LLC Company Formation Dubai | 6 Steps to be done in setting up a business in Dubai

LLC Company Formation Dubai is a good way to “Wall Off” your personal assets from your company’s liabilities

When looking at business types, many business owners choose to LLC Company Formation Dubai. An LLC is a good way to “wall off” your personal assets from your company’s liabilities, offering protection for your personal assets in the event of a judgment against your business. For this reason, it’s a better fit for many owners than a sole proprietorship or a general partnership.

LLC company formation Dubai As provided for in the Federal Law, there are seven types of business entity that may be established in Dubai and in the six other emirates of the UAE. Of these seven, the Limited Liability Company (LLC) is the one most preferred by investors planning on setting up a business in Dubai.

The rules governing LLC company formation Dubai as well as the steps involved in it are easy to understand and follow.

The general rule for LLC company formation Dubai typically starts off with a stipulation as to the number of individuals allowed to comprise a company.

Limited Liability Company can be formed by a minimum of two and a maximum of fifty shareholders whose liability is limited to their shares in the businesses capital.

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Guaranteed Company Shares are not open for Public Subscription

Currently, the minimum capital required in LLC company formation Dubai is 300 thousand UAE dirham’s (approximately 82,000 U.S. dollars). The required capital may be contributed either in cash or in kind.

Fifty-one per cent participation by UAE nationals is the general requirement for the Limited Liability Companies. Therefore the normal shareholding pattern for an LLC will be:

  • Local sponsor (Partner) – 51% and
  • Foreign Shareholder (s) – 49%Moreover, either the UAE nationals or the foreign partners may be granted the authority of managing the company

Going back to the maximum foreign equity of 49%, this in fact is one of the reasons why many companies with foreign partners often choose the LLC type of incorporation as it evidently provides the highest possible percentage of legal ownership to foreign partners in a trading business setup.

In LLC company formation Dubai, it is guaranteed that the company shares are not open for public subscription. A company registered as an LLC is highly recognized for being able to offer a structure fit for an entity that is looking at a long-term business relationship with the local market.

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Furthermore, an LLC, as stipulated in the Companies Law, may engage in any lawful undertaking. Exceptions to this are such activities related to banking, money investment (on behalf of other parties), and insurance.

Finding a sponsor is not a problem since there are plenty of opportunities around. However, you need a sponsor to be knowledgeable in the market, as well as with the business you plan to put up.

The six steps needed to be done in LLC company formation Dubai are as follows:

1. A commercial name under which the company will be conducting its business activities must be chosen and applied for approval by the Licensing Department of the Dubai Economic Department.

2. A Memorandum of Association of the company must be drawn up and then attested in the Dubai Courts by a Notary Public.

3. Approval of the Dubai Economic Department must be sought along with the entry (which must be applied for) in the Commercial Register.

4. Upon the granting of approval by the Dubai Economic Department, formal entry of the company in the Commercial Register will be made; publication of the company’s Memorandum of Association in the Bulletin of the Economy and Commerce Ministry will then follow.

5. The Dubai Economic Department will then issue the license to the company.

6. Finally, the company must be registered with the Chamber of Commerce and Industry of Dubai.

What are the benefits of LLC Company Formation Dubai?

  • While foreign equity in the company does not exceed 49%, profit and losses can be shared at a ratio different the share capital.
  • The most popular method of establishing a commercial company in UAE
  • UAE LLC offers unrivalled access to the wider UAE economy
  • No specific minimum capital requirements
  • The investor becomes the partner in the company.
  • The investor gets the investor visa under which he/her enjoys an investor’s status in the Emirates along with his/her family.
  • The investor has the option to commence branches.
  • The investor can manage the business without the day-to-day interference the local partner.
  • The assets and capital created will be in the name of the company and not in the name of the local national partner.
  • Few restrictions on the activities of an UAE LLC
  • Easy to open global corporate bank accounts For those planning on LLC Company formation Dubai, note these disadvantages: Many people may not be familiar with the management structure of an LLC as, unlike most of the other forms of business organizations, it is not required to have a Board of Directors.

Because of this, there may be some reservations as to the conduct of business dealings with an LLC. Here also lies the possibility of an LLC having difficulty raising its capital as investors may be more comfortable placing their money in a business form that they understand better.

The time required to successfully complete LLC company formation Dubai is from 8 to 15 working days reckoned from the date of filing of all the required documents.