What Are the Key 8 Legal Steps for Business Setup in Dubai?

8 Legal Steps for Business Setup in Dubai

Due to its strategic locations and business-friendly environment, the United Arab Emirates continues to attract more business around the world. Because the Emirates is the second largest economy in the Arab world and boasts a 0% tax on both personal and corporate incomes, thousands of entrepreneurs around the world desire to start a business in the UAE. All the legal standards are to be maintained while setting up a business in Dubai as the company is strict when it comes to new business setups. This blog details the key 8 legal steps required for the Business Setup in Dubai

To establish a reputable brand name and to expand the company’s reach internationally, a Business Setup in Dubai can be a lucrative opportunity. An investor can take advantage of Dubai’s strategic location, easy access to nearby markets, cutting-edge infrastructure, and superior connectivity irrespective of whether the business is large, medium, or small. This is the main reason why the formation of business in Dubai is trending as it can make the business out of the world. 

Once the investor has sorted out all the legal procedures, starting a business in Dubai should not take more than 8 days. The following are the key 8 elements required to set up a business in Dubai: 

Identify Legal Form and Activity 

The business person must first determine the type of business activity that they intend to start as it is the main approach to apply for a business license in Dubai. This is because the kind of business is determined by the type of license the entrepreneur requires. Whether the business is an establishment, a limited liability company, or a branch of a foreign company must be determined as these would determine the basis of the operation. 

The rules, conditions, provisions, and fees would vary depending on the nature and type of business activity chosen by the business person. Entrepreneurs must remember that further approvals from other government departments are required if they select to start jewelry trading, veterinary activities, food trading, and legal consultancy. 

Registering the Trade Name 

The next important step for registering the company in Dubai is to register a trading name for the business. After the investor lists out the business activities, they should find a suitable name for their company. Before an investor commits to a company name, they should make sure that it is legally acceptable as the UAE has some strict naming conventions. 

Any names that refer to God, or any other religious or political groups are forbidden in the country. If the entrepreneur chooses to name the company after a person, their full name must be used. Using initials abbreviations are not recommended and that person must be a partner or owner of that company. The investor should also not use offensive or blasphemous language while naming their company.  It should be well-matched to the type of activity and should not be previously used in the same business industry. 

The trade name must not be deceptive to consumers nor should it violate any public law or order. To distinguish the name from other companies, a distinct trade name must be chosen for the business and it must reflect the nature of the activity and its legal status. 

Choose a Location 

Choose a Location 
Global communication background, business network design

A lot about the company is ascertained by deciding on the location of the business. Like infrastructure, resource availability, exposure to diverse economies, and regulations on taxes, a lot of things would differ from one location to another. 

One of the most important decisions an investor must take is to decide whether to set up the company in UAE’s free zone or on the mainland. The investor could benefit from 100% company ownership, no currency restrictions, no corporate and personal tax, complete repatriation of capital and profits, and 100% import and export tax exemption if they choose to set up the company in UAE’s free zone. 

However, the investor would be required to work with a mainland company if they wish to trade directly with the UAE’s local market. They would also charge a fee for the same. They will need to work with a local partner unless their business activity falls under professional services. They will hold 51% of their company shares while only 49% of the share would only be remaining for the investor. 

Determine the Legal Entity 

There are several rules regarding the makeup of a firm depending on the location and the type of business activity chosen by the entrepreneur. For the setup of a business in Dubai, it is important to determine the type of legal entity that the company would adopt. The business owner can establish one of the three types of businesses: Mainland Company Establishment, Free Zone Establishment, or Free Zone Limited Liability Company. 

A sole proprietor is not allowed to plan a legal consultancy firm as it can be done only as a stand-alone company or a branch of a company. The business person must see what type of company they can establish by checking it with the Dubai trade authorities. 

Initial Approval from Authorities 

Preliminary approval from the Department of Economic Development is mandatory after registering the trading name and obtaining the certificate to obtain all other approvals easily and quickly. The business person can conduct business activities online and through social networking accounts once they possess a DED Trader License. It assists startups in establishing companies in Dubai and directs businessmen in the right direction. 

The business person must first register with DED Dubai if they wish to open a business in Dubai. They should also be aware of the fact that they must obtain a new certificate once it expires as the preliminary approval will be valid only for three months from the date of issuance. 

License for Business Setup in Dubai 

The entrepreneur must obtain the business license after obtaining approvals from the relevant authorities. The investor gets the license from the DED if they are registering the company on the mainland. However, the license will be issued by the local authorities if they set up the company under the free zone. If needed, the business person has to obtain external approvals after getting the business license. 

Depending on the business’s economic and legal status, the documents needed to obtain a business license vary. However, documents such as copies of the passports of all the partners, a copy of the shares certificate, a copy of the company’s certificate of incorporation, a copy of the company’s memorandum, and articles of association are needed to get a license. 

Police Clearance Certificate in Dubai 

For citizens and residents inside the UAE, the Police Clearance Certificate can be obtained from the Dubai Police. It is otherwise called a Good Conduct Certificate as it certifies that the individual has a clean record. The certificate also verifies that the business person falls under the “good resident” category in the UAE. 

The business person can directly apply for the certificate by filling out the form either through the Dubai Police website or its app. AED 100 is charged for UAE nationals and AED 200 for its residents to get the clearance certificate. A copy of the passport, original emirates ID, and passport-size photographs are the documents required for the police clearance certificate. 

Approval from the Ministry of Economy 

The establishment of a representative office in the UAE must be approved by the Ministry of Economy. Some of the documents must be submitted to the Ministry of the Economy including shareholding agreement, Memorandum of Association, nature of the business, head office address, etc. In some cases, additional approvals from other government entities are required. 

The Business Setup in Dubai can be done with the assistance of business setup consultants as they would guide the entrepreneur in setting up a company successfully in Dubai. As their team consists of experienced professionals and has cutting-edge knowledge of the business in Dubai, the Company Setup in Dubai can become profitable. 

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