whether you’re a sole proprietor seeking a simple setup or envisioning a large-scale enterprise, there’s a company form perfectly suited for your goals.  

For those looking to establish a company within the city limits (referred to as the “onshore” jurisdiction), a local consultant like Khidmath Corporate Services can be an invaluable asset. 

We can guide you through the legalities, handle the paperwork, and ensure a smooth and efficient process for setting up your Dubai onshore company.

Types of Business Licenses in Dubai

Dubai offers several types of companies in Dubai, each with its own set of regulations and benefits. Selecting the right type of company, along with the appropriate business license, is fundamental for ensuring your business operates within the legal framework. Here’s a glimpse into some of the most common types of business licenses available:

• Commercial License
  This license is ideal for companies involved in trading, import/export, distribution, or other commercial activities.
• Industrial License
  If your business involves manufacturing, production, or any other industrial activity, this license is a must.
• Professional License
  Geared towards individuals offering professional services like consultancy, legal advice, or architectural design, this license allows them to operate legally in Dubai.

For those seeking a more independent setup with minimal regulations, opening a company in one of Dubai’s many Free Zones is an attractive option. 

Available types of companies in Dubai

Before registering a company in Dubai, selecting the most suitable type of business entity is crucial.  While there are various options available, Dubai primarily recognizes four main types of companies:

1. Limited Liability Company (LLC)
   This is the most popular choice for businesses in Dubai, offering a balance between flexibility and liability protection. 
   
   LLC ownership is divided into shares, and shareholders’ liability is limited to their investment in the company.  Khidmath Corporate Services can assist you with every step of opening limited liability companies in Dubai.
2. Partnership 
   This category encompasses two subtypes: General Partnerships and Limited Partnerships.
   
   General Partnerships involve two or more partners sharing profits and losses according to a predetermined agreement. However, this option is restricted to UAE nationals only. 
   
   Limited Partnerships offer more flexibility, with one or more general partners assuming full liability and limited partners with liability restricted to their investment.  Again, only UAE nationals can be general partners.
3. Branch Office
   Established companies with operations elsewhere can set up a branch office in Dubai to extend their reach into the region.  This option allows them to operate under the parent company’s name but with limitations on specific activities.
4. Sole Proprietorship
   This is the simplest form of business ownership, where a single individual owns and manages the entire company.  However, it’s important to note that in a sole proprietorship, the owner holds unlimited liability for the business’s debts and obligations.

Requirements for opening a limited liability company in Dubai

The Limited Liability Company (LLC) is a popular choice for its ease of setup and operational flexibility. Here’s a basic overview of the requirements for open limited liability companies in Dubai:

1. Choose a Business Activity
   The first step involves identifying the specific activities your company will undertake.  The Dubai Department of Economic Development (DED) maintains a list of approved business activities, and selecting the most relevant ones is crucial.
2. Select a Company Name
   Choose a unique and appropriate name for your LLC that complies with DED naming conventions.  Khidmath Corporate Services can help you brainstorm suitable names and conduct availability checks.
3. Appoint Local Service Agent (Optional)
   While not mandatory for all LLCs, some business activities may require appointing a local service agent.  This agent, typically a UAE national or a UAE-based company, acts as your legal representative and facilitates communication with government authorities.
4. Finalize Share Capital and Ownership Structure
   Determine the total share capital of your LLC and the ownership distribution among partners.  The minimum share capital requirement for a Dubai mainland LLC is AED 150,000 (around $40,800 USD).
5. Obtain Business License
   Once all the necessary documents are prepared, you will need to apply for the relevant business license  from the DED.  Dubai company formation representatives like Khidmath Corporate Services can streamline this process and ensure all the required paperwork is in order.

Setting up Sole Traders and Partnerships in Dubai

While Limited Liability Companies (LLCs) dominate the business landscape in Dubai, other types of companies available in Dubai cater to specific needs. Here’s a look at establishing sole proprietorships or partnerships in Dubai:

• Sole Proprietorship
  This simple type of company in Dubai offers quick setup and minimal administration. However, as mentioned earlier, the owner holds unlimited liability for the business’s debts.  This option might be suitable for small, home-based businesses with limited financial exposure. Keep in mind that sole proprietorships are not ideal for those seeking to relocate to Dubai under an investor or entrepreneur visa.
• Partnership
  As with LLCs, there are limitations on who can establish partnerships in Dubai.  The Creation of a Partnership is restricted to UAE nationals only.  General Partnerships involve shared profits and losses, while Limited Partnerships offer some liability protection for limited partners (again, restricted to UAE nationals).  If you’re considering a partnership structure, explore the possibilities of forming an LLC with a UAE national partner.

Business Forms Available for Foreign Companies in Dubai

Dubai actively welcomes foreign investment, and there are several business forms available for foreign companies to establish a presence in the emirate:

• Branch Office and the Subsidiary
  Foreign companies can set up branch offices in Dubai mainland to operate under the parent company’s name.  However, branch offices have limitations on the types of activities they can undertake.  For more operational freedom, foreign companies can establish subsidiaries, which are independent legal entities  with their own registration and licensing.
• Free Zone Companies
  Dubai boasts numerous Free Zones, each specializing in specific industries.  These zones offer attractive benefits for foreign companies, including tax exemptions, full ownership, and streamlined company registration in Dubai.  We’ll explore Free Zone companies in detail in a future blog post.

Choosing the right business form depends on your company’s goals, operational needs, and target market.  Dubai company registration agents like Khidmath Corporate Services can provide expert guidance  to help you navigate the legalities and select the most suitable option for your business in Dubai.