Registration of company in Dubai outside free zones

A company being registered outside free trade zones is called a “local” company. In this article we consider the process of registration of a “local” company in Dubai.

Registration of a “local” company in Dubai is made in the Department of Economic Development (DED). For operation of a company, it is necessary that DED issued a business license for performing certain activity.

Selecting type of activity when registering a company in Dubai

To launch the process of obtaining a license of a “local” company, it is necessary to select appropriate type of activity that will be permitted by a license, and which stipulates the organizational-legal form of a company (meanwhile, a local company can be registered in different forms).

In Dubai, when choosing the type of activity of a local company, you may select from more than 2,100 types of activity. These types of activity are distributed among different classes and groups – industrial, commercial, professional, and tourist activity.

Where a necessary activity is not on the list, you may address the Department of Economic Development (DED) and provide a precise description of a necessary activity. The Department might help to solve the issue.

A type of license is related to a type of activity; therefore, you need a professional license if you plan to perform professional activity. If license combines several types of activity, then for a type of license first the most “significant” activity will be considered, which is an industrial activity, followed by a commercial activity, and then a professional. For example, if a license permits both commercial and professional activity, a type of license will be commercial, as this is more “significant” activity (not applicable for a tourist activity).

It should be kept in mind that some types of business activity require approval of state bodies except the Department of Economic Development (DED).

Here are the examples of some types of activity that should be approved by different state bodies:

Selecting organizational-legal form when registering a company in Dubai

A company can be registered in Dubai (in case of a “local” company) in one of the following organizational-legal forms:

• “Sole Proprietorship”;
• “Limited Liability Company” (LLC) with one owner;
• “Civil Company”;
• “Limited Liability Company”;
• “Private Shareholding Company” (“Private Joint-Stock Company”);
• “Public Shareholding Company”;
• “Simple Limited Partnership”;
• “Partnership Company”;
• “Intelaq License Company”.

Detailed description of these organizational-legal forms is provided here: registration of company в Dubai – organizational-legal forms.

Selecting trade name when registering a company in Dubai

When registering a company in Dubai, a trade name should be reserved.

When choosing a name for a company in Dubai, general rules for trade names should be observed. A trade name should be related to a license type, so that not to mislead customers.

During submission of an application, a customer is given a payment voucher or number of transaction that he needs to use as a link when paying a fee for reservation of a trade name.

Reservation of a trade name should be paid within 72 hours since receipt of a payment voucher.

Certificate on reservation of a trade name is valid within 6 months.

Price for reservation of a trade name is 620 dirham (169 dollars).

Reservation of a trade name can be prolonged 3 times, every time for 6 months. Price for prolongation is 620 dirham (169 dollars). Prolongation should be made within one week until expiry of reservation period.

Certificate of a trade name, which validity term has expired, must be reserved again. All corresponding fees must be paid.

DED reserves the right to charge penalties for breaching rules for names in preceding years.

DED reserves the right to cancel or amend a business name, if it was found that the existing trade name is similar to any other name.

A name must not coincide with any brands applicable in the UAE, with names of state projects, or brand names.

Limitations applicable to trade names:

• Trade name should not contain any obscene or improper words, and should not insult general public even if such name is a personal name.
• Trade name should not contain the name of “Allah”, the word “God”, or spiritual attributes.
• If a business name includes a person’s name, then this person must be a partner/owner in a company license (e.g., license issued for “Mohammed Al Ghamdi” may not have a trade name “Mohammed Al Zaheri”).
• Last names may not be used as a trade name, except cases when a trade name includes a first name as well (e.g., the name “Ahmed al Ghandi” may not be used to form the name “Al Ghandi Contracting”, the name should be this one: “Ahmed al Ghandi Contracting”).
• Names should be used in a trade name as they are, i.e. names may not be translated into other language and this translation may not be used instead of a name.
• Name should not include country or government name.
• Business name must strictly reflect business activity.
• Name should not include any prohibited names, such as names of global political organizations, religious organizations (e.g. FBI, Mafia), etc.
• Name should not include punctuation marks, such as “.,!?/”.
• If a name contains any special elements, then an additional fee must be paid from 1,000 dirham (273 dollars) to 2,000 dirham (545 dollars) at the moment of obtaining a license. A total sum should not exceed 3,000 dirham (818 dollars).
• If a trade name includes foreign words, which cannot be translated into Arabian, e.g. “Platinum”, then a fee in amount of 1,000 dirham (273 dollars) is collected.
• If a trade name includes regional links, e.g. “East”, “West”, “International”, “American”, “European”, then a fee in amount of 1,000 dirham (273 dollars) is collected.
• If a part of a trade name is a trade mark, then a fee in amount of 1,000 dirham (273 dollars) is collected.
• If a trade name includes figures, e.g. “China 2,000 Trading”, or contains a number written in words, e.g. “China One”, then a fee in amount of 2,000 dirham (545 dollars) is collected.
• If a trade name includes foreign words, then a fee in amount of 2,000 dirham (545 dollars) is collected.
• If a trade name includes the word “Gulf”, then a fee in amount of 2,000 dirham (545 dollars) is collected.
• If a trade name includes an abbreviation, e.g. “A.L. Trading”, then a fee in amount of 2,000 dirham (545 dollars) is collected.

Trademarks:

Trademarks may not be registered in DED. The Department of Trademarks of the Ministry of Economy is responsible for acceptance of applications, study and taking decisions on registration of trademarks. When a customer files a complaint on violation of use of a trademark, a subdivision of DED on intellectual property rights first verifies the availability of the certificate of registration of trademark in the Ministry of Economy and then takes legal measures.

A company has right to use a trade name of other company provided by a franchiser after submission of a franchise agreement to the DED.

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Obtaining certificate of initial approval when registering a company in Dubai

A certificate of initial approval is a document certifying that DED does not object that a customer might start a business. This means that a customer may proceed to the next stage in obtaining a license.

In the process of submission of an application, a customer is given a payment voucher or a number of transaction that must be used as a link for payment.

A fee for initial approval must be paid within seven days from the moment of submission of an application.

Partners, organizational-legal form and types of activity for further license are stated in a certificate of initial approval.

A certificate is valid for 6 months and can be prolonged with payment of a fee in amount of 120 dirham (32.7 dollars), provided that necessary documents are valid.

If failed to pay the obtained payment voucher within 6 months, the transaction is automatically cancelled.

When submitting an application for initial approval, permissions of other bodies regulating the following types of activity may be necessary:

• Activity regulated by the Legal Department (legal consultations (professional license), legal translations (professional license)).
• Activity regulated by the Securities and Commodities Authority (SCA).

Preparation of Memorandum and Agreement with a Local Service Agent (if necessary) when registering a company in Dubai

Depending on organizational-legal form of your company, you and your partners might need to execute and sign a Memorandum (Memorandum of Association). In some cases it is necessary to sign an agreement on involvement of a Local Service Agent / corporate agent with a local citizen of the UAE, who will represent your business.

A customer should execute a Memorandum if an organizational-legal form of business belongs to:

• “Limited Liability Company” (LLC) with one owner;
• “Civil Company”;
• “Limited Liability Company”;
• “Private Shareholding Company” (“Private Joint-Stock Company”);
• “Public Shareholding Company”;
• “Simple Limited Partnership”;
• “Partnership Company”;

Development of a Memorandum is a process that must be done with involvement of a legal company, or a department of legal issues of DED, or a notary.

When registering a branch of an existing company, it is necessary to provide a copy of a Memorandum of a company. For businesses in the forms “Sole Establishment” and “Intelaq License Company” a Memorandum is not necessary.

Documents necessary for issuance of license when a company is being registered in Dubai

Requirements to office when registering a company in Dubai

All companies in Dubai must have a real address. A customer may conclude a rental agreement with a leaseholder and register this agreement in the system “EJARI” for attestation.

To register in the “EJARI”, it is necessary to provide a certificate of initial approval and documents required by the ‘Real Estate Regulatory Agency” (RERA) in any of authorized service centers. A notarized agreement must be later presented in DED of Dubai and proceed the process of issuance of a trade license.

A new trade license can be added to the same premise under these terms:

• Local party in a new license should be the same owner, partner or Local Service Agent, which is stated in the existing license issued for a desired premise.
• Area of premise allocated for each license should be not less than 10 square meters.

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Obtaining license approval (if necessary) when registering a company in Dubai

For some types of activity, a special approval of a license by different state departments (federal and local) is required.

For example, if a customer wants to establish a hospital, then it is not sufficient just to obtain approval for licensing from DED; he also needs an approval by the Dubai Healthcare Department.

It is necessary to check if business activity requires extra approvals by different state bodies. If yes, then a customer should address the state department with necessary documents.

An activity that is subject to control of DED does not require any extra permission for licensing.

Obtaining business license when registering a company in Dubai

After a customer has made preceding steps, it is necessary to submit all the documents. After that, a customer is given a payment voucher or number of transaction that he should use as a link for payment.

A fee for license must be paid within 30 days from receipt of a payment voucher.

In failure to pay within 6 months from receipt of a payment voucher, a transaction is automatically cancelled.

Upon obtaining a license, you may immediately start your business.