The words formation, forming, form, incorporate, incorporation, set up etc. are all used here to mean the same thing. They all refer to the process of starting a company.
Where should you form your Commercial License?
Fortunum can incorporate / set-up a Commercial License in one of three ways for you;
- A Commercial License which is set up as a Limited Liability Company
- A Commercial License formed within one of the numerous Free Zones in the U.A.E.
- A Commercial License formed as a Branch of a Foreign Company
Forming a Commercial License as a Limited Liability Company (LLC)
- U.A.E. law and Dubai law state that a Limited Liability Company must have a minimum of 51% of its shares owned by U.A.E. Nationals. The remaining 49% is open to foreign ownership.
- You should choose to incorporate or set up a Limited Liablity Company if you plan on selling your goods to the the Dubai or U.A.E. markets.
A Commercial License incorporated within one of the numerous Free Zones in the U.A.E.
- You can also form a Limited Liablity Company within one of the many free zones found in Dubai and the other Emirates in the U.A.E. Some free zones will allow you to set up Limited Liability Companies, whereas some other free zones have a hybrid structure similar to a Limited Liability Partnership. Not all free zones allow the suffix "LLC" which indicates a Limited Liability Company. Some free zones use suffixes such as "FZ-LLC" which stands for "Free Zone - Limited Liability Company" or even "FZC" - which stands for "Free Zone Company" which in reality is a hybrid Limited Liability Partnership.
- You should consider forming a Commercial License within a Free Zone ONLY IF you plan to EXPORT your goods. If you wish to sell your goods locally within Dubai or the U.A.E. with a Free Zone Company, you are required to appoint a distributor. You cannot invoice your clients directly. All invoicing must be done through the distributor.
- The one advantage that a free zone company offers you is 100% ownership in your business. Free Zones Companies are exempt from the 51% - 49% minimum shareholding rule that is in force outside the free zones. That being said, all our Sponsors at Fortunum have been known to us for over 10 years and we have not had any issues with this - no ownership challenges, no take overs etc. Our sponsors provide a professional service and understand that they are providing this service as per the requirements of the law. They also understand that they have no moral or ethical right to the shares of your company or even the profits of your company.
A Commercial License set up as a Branch of a Foreign Company
- Many clients are torn between the safety offered by incorporating a Commercial License in the Free Zone and the flexibilty offered by a Limited Liability Company incorporated outside the free zones. The most common question we hear is "Is there a way to incorporate a Commercial License outside the free zone with 100% Foreign Ownership?" The answer is a big "YES!" A Commercial License formed as a "Branch of a Foreing Company" can retain 100% ownership in Dubai and the U.A.E.
- Even though incorporating a Commercial License as a Branch of a Foreign Company can involve more expenses than setting up a Limited Liabilty Company or a Free Zone Company, the Branch of a Foreign Company structure gives its owners100% peace of mind.
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