A foreign company planning to start its business in Dubai must first decide on whether it will go for new company setup in Dubai or start a branch office. While there are numerous benefits of formation of a new company in UAE, however setting up branch or representative office is another popular way of widening a company’s operations. This practice is common due to the reason that it allows foreign investor to retain 100% ownership of his company.
Branch offices are treated as an extension of their foreign parent company in Dubai. They do not have their own legal identity but remain liable for their activities. The major benefit of setting up branch office in Dubai is the permission to carry out commercial activities in UAE and be able to earn profits. However, it should be noted that branch office can carry out those operations only which are similar to those being performed by its parent company in home country.
Difference between Branch & Representative Office
This is a popular question which arises while going for new business setup in Dubai. While branch office and representative office share many similar attributes such as being licensed in the name of their parent company, functioning under commercial registration authority and are required to have a UAE National Local Service Agent; there is however a key difference between the two. Branch offices are allowed to engage in commercial activities similar to its parent company and earn profits whereas representative offices are not allowed to earn profits. Their role is restricted to advertising or promoting their foreign parent company’s products and services. Also representative offices in UAE can have only 4 employees.
Process to Open a Branch Office in Dubai
The government authorities in UAE have provided an easy and quick way to establish branch offices in Dubai or UAE. If you are looking to setup branch office in Dubai, we have listed down steps to follow for your ease,
Step 1: Appoint a Local Service Agent
The first step is to find and appoint a local services agent whose role is limited to administrative functions such as obtaining license, registration, visas etc. in return for a fixed decided fee. LSA is not involved in managerial functions nor has he any ownership in company. Local service agent is appointed through a written contract.
Step 2: Trade Name Reservation and Initial Approval
LSA will go to Department of Economic Development (DED) in order to obtain trade name reservation and then apply for initial approval from Ministry of Economy for setting up branch office in Dubai.
Step 3: Filing of Application
After initial approval, application will be made for Ministry of Economy and application form must include complete details of foreign parent company like share capital, activities, head office, list of proposed activities to be carried out by branch office and name of proposed general manager in Dubai. The documents required to be submitted with application form are,
- Certificate of trade name reservation and initial approval
- Company documents such as MOA (Memorandum of Association), AOA (Articles of Association) COI (Certificate of Incorporation) and Certificate of Good Standing.
- Parent company’s management board resolution for setting up branch office in Dubai
- Power of attorney for General Manager in Dubai
- General Manager’s passport copy
- Audited financial statements of parent company’s for the last two years
- Statement issued by parent company stating its major operations and trade activities and also the activities which will be carried out in Dubai
- Notarized agreement with local services agent and his identification documents copy (if LSA is a company then company’s corporate documents)
Step 4: Get Approval from Ministry Of Economy and Federal Foreign Companies Committee
Ministry of Economy will issue their own approval and then further documents (hard copy) that will be required to submit are,
- Application form
- COI of parent company
- MOE initial approval
- Certificate of local bank deposit
Ministry of Economy will forward the application to Federal Foreign Companies Committee with a note that specific activities are granted to branch office to carry out in Dubai.
Step 5: Get License by Department of Economic Development
After the approval of the Federal Foreign Companies Committee is received, the applicant will make another application to DED requiring similar documents that were submitted to MOE with the addition to include proposed address of branch office in Dubai. The application must include,
- Approval from MOE as well as approvals received from other authorities in this regard
- Copy of proposed lease in Dubai
- Copies of documents that were submitted to MOE in Step 3
- Undertaking of parent company
- Letter from UAE Auditor confirming his appointment and with the summary of parent company’s financial statements for two years.
After successful submission, DED will issue commercial license to branch office which will be valid for one year and renewable annually. Now there is a new law in Dubai that upon special request, 4 year license may also be obtained.
Step 6: Completing Administrative Tasks
After license issuance, the branch office can proceed to carry out administrative tasks such as creation of bank accounts, acquiring visas and labor cards for its employees etc.
Step 7: Registration with Commercial Authorities
After the successful completion of documentation work and licensing so that you have everything at hand, branch office can register itself with commercial authorities and it is entered in the register of Ministry of Economy and Commerce. Lastly branch office is registered at Dubai Chamber of Commerce and Industry.
KWSME Services for Branch Office Setup
If you are new to Dubai or you have no information about setting up new company, we at KWSME will do that just for you. Having experience of more than 10 years and thousands of satisfied clients, we guarantee you that our experts will provide you with the best business solution according to your needs. Do not get into the hassle of running from one authority to other, leave that upon us and we will setup your branch office whilst saving your time and money. Contact our business consultants for further guidance.