Dubai continues to draw more and more foreign investors because of its enhanced infrastructure and connectivity as well as its tax-free status. It is highly recommended to proceed carefully when forming a business in Dubai, as each step needs to be carefully planned, and a partnership with a local agent is needed to handle the business registration process. Entrepreneurs from both domestic and foreign countries are free to establish any kind of company they like as long as it complies with Dubai’s legal requirements. Before applying for the necessary business license, each applicant for company registration in Dubai needs to select an appropriate business structure.
Different Types of Company Structures in Dubai
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Public Shareholding Company
This kind of business structure involves making the company’s shares available to the general public. This kind of company formation is perfect for big companies with significant financial sources. In the United Arab Emirates, public shareholding companies are required to have a minimum of ten founding members and a minimum share capital of AED 30 million. The Commercial Companies Law, which governs them, requires that they hold annual general meetings and have a board of directors.
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Private shareholding company
A private shareholding company is a specific kind of business structure where the company’s shares are owned by a small group of shareholders. The most suitable applicants for this kind of company formation are medium-sized to large-scale enterprises with significant funding sources. In the United Arab Emirates, private companies that hold shares must have a minimum of two founding members and a minimum share capital of AED 2 million. They must hold yearly general meetings and have a board of directors in accordance with the Commercial Companies Law.
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Sole Proprietorship
A sole proprietorship is a form of business structure where a single individual owns and runs the company. The owner is solely responsible for the debts and liabilities of the company. In Dubai, a sole proprietorship has no separate legal entity and the owner is in charge of every part of the company.
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General Partnership
A general partnership is a kind of business structure where two or more people collaborate to establish a company. The business’s profits and losses are distributed equally among the partners. In the UAE, there is no minimum capital requirement for general partnerships, but they do need to have a minimum of two partners. They are governed by the Civil Transactions Law.
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Limited Partnership
There are two kinds of partners in a limited partnership: general partners and limited partners. Limited partners only contribute to the business’s capital and have limited liability, whereas general partners manage the company and bear responsibility for its debts and obligations. In the UAE, limited partnerships need to have a minimum of two partners, and the amount of capital needed varies based on the type of business. They are governed by the Commercial Companies Law.
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Limited Liability Company
A business structure known as a limited liability company gives the shareholders of the company limited liability for the debts and liabilities of the business. Under UAE law, LLCs can have as few as two shareholders or as many as fifty. The amount of share capital needed varies based on the type of business.
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Joint Venture
A joint venture is a form of business arrangement where two or more companies collaborate to establish a new company. The business’s profits and losses are distributed equally among the partners. The UAE does not have a minimum capital requirement for joint ventures, but it does require a minimum of two partners. They are governed by the Commercial Companies Law.
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Branch of a Foreign Company
A foreign company that opens a branch in the United Arab Emirates is known as a branch of a foreign company. The branch is governed by the same regulations as the foreign business since it is viewed as an extension of the latter. In Dubai, branches don’t have a minimum capital requirement but do need a local sponsor.
