Limited Liability Company Formation

The LLC is established in the Dubai mainland and has the benefit of getting access to local and international markets. This is, perhaps, the most common legal form of companies established in the Dubai mainland. The paperwork involved in the formation of a Limited Liability Company is exhaustive. KWS-ME consultancy takes the responsibility of your paperwork and getting the required approvals from local government offices. That way the process of registering and forming a Limited Liability Company can move forward unimpeded.

The Advantages of Incorporating/Forming an LLC

  • Liberal access to local and international markets
  • Be part of the international trade and business loop
  • By forming an LLC in Dubai the investor visa is available to the owner or investor without the requirement of a security deposit
  • Free access to the well-developed and constantly upgraded infrastructure of Dubai
  • Most viable legal form of establishing a company in Dubai
  • There is no cap on the total minimum capital that an investor should bring for forming an LLC
  • A UAE-based LLC is allowed to open its subsidiary branches any where in the UAE
  • Local partner would not usually interfere in the matters of management of the company. He will act as a dormant/sleeping partner
  • Top-notch warehousing and office facilities available to LLCs
  • Easy access to cheap credit
  • Can easily open corporate bank account

LLC Incorporation/Formation

An LLC is the most common legal form of company in Dubai. An LLC can be formed by at least 2 partners. The number of partners can go up to 50 in forming an LLC. Each partner has a liability limited to his share of paid-up capital.  The minimum capital share requirement is 300,000 Dirhams in order to form an LLC.

According to the UAE Laws, the permissible capital share arrangement will give 51% of the shares of the company to local sponsors while 49% of the shares of the company will be composed of individual shares of foreign investors.

The local sponsor’s 51% ownership requirement is made compulsory by the UAE laws. Most usually, the local sponsor or partner will be a silent or dormant partner who will refrain from unnecessarily interfering in the matters of management of the company. He will be happy to get his sponsorship fee annually to which the foreign partners have already agreed to. However, the profit and loss sharing arrangement can be settled and legally formalized irrespective of the capital sharing arrangement.

For the process of incorporating an LLC, the initial approval or no objection certificate is required from the Department of Economic Development. A number of documents have to be provided to the DED for getting the NOC.

Serivces Offered by KWS-ME To Its Esteemed Clients for the Formation of LLC Include:

  • Promptly getting the paperwork ready and arranged in proper order
  • Liaisoning and establishing links with relevant government offices on behalf of the client
  • Getting documents approved and cleared from relevant government departments for the purpose of incorporating an LLC
  • Drafting of MOA (Memorandum of Association) or AOA (Articles of Association) and other documents
  • Find a local sponsor or local partner for formation of LLC
  • Suggesting & Helping clients to get their accounts opened in banks that meet their needs most appropriately
  • Visa approval and procurement services provided by KWS-ME to its valued clients
  • Arrangement and Management of client’s documents
  • Helping the client to find a place for company offices

List of Requirements for the Formation of LLC

Documentary Requirements for Getting Initial Approval or NO Objection Certificate:

  • Copies of passports of all the foreign partners wanting to establish an LLC
  • Document highlighting the name chosen for the company
  • An application filed for the formation of company and obtaining a trade license
  • A passport copy along with the family book of the local sponsor
  • A copy of NOC from the current sponsor in case the applicant is holding a resident UAE visa
  • Passport copies of the GM and Directors of the company
  • A copy of Emirates ID (for the UAE national)

Getting the initial approval or NOC is the first major milestone in the incorporation of LLC. Once this part is taken care of, you can apply for obtaining other relevant certificates and approvals which have to be obtained from other government departments. The nature of business activity, operational quirks, and legal form of the company will determine which certificates and approvals are required. The notarized Contract of Establishment will be submitted with other relevant documents to the Dubai Department of Economic Development in order to incorporate the LLC. The agreement will include the name of the company, the type of business activity the LLC will do, official address, names of the partners, nationalities of the partners, capital sharing arrangement, and profit & loss sharing ratio.

Documentary Requirements for Getting Final Formation:

  • A copy of Ejari – the lease documents for office space
  • A copy of documents submitted for initial approval with DED
  • Notarized Memorandum of Association (MOA)
  • Initial Approval or NOC’s copy issued by Department of Economic Development

There could be slight differences in the procedural requirements asked by different emirates for the incorporation of LLC. But the requirement of documents to be submitted with the government offices will likely remain unchanged. The entire process takes a lot of time. But KWS-ME has mastered the art of getting the process time reduced by leaps and bounds.

The Rule of Minimum Capital Required for LLC:

The rule of minimum capital required to an investor’s bank account was revoked back in 2009 by a legal decree but the rule still persists in various forms and degrees in different emirates as a prerequisite for the formation of LLC.

There could be up to 5 managers in an LLC who could be made responsible for running and managing the administrative and financial operations of the company as well as the bank account.

Additional Information about LLCs

LLC is not allowed to dabble into professional services barring a few like banking, investment or insurance. LLC is not allowed to practice what falls into the purview of professional trade licensed company. LLC is only allowed to engage in industrial or commercial or trading activities in Dubai.

LLC can afford to manage a flexible business model and corporate structure which would suit its operational and business needs. The LLC must use its name which is clearly mentioned on the trade license and add “limited liability company” as suffix to its name. The LLC could hire 5 managers who would have all the administrative powers. The managers could also come from the shareholders too.

The shares of LLC cannot be offered to public as instruments for funds generation. In case of any of the partner’s death, his/her share will be transferred to his nominated heirs. A UAE-accredited auditor will have to be hired by the LLC.

The 51% local ownership rule is upheld except in a case where a GCC national wants to establish an LLC. If GCC national has a foreigner as his partner, then the company will have 51% of shares owned by a local UAE sponsor. The minimum profit and loss ratio settled between the local partner and foreign partner cannot have anything less than 20% for the local sponsor.

Get Free Consultation Now!