How to Have a Full Ownership of Your Business in Dubai?

DED Dubai Full Ownership

The UAE Commercial Companies Law (the “CCL”) has changed to allow companies incorporated in the UAE under the CCL, sometimes colloquially called “mainland” companies, to have full foreign ownership. The foreign ownership change took effect on June 1, 2021, according to the UAE Ministry of Economy.

This change aims to stimulate business activity and attract more foreign investment into the United Arab Emirates. As per the guidelines published by Dubai’s Department of Economic Development (“DED”), full foreign ownership is available for more than 1,000 commercial and industrial activities, excluding economic activities with a strategic impact. This strategic category includes activities in core sectors such as military, banking, insurance, and telecommunications. The complete list of activities open for full foreign ownership can be viewed on the Dubai DED website via this link.

However, before you start a new business or revise your company structure, you ought to understand the conditions and intricacies involved in this amendment to the CCL.

Rules Vary in Each Emirate for Mainland Company Setup

While Dubai has around 1,000 business activities for full expat ownership, the Abu Dhabi Department of Economic Development (ADDED) has a list of 1,500 activities. The local government of each Emirate retains the final authority to decide foreign ownership percentage.

The local Department of Economic Development can request that you submit your business proposal and documents supporting your business and specific activity for a final decision on ownership percentage. It helps to have the assistance of a seasoned consultant who can submit these documents on behalf of your business.

Impact on Existing Mainland Businesses

The status of existing business licenses structured on the 51%-49% model remains unchanged. However, you can amend your Memorandum of Association (“MOA”) and license via standard legal procedures.

Full ownership does not diminish existing requirements for licensing, except that it is no longer mandatory to have an Emirati or GCC national or company as a partner. In addition, the new guidelines do not yield in any additional fees, guarantees or capital requirements.

You cannot convert the legal form of a company from an LLC (Limited Liability Company) to an expat owned sole proprietorship; however, the license can be transferred to a one-person company with limited liability, or you can add another expat to retain the LLC structure. Full ownership does not apply to commercial agencies, as they are regulated by the Commercial Agencies Law and not the CCL.

Previously, LLC’s were required to have a share capital of at least AED 150,000, although in practice the minimum capital accepted by Dubai DED was AED 300,000. It not necessary to deposit the share capital, companies are expected instead to have adequate share capital in order to achieve the purpose of its incorporation.

In practice, the minimum share capital imposed is at the discretion of the relevant DED in each Emirate and these authorities may continue to impose minimum share capital requirements for certain business activities.

Amending Your Existing DED License

Before you amend your existing license, you will need to ensure cooperation with the Emirati shareholder. In most cases, the Emirati shareholder is a silent partner who collects an annual fee for his or her services. You will most likely need to negotiate a final settlement fee to transfer all shares to yourself or another expat partner.

Once you have come to a mutual accord, you can proceed with a sale of share agreement and amend the MOA. We can assist with the legal process of the amendment. If the Emirati shareholder does not agree to remove himself or herself from your existing LLC company, you still retain legal and arbitration options to get full control of your business.

Impact on Free Zones

Since their inception, UAE free zones were dependent on full ownership in companies as their primary differentiator. However, the amended CCL has created a new challenge to find new ways to compete with mainland company formation, be it with their services, ease of transactions, or employment and taxation regulations.

Free zones continue to have a tax-free environment which can play a deciding factor for companies. Mainland businesses in the UAE must register for VAT if they have a turnover of more than AED 375,000 in a year. The UAE Cabinet has defined free zones as “designated zones”. These zones are outside the scope of VAT when goods are transferred between designated zones.

Long-term property leases ranging from 20 to 50 years are available in some free zones such as Jebel Ali Free Zone or Hamriyah Free Zone. Many free zones also offer freehold ownership options or virtual desk solutions for SMEs whereby a physical office is not required.

The decision to either incorporate via a free zone versus the local DED may boil down to what share of the business is transacted locally versus internationally. Entrepreneurs focused on external markets may opt to retain a free zone setup, whereas those focused domestically can save the cost of having to go via a local distributor and thereby improve profit margins.

How Do I Incorporate a New Mainland Business With Full Ownership?

The incorporation process for a new mainland business is easier than ever. Many of the procedures are available through online portals managed by the local DED. You can launch your business in 5 simple steps:

  • Think of a name for your business and select your business activity from this list.
  • Complete the incorporation paperwork. The documentation required can vary depending on the business sector. This is where a business consultant can come in handy.
  • Lease a physical site for your venture and pay the DED license fee.
  • Open a corporate bank account once you have a license.
  • Complete visa formalities for yourself and any foreign staff.

The cost for business incorporation in Dubai depends on the business activity, location, and the number of visas needed. You should factor in service fees for business incorporation firms, office rent, and visa costs.

Apart from foreign banks and oil companies, there is no corporate tax imposed in the UAE. There are also no restrictions imposed by the UAE authorities on the repatriation of profits for mainland businesses. Annual fees are payable to the relevant local DED authority to renew business licenses. Fees are also payable to the relevant Chamber of Commerce and other regulating agencies (if applicable).

Free Consultation for Company Setup

Our consultants are experts in Dubai and GCC incorporations, having advised on several of the region’s high-profile incorporations for franchises, private investment firms and start-ups in multiple sectors. We also specialize in helping SMEs navigate the local business environment.

5 Common Fears Successful Entrepreneurs Need To Overcome

Overcome Fears

With anything in life, you need to overcome your fears if you want to be successful. Letting your fears get the better of you will make it close to impossible to chase your dreams.

Here are examples of fears that an entrepreneur will often face when building a business.

1. Criticism or rejection

People are often afraid of pursuing their dreams or a business venture out of fear of being criticized — that their ideas will be rejected even by their family or friends. Some fear that others will see them as weird or crazy people.

You might have been told that what you are planning would be too risky and would never work. This fear can be so debilitating that it can even prevent people from trying something new or even taking the next step.

Everything starts with you. You need to start believing in your talents first before you can make others believe in you and your business. Instead of worrying about the negative things that people might think of saying, think instead about what they would say if you succeeded in your pursuit.

If people think you are crazy, then accept it. Keep in mind that it is the people with “crazy” ideas who end up changing the world.

2. Debt or bankruptcy

Some people stay in their jobs and don’t go into business out of fear that their decisions would land them in the poorhouse. There is a basis for this fear. Starting a business requires capital and finding funding can be difficult.

If you find it hard to build capital or convince people to invest in the venture, you can try saving up for some of the capital needed to start your business. The amount may not be enough to pay for everything, but it should be enough to get you started or try out some of your ideas.

3. Offending others

Some people are indecisive out of fear that others will see them as being too self-confident or arrogant. This is especially true when it comes to marketing or promoting the brand.

However, being audacious is often important if you want to become a successful entrepreneur. You have to be confident enough in expressing your ideas, in promoting your brand and what you have to offer. Advertising is a necessity in building a successful business. If you don’t do it, no one will know about your brand or what you can do for people.

4. Looking stupid

We sometimes don’t do things out of fear of looking foolish in front of other people. Have faith in your abilities and the decisions that you make. What you decide to do allows you to test your skills and become better, whether it is in terms of speaking in front of a crowd, making movies, leading a team, or something else.

Regardless of whether you made the right or wrong decision, there is something you can learn from the experience. The worst thing you can do is to not do anything at all. It may make you feel safe, but it also prevents you from growing and developing your skills.

5. Success

You may be surprised to find that there are entrepreneurs who fear success. Success is something we all yearn for when we build a business. So why would people fear becoming successful?

We have this notion that building a business is extremely difficult. On the flip side, what if it’s easier than you’ve been led to believe? Imagine opening the doors of your bakeshop for the first time and seeing a long line of people waiting to get inside.

Some entrepreneurs fear that they will be unable to handle the demands of running and maintaining a booming business. There are other business people who feel that their success will alienate them from their friends and colleagues.

Operating a thriving business is what most entrepreneurs aim for. At some point, you may feel alone, but it comes with the territory of becoming the best in your field. Always strive to improve yourself and your business. Your business success will not just affect you but can also affect how your industry grows and develops.

Everyone has fears. Entrepreneurs are no different. Knowing how to face your fears and overcome them can help you create a business that is successful.