Introduction
The Dubai Sole Establishment which is really a sole proprietorship company. It is one of the two most popular types of company incorporation in Dubai. The Dubai Sole Establishment is a very popular and accepted company structure for the following reasons;
- The Dubai Sole Establishment is widely used and therefore widely accepted and understood by the business community in Dubai.
- The Dubai Sole Establishment is very easy to set up – it just takes 3 steps for a foreigner to set up a Dubai Sole Establishment. A UAE Citizen can set up a Dubai Sole Establishment in just 2 steps.
Note: The Dubai Government has established a unique Dubai Sole Establishment incorporation procedure which aims to achieve the following;
- A very quick incorporation
- Making sure that the investor is completely aware of all the requirements for starting and running and business before the incorporation process starts.
Step 1: Initial Approval
Obtaining the Initial Approval is the most important part of the Dubai Sole Establishment incorporation process. The Initial Approval is a document issued by the Dubai Government licensing authorities which approve the following;
- The Business Activity: Unlike other jurisdictions where you incorporate a company and begin trading, Dubai is different in that each and every business activity that you wish to undertake must be approved first by the Dubai Government.
- Company Structure: This depends largely on the activity/activities that you have chosen to undertake. Activities defined by the Dubai Government as “Commercial Activities” are incorporated as Dubai Sole Establishments ONLY for UAE Citizens. For a foreigner wishing to set up a Dubai Sole Establishments only activities defined by the Dubai Government as “Professional Activities” can be incorporated. Professional activities are usually service oriented industries or industries that require a specific skill. For example management consultants are registered as Dubai Sole Establishments. To see if you will be allowed to register your intended business activity as a Dubai Sole Establishment, please fill in our Obligation Free Questionnaire and we will reply with a detailed proposal.
- The Partners of the Company: If you are a foreigner, then you can be the Sole Partner in the Company. Even though you are the sole partner of the company, you will still need a Local Sponsor to act as your UAE National Service Agent.
- The Company Name: Dubai has very strict laws regarding the naming of companies. The primary concern is to make sure that the company’s name does not misrepresent the business of the company. Unlike other jurisdictions around the world which have rules regarding the naming of companies, Dubai applies a very strict interpretation of the law. It is not uncommon to see companies with names such as “XYZ Management & Marketing Consultants.” You are unlikely to be able to register a company called “Merrill-Lynch” or “Berkshire-Hathaway” without referring to the business activity.
Step 2: Fulfilling the Conditions of the Initial Approval
The Initial Approval Document contains a list of conditions that must be fulfilled before the final license is issued. These are usually;
- Renting an Office: Dubai has very strict zoning laws. You cannot register a company at your home. You cannot even use your friend’s office – it is a strict one company per office rule in Dubai.
- Courts and Notary Procedures: To register a Dubai Sole Establishment, you have to first appoint a local sponsor to act as your UAE National Service Agent. There is a standard agreement which outlines the service agreement between you and the UAE National Service Agent. This document has to be signed and executed at the Dubai Courts Notary Public Section.
- Related Ministry or Related Department Approval: If you are setting up a straightforward consulting company you will not be required to obtain any further approvals. However, there are many business activities where the Dubai Government has to make sure that you are competent to carry out the intended business – or there is legislation in place so that a Ministry or Department oversees and approves the licensing procedure. For example, if you wish to set up a financial investment consultancy you will have to obtain Central Bank Approval.
Step 3: License Issue
Once all the conditions have been fulfilled, the Licensing Authorities take about 1 – 2 days to check all the documents. A payment voucher will be given to you – in effect an invoice – covering the license fees. Once you pay the license fee – the Final License will be issued.
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