Corporate Structuring
The UAE is a constitutional federation of seven Emirates: Abu Dhabi, Dubai, Ajman, Fujairah, Ras Al Khaimah, Sharjah and Umm Al Quwain, each with their own local governments, and united under the overarching leadership of the Federal Supreme Council and the Council of Ministers. The UAE’s Constitution came into effect in 1971 but was only permanently accepted by all the Emirates in May 1996. It sets out the legal and political framework of the federation of the UAE. Generally, the legal system combines Islamic law (Shari’a) with civil law principles, which are derived from Egyptian Law (influenced by French and Roman Laws). In the absence of a specific law and in the interpretation of UAE laws, principles of Islamic Shari'a apply.
UAE Federal Laws apply in each Emirate (although may have a restricted application in certain Free Zones, in particular the Dubai International Financial Centre (DIFC) and the Abu Dhabi Global Markets (ADGM) (the Financial Free Zones)). Each Emirate retains authority over all matters which have not been exclusively assigned to the federation of the UAE. Under the UAE Constitution, federal laws have supremacy over the laws applying in each Emirate. Therefore, when considering matters of UAE law, consideration must be given to both UAE Federal Laws and the laws of the relevant Emirate together (if relevant) with the laws and rules of any relevant Free Zone.
The Constitution establishes the legislative and executive arms of the UAE federal government and the UAE federal judicial authorities. Below is a summary of the legislative and executive arms of the UAE federal government:
the Federal Supreme Council is the highest legislative authority in the UAE. It is comprised of the Ruler of each Emirate and is responsible for the ratification of certain federal laws before their promulgation, together with other responsibilities.
the President and Vice-President are elected by the Federal Supreme Council. The President presides over and directs the discussions of the Federal Supreme Council. The President also signs federal laws, decrees and decisions of the Federal Supreme Council, and appoints the Prime Minister, the Prime Minister's deputies and the members of the Council of Ministers, and holds powers over international diplomatic and domestic issues.
the Council of Ministers represents the executive function of the government and consists of the Prime Minister, the Prime Minister's deputies and also a number of UAE citizens as Ministers. The Council can prepare draft legislation and issue regulations for the implementation of UAE federal laws. No decree can be issued unless the Council of Ministers has confirmed it.
the Federal National Council has 34 members allocated between the Emirates. Each Emirate can decide the selection process for its members. Draft laws are submitted to the Federal National Council for discussion and amendment. The Council can pass, reject or amend draft laws. However, a decision of the Federal National Council is not binding on the Federal Supreme Council.
UAE federal laws requiring urgent implementation can be approved by the Federal Supreme Council, the President and the Council of Ministers. All UAE federal laws require ratification by the President.
UAE federal laws are published in the Official Gazette within two weeks from the date of promulgation and come into effect one month after the date of publication unless another date is prescribed in the law.
As the UAE is a civil law jurisdiction, judicial precedent is not binding on UAE Courts. Each Emirate has its own legislative and executive framework, and each Emirate issues its own laws and regulations on matters that have not been referred to the UAE federal government under the Constitution. Below is an overview of the UAE’s court system along with the judicial hierarchy levels.
Abu Dhabi and the Federal CourtsOther than the courts in the Emirate of Dubai and Ras Al Khaimah (and, at a local court level only, Abu Dhabi), Emirate courts are part of a federal judicial system. The federal judicial system consists of the Court of First Instance, Court of Appeal, Court of Cassation and, for a limited set of cases, the Federal Supreme Court.
The court of First Instance has jurisdiction over disputes relating to civil, commercial, administrative, labour and personal status matters unless the UAE Federal Government is a party, in which case, the dispute will be heard by the Federal Supreme Court.
Within the Court of First Instance, there are specialist courts established to deal with specific types of disputes, such as a labour court for employment disputes, a personal status court for family and inheritance matters, a criminal court for criminal prosecutions, a civil court for financial rights of individuals and government entities and a commercial court for all types of commercial disputes and also bankruptcy/protective proceedings.
As the UAE is a civil law jurisdiction, judicial precedent is not binding on UAE Courts. Each Emirate has its own legislative and executive framework, and each Emirate issues its own laws and regulations on matters that have not been referred to the UAE federal government under the Constitution.
Dubai CourtsDubai has its own court and appeal system. It consists of the Court of First Instance (including Civil, Commercial, Personal Status (separated into one for Muslims and also one for Non-Muslims), Criminal, Labour, Real Estate and Execution), the Court of Appeal and the Court of Cassation.
DIFC CourtsThe DIFC has its own independent judicial system, distinct from the UAE federal and Dubai judicial systems. Law No. 12 of 2004 (amended by Law No. 16 of 2011) sets out the jurisdiction of the DIFC Courts which include a Court of First Instance, Court of Appeal and an Execution Judge. Fees for the DIFC Courts are assessed on a sliding scale up to a cap of USD130,000.
The DIFC Courts follow a precedent-based system, and judges have the discretion to look at English common law where no DIFC precedent exists. Judicial proceedings are conducted in English, and court procedures largely follow those used in the English courts including disclosure procedures, interim measures, and cost claims.
ADGM CourtsThe ADGM has its own independent judicial system, distinct from the UAE federal and Abu Dhabi judicial systems. ADGM Courts are common-law courts based on the English court system. Law No. 4 of 2013 concerning the Abu Dhabi Global Markets sets out the jurisdiction of the ADGM Courts which include a Court of First Instance (which has a Civil, Employment and Small Claims Division (SCD)) and a Court of Appeal.
ADGM Courts follow a precedent-based system, and judges follow judicial precedent established under English common law. Judicial proceedings are conducted in English, and procedures largely follow those of the English courts. Judicial proceedings can also occur remotely via electronic means.
The primary law that governs civil transactions in the UAE is the Civil Transactions Law (Federal Law No.5 of 1985) (the Civil Code), which for commercial transactions should be read together with the Commercial Transactions Law (Federal Law No. 18 of 1993) (the Commercial Code) and, for transactions involving corporate entities, the Commercial Companies Law (Federal Decree Law No. 32 of 2021) (replacing Law No. 2 of 2015) (the Companies Law).
From a legal perspective, the UAE is a developing jurisdiction. Many commercial and civil laws have not yet been tested by UAE Courts and different courts operating in the UAE have interpreted and applied provisions in the Civil Code and Commercial Code, and other federal laws, differently.
What are the trade agreements in place or regional blocs Bilateral investment treaties and their implications on foreign investment?The UAE is party to several multilateral and bilateral free trade agreements (FTA) with many countries and trade groups across the world, including with partner countries in the GCC, enhancing its position as a global trade hub in the middle east region and globally. Some of these treaties and agreements include: the Information Technology Agreement (ITA) of the WTO, the Trade and Investment Framework Agreement (TIFA) with the United States, the Kyoto Convention, the FTAs signed (respectively) with Singapore, the European Free Trade Association (EFTA) member states, and New Zealand; in addition to more than 140 double taxation treaties (see section C below).
The UAE is also a member of the World Trade organization as of April 1996. Under the Greater Arab Free Trade Area Agreement (GAFTA), the UAE has free trade access to Saudi Arabia, Kuwait, Bahrain, Qatar, Oman, Jordan, Egypt, Iraq, Lebanon, Morocco, Tunisia, Palestine, Syria, Libya, and Yemen.
Adhering to such FTAs (and several future ones currently being negotiated) had a positive impact on the country’s trading record, which was clearly led by the benefits derived from these agreements, including reducing custom duties and implementing more transparent and efficient customs procedures, preserving intellectual property rights, promoting the establishment of legal protection for investors, and improving competitiveness in foreign markets while regulating competition.
As a key player in the global energy market, the UAE has a pivotal role in Energy diplomacy. In an effort to meet its “Zero” carbon emissions target by 2050, the UAE and UK have signed, earlier this year, a “Clean Energy Memorandum of Understanding” that will enable sharing of technical knowledge in clean energy, including low-carbon hydrogen and nuclear energy .
What policies has UAE adopted to encourage foreign investment, and what incentives have these policies introduced?The UAE actively seeks to enhance and create more sustainable and diversified opportunities for attracting foreign direct investment (FDIs). This has been witnessed through launching several initiatives over the years, including the UAE Vision-2021 which aimed at: boosting the UAE into transitioning to a knowledge-based economy, promoting innovation and research and development, strengthening the regulatory framework for key sectors, and encouraging high value-adding sectors. The UAE Vision-2030 aims at achieving a set of 17 critical goals (known as ‘Sustainable Development Goals (SDGs)’/or ‘Global Goals’) which are based on the United Nations’ Millennium Development Goals. Most importantly, the Government of Abu Dhabi announced a long-term plan for the transformation of the emirate's economy (known as 'Abu Dhabi Economic Vision 2030'). The plan includes a reduced reliance on the oil sector as a source of economic activity over time and a greater focus on knowledge-based industries in the future.
Several policies and reforms have also been implemented in the country to encourage foreign investment. Most crucially, these include:
The relaxation of local ownership requirements: this is provided in the Companies Law which now allows foreign nationals to own up to 100% of the shares of an onshore (also known as ‘mainland’) limited liability company (LLC), subject to certain exceptions for activities reserved to UAE nationals (e.g. ‘strategic impact’ activities (see section (D) below)) or entities wholly owned by them. This policy removes the previous restriction that required a local shareholding of at least 51% of a LLC and gives foreign investors more control and flexibility over their businesses. It is worth noting however that the policy also introduces some new obligations for foreign shareholders, such as the need to obtain a security clearance from the relevant authorities before acquiring shares in a LLC.
The establishment of free zones across the country: Free zones are designated areas that offer various incentives and benefits to foreign investors, such as 100% foreign ownership, tax exemptions, customs duty exemptions, and simplified licensing procedures. Free zones are usually set up for specific business purposes, such as technology, media, finance, or trade, and allow for free trading/operations within the free zone or outside the UAE without restrictions. However, free zone entities cannot trade within the mainland, unless they establish a branch or a LLC on the mainland, or appoint an agent or distributor. Moreover, free zone entities are subject to the regulations and requirements of the respective free zone authority, which may differ from the federal laws and regulations applicable to mainland entities.
The signing of double taxation treaties with various countries: By far, the UAE has signed 139 double taxation treaties (107 of which are in effect and 32 are still awaiting the issuance of implementing decree to enter into force). Double taxation treaties aim to prevent or reduce the taxation of the same income or profits by two or more jurisdictions, and to provide relief from double taxation for cross-border transactions and activities. Double taxation treaties can benefit foreign investors by lowering their tax liabilities, eliminating withholding taxes, and providing certainty and stability on their tax obligations. However, the application and interpretation of double taxation treaties may depend on the specific provisions and conditions of each treaty, as well as the domestic laws and regulations of the contracting states.
Enforcement of foreign judgments: In 2006, the UAE adhered to the “Convention on Recognition and Enforcement of Foreign Arbitral Awards” (also known as the “New York Convention”), which allows for the enforcement of foreign arbitral awards in the UAE. Further, the UAE is a party to numerous treaties facilitating the reciprocal enforcement of foreign judgments. These include: the GCC Convention for the Execution of Judgements, Delegations and Judicial Notifications (1996) (‘GCC Convention’) and Riyadh Convention on the Judicial Cooperation between the States of the Arab League (1983) (‘Riyadh Convention’). Several other bilateral treaties for the reciprocal recognition and enforcement of foreign judgments have also been signed, including treaties with China, India, France and Egypt. It is worth noting that the application of the above treaties extends to the financial free zones, whereas the financial free zone courts (of DIFC and ADGM) have signed bilateral memoranda of guidance in relation to reciprocal enforcement arrangements with courts in several other jurisdictions (e.g. the Memorandum of Guidance signed by DIFC regarding the Enforcement with the High Court of England and Wales) .
Capital repatriation: Foreign investors are free to repatriate the proceeds of a sale on liquidation.
Exemptions from Competition related restrictions: As provided in the Federal Law No. 4 of 2012 on the regulation of competition (“Competition Law”) and its executive regulations issued by cabinet resolution No. 37 of 2014, some entities and industries are exempt from the restrictions governing competition in the UAE. These include entities operating in telecommunications, pharmaceuticals, financial services, transportation, waste disposal, oil and gas, media related activities and utilities. Also, government owned entities (at least 50% ownership) and small and medium sized enterprises (SMEs) with specific annual turnover thresholds requirements (up to AED 200 million (for SMEs operating in the services sector) or AED 250 million (for trading and industrial sectors)) and number of employees (a maximum of 200 employees (for trading and service sectors) or 250 employees (for industrial sector)); are also exempt from said competition regulations.
Import/Export Control
Custom Duties
These initiatives and reforms (along with many others in place or soon to be adopted) have, and are intended to, improve the country’s business environment and increase its attractiveness to foreign investment. By far, these policies facilitated to attract substantial FDIs into several crucial sectors in the country including real estate, technology, and renewable energy.
Traditionally, most of the trading activities within the mainland, required a minimum ownership percentage (51%) by UAE nationals. These restrictions have been recently relaxed, and now a list of activities may be carried out with a 100% foreign ownership.
What are the Business structures available for foreign companies?When considering launching a business in the UAE, foreign investors generally have the option to either: a) establish a local/physical presence through establishing a corporate entity onshore/in the mainland or in a free zone; or b) indirectly through entering into a commercial agency or distributorship arrangement. The choice of any of said options would depend on the nature of the contemplated business activity.
Are there any foreign ownership restrictions applicable to onshore corporate structures?As provided in Section C above, foreign investors have traditionally faced restrictions on engaging in most of the trading activities within the mainland, which required a minimum ownership percentage (51%) by UAE nationals. These restrictions have been recently relaxed pursuant to the new Companies Law (replacing the previous Federal Commercial Companies Law No 2 of 2015), which now outlined an expanded list of activities that may be carried out with a 100% foreign ownership. This generally applies to the majority of activities in the UAE, save for those determined as activities with a ‘Strategic Impact’. Pursuant to Cabinet Resolution No. 55 of 2021, the activities that have a ‘Strategic Impact’, generally require applying for an approval from the relevant regulatory authorities to determine the required minimum level of Emirati ownership, board of directors’ membership, and any other conditions/requirements decided by said authorities. These activities include:
Security, Defense and activities with a military nature (regulated by the Ministry of Defense and Ministry of Interior;
Banks, exchange houses, finance companies and insurance activities (regulated by the UAECB);
Money printing (also regulated by the UAECB);
Telecommunications (regulated by the Public Authority for the Regulation of the Telecommunications Sector and the Digital Government); and
Pilgrimage (Hajj), Umra Activities and Quran memorization centers (regulated by the Public Authority for Islamic Affairs and Endowments).
Which government bodies in the UAE are relevant to business and trade activities?While noting the specific restrictions applicable for ‘Strategic Impact’ activities (as outlined above), as a general requirement, entities incorporated in the UAE must obtain authorisation from the relevant ministry or government body with jurisdiction over the type of business activities to be conducted.
There are several government agencies in the UAE that are relevant to business and trade activities, and each of them has a specific role in regulating, licensing, supervising, or promoting different sectors or aspects of the economy. Some examples of these agencies include the following:
The Ministry of Economy (MoE), which is responsible for issuing authorisations for certain types of business activities, such as industrial projects, engineering consultants, and recruitment agencies. The MoE also examines and registers trademarks and patents and provides merger control clearance for certain acquisitions of control that exceed market share thresholds.
The Ministry of Finance (MoF), regulating industrial projects.
The Federal Tax Authority (FTA), which administers and enforces the value-added tax (VAT), excise tax, and digital tax stamp regimes in the UAE. The FTA also publishes clarifications and guidance on tax matters and conducts audits and inspections of taxable persons.
The UAE Central Bank (UAECB), which regulates and supervises the banking and financial services sector in the UAE, and grants approvals for entities engaged in these activities. The Central Bank also stipulates certain requirements for licensed financial institutions regarding the processing and protection of personal data of their customers.
The Securities and Commodities Authority (SCA), which regulates and supervises the capital markets and securities sector in the UAE, and grants approvals for entities engaged in these activities. The SCA also issues rules for the takeover regime for the shares of publicly listed companies and adjusts the liability caps for limited liability clauses in contracts.
The UAE Data Office, which is the regulatory office responsible for the enforcement of the recent Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses ("Corporate Tax Law"), which imposes corporate tax on the taxable income of businesses. The UAE Data Office also oversees the implementation of a global minimum effective tax rate under the OECD BEPS Pillar Two.
The free zone authorities, which are established by each Emirate to set up free zones for general or industry-specific activities, and to issue licences and permits for entities operating within these zones. The free zone authorities also have their own employment regulations and dispute resolution mechanisms for their respective zones
A person wishing to set up a business in the UAE would need to obtain authorisation from some of the above (or other) bodies depending on the type, location and activity of the business. Certain departments or sub-divisions affiliated to the above (or other) authorities would particularly be involved in licensing some activities. For instance, sea cargo, freight forwarding and cargo clearing requires obtaining the approval of the Department of Ports and Customs in the relevant Emirate. Also, a business engaged in engineering consultancy and related technical services would require the approval of the municipality or planning department of the relevant Emirate.
What are the types of onshore corporate vehicles available in the UAE?The Companies Law provides for different types of corporate vehicles which can be established by foreign investors. The choice of the relevant vehicle would depend on the contemplated activities which, most crucially, may require a minimum percentage of local ownership, as outlined in Section D above. The most common types of onshore/mainland corporate vehicles are: limited liability companies (LLCs) which can now be formed by a single shareholder, private joint stock companies (which have only been very recently introduced), public joint stock companies (for investors willing to list in one of UAE’s stock exchanges), branch and representative offices. A generic overview on each of said vehicles is provided in Annex (A) below.
What are the types of Free Zones in the UAE?There are mainly two types of free zones in the UAE: financial free zones and economic free zones. For economic free zones, there are more than 30+ zones spread in different locations across the UAE, including Jebel Ali Free Zone (JAFZ), Dubai Silicon Oasis (DSO), KIZAD, Dubai Airport Free Zone (DAFZA), Abu Dhabi Airport Free Zone, Dubai Multi Commodities Center (DMCC), Sharjah Media City, etc… The only two financial, and most commonly used, free zones are the DIFC and the ADGM.
Describe the main incentives offered by UAE Free Zones? As briefly outlined in Section C above, free zones in the UAE offer various incentives and more lenient requirements for setting up a business and carrying out activities within specific industries/ business sectors (e.g. such as technology, media, finance, or trade, etc…). These incentives include:
Allowing for 100% foreign ownership;
No custom duties applicable (except for goods entering a destination within the GCC/UAE market);
No foreign exchange control;
no restriction on capital repatriation;
Corporate tax rate at 0% (noting that certain prescribed conditions must be met to qualify for this exemption, including meeting the criteria of a “Qualifying Free Zone Person” as defined in the relevant regulations)
Describe the legal framework/regulations governing free zones in the UAE?
Free Zones are established by one or more decrees that set out their legal and administrative framework and establish (or designate) a regulatory authority for each Free Zone.
The laws applicable in Financial Free Zones are mostly based on English common law. For instance, in ADGM, English common law (including rules and principles of equity) and certain English statutes on civil matters have been directly incorporated into the laws of the ADGM.
Further, financial free zones have their own separate and independent registrars, financial service regulators and judicial systems. They also have frameworks for mutual recognition of judgments between the Financial Free Zone and the Emirate in which that Financial Free Zone is located; and signed several bilateral memoranda of guidance in relation to reciprocal enforcement of judgements with courts in several jurisdictions outside the UAE.
All federal civil and commercial laws (except the Penal Code and the UAE federal law on the criminalisation of money laundering) do not apply on financial free zones.
When considering establishing a corporate vehicle inside a free zone, the laws and regulations of that Free Zone will therefore need to be considered.
What licenses need to be obtained when establishing a corporate vehicle inside a free zone?A business established in a free zone would require obtaining a licence from the free zone authority, depending on the nature of the business (e.g. trading licence, service licence, or manufacturing/industrial licence).
In order for a free zone entity to engage legally in sales within the UAE (and outside of the relevant free zone), the entity will generally have to appoint a commercial agent or distributor licensed to trade in the relevant Emirate's mainland.
What type of entities can be established in free zones?Three main type of entities can be established in a free zone namely:
A free zone establishment (FZE)
A Free Zone Company (FZC)
A Free Zone Branch (FZ Branch).
There is very little difference between FZEs and FZCs other than the number of shareholders and the share capital requirements (as further elaborated in Annex 2 below).
Who can act as a commercial agent in the UAE?The Federal Commercial Agency Law No. 3 of 2022 (the ‘Commercial Agency Law’) (amending the preceding federal law no. 18 of 1981) introduced fundamental changes with respect to the types of legal entities which can be registered as commercial agents in the UAE. Formerly, only UAE nationals or companies wholly owned by UAE nationals could qualify for registration as commercial agents and hence avail of the protections afforded under the Commercial Agency Law. However, according to the new law, commercial agency activities can now be carried out by: UAE nationals, a UAE public joint stock company (‘PJSC’) owned by at least 51% of UAE nationals, a UAE private entity owned by a PJSC (meeting the former ownership requirement, a UAE private entity 100 % owned by UAE nationals, or international companies that are not owned by Emirati nationals to act as commercial agents for their products provided that such products are not the subject of a commercial agency.
These latest amendments circumvented the previous challenge of local ownership requirement, which restricted UAE family businesses (having registered commercial agencies as part of their business portfolio) from seeking external investment (e.g. by virtue of a private placement or initial public offering (‘IPO’), due to the fact that any private or public offering would have to be restricted to UAE nationals in order to comply with the 100 % local ownership requirement.
The newly amended Commercial Agency Law therefore constitute a milestone, facilitating local companies’ access to international financial markets and securing additional funding and investment, which in turn, would incentivise the growth of the local financial markets.
It should be noted that UAE laws do not distinguish between commercial agencies and distribution arrangements. As defined in the Commercial Agency Law, commercial agency is an arrangement (e.g. commercial agency agreement) whereby the principal assigns an agent to “distribute, sell, offer goods or services in the UAE in consideration of a commission or a profit”. Furthermore, franchise agreements are now also subject to Commercial Agency Law.
What are the registration requirements for commercial agencies?Any commercial agent must be registered with the MOE, and annotated in the commercial agents’ register. The commercial agency agreement must be concluded on an exclusive basis, either in respect of a specific territory (Emirate) or a product line(s).
Are there any risks associated with the termination of a commercial agency agreement?In general, the Principal may not terminate or refuse to renew a commercial agency agreement without a material reason justifying the termination or non-renewal, or upon a mutual agreement between both the Principal and agent, and upon serving a termination notice.
In addition, the agency may not be re-registered in the commercial agents’ register in the name of another agent, even if the preceding agency is based on a fixed term agreement, unless the agency has been terminated by mutual agreement between the Principal and the agent or in case of material reasons accepted by the commercial agency committee justifying the termination or non-renewal of the agency or after rendering a final court judgment terminating the agency.
Accordingly, the expiry of a registered commercial agency does not amount to a “material reason”, justifying the termination of the registered commercial agency arrangement, unless mutually agreed by the parties. Further if solely terminated by either party before the expiry of the term (although allowed provided a notice is served within a specific period of time), such early termination can be challenged before the commercial agency committee and compensation can be claimed by an agent if it succeeds to demonstrate a damage suffered.
(scroll to view the entire table)
Type of company
Nature, structure and permitted activities
Number of shareholders
Minimum capital & basic principles of liability
Management
Dissolution
Public Joint Stock Company (PJSC)
A company with capital divided into equal nominal value negotiable shares which, after subscription of some of such shares by the founders, can be bought and sold on public markets.
Any commercial activity can be carried out subject to obatining the required approvals from the relevant authorities.
Minimum five (5) founding members.
Founder and/or preference shares may not be issued.
No minimum local ownership requirement except for activities of ‘strategic impact’ (See Section D above).
Minimum capital of AED 30 Million. The Founders shall subscribe for shares of the company's issued capital to the extent of the ratio described in the Prospectus, before offering the remaining shares of the company at a public offering, subject to the requirements of the SCA in this regard. All shares maintain equal rights and obligations, and are freely transferable.
Each shareholder’s liability is limited to its capital contribution in the company.
Management is carried out by a board of directors (elected by the general gssembly) headed by a Chairman. Min of three, max of eleven directors provided that their number is always odd, their term of office cannot exceed 3 calendar years, commencing from the date of election or appointment.
Board of directors shall meet at least four times a year unless the articles of association provide for more meetings, and shall be conducted in accordance with the procedures specified in the articles of association.
Majority vote is required for meetings of directors.
All powers necessary to execute business of the company are vested in board of directors, except for matters requiring the approval of the company’s general assembly, as set out in the Companies Law.
A director may be removed or discharged by General Assembly regardless of provisions in articles of association.
General provisions:
Exhaustion of the objects of incorporating the company.
Depletion of all or most of the company assets which makes the beneficial investment of the remainder impossible.
Merger in accordance with law.
Unanimous approval (or majority, as the case may be) to terminate the duration.
A court order to disolve the company.
Special conditions:
If the cumulative losses reach an amount equal to half of the company’s issued capital, a special resolution must be passed to either decide to dissolve the company prior to the expiry of its term or to continue with its activities.
If the general assembly fails to pass said resolution, it must be initiated by board of directors. Otherwise, all interested parties may file a lawsuit before the competent court requesting to dissolve and liquidate the company according to the provisions of the Companies Law.
Private Joint Stock Company (PrJSC)
Same as above except that the company’s shares are not traded on a public exchange.
Can be converted to a Public Joint Stock Company after 2 fiscal years of operation.
At least two (2) founding members and maximum of two hundred (200) members.
Notwithstanding the above, it is permissible for a single legal person to incorporate and own the company. The holder of the company's capital shall only be liable for its obligations to the extent of the capital of the company as set out in its memorandum of association. The name of the company shall be followed by the sentence: "Private Joint Stock – One Person Company (OPC)".
Minimum capital at least AED 5 Million and should be paid in full.
It has a separate legal personality from its shareholders.
Each shareholder’s liability is limited only to the extent of its capital contribution in the company.
Same as Public Joint Stock company set out above.
Same rules applicable for Public Joint Stock company set out above.
Limited Liability Company (LLC)
A LLC may not issue negotiable share certificates and its shares are not freely transferrable.
"Limited Liability Company" or in short “LLC” designation must appear in the name of the company (on official documents and letterhead and in case of One Person Company (OPC), the name of the company shall be followed by the expression "Limited Liability One Person Company (OPC)".
Any lawful activities may be carried out, other than insurance, banking and investment.
At least 2 partners and a maximum of 50. Also possible for a single natural or legal person to incoporate and own the company solely.
The company shall keep, at its head office, a special register of partners with details of their shareholding and transactions in relation thereto.
No minimum capital. However, upon the proposal of the Minister in coordination with the relevant authorities, the Cabinet may issue a resolution specifying a minimum capital of the Company (decided on a case by case basis).
Value of shares must be fully paid at time of incorporation.
Each partner is liable to the extent of its contribution in the company’s capital as set out in the memorandum of association (as may be amended from time to time).
Actions of the manager(s) are binding to the company provided they are substantiated by the capacity under which he/they act.
Manager(s) liable to the company, the shareholders and third parties for any fraudulent acts and shall also be liable for any losses or expenses incurred due to improper exercise of power or contravention of the provisions of any law in force, the memorandum of association of the company or the contract appointing the manager or for any gross error by the manager.
Day to day management may be vested in any person(s) appointed in the memorandum of association or by General Assembly.
Management may be vested in one or more managers (without any maximum number of managers set at law) as determined by the partners in the memorandum and articles of association. If there is more than one manager, the partners may appoint a board of managers (similar to board of sdirectors in a PrJSC/PJSC) and vest in it such powers and functions as set out in the memorandum of association.
Manager(s) may be a foreign partner, may be appointed for limited or an unlimited period, and have full power and authority to manage the company, except for matters requiring the approval of the company’s general assembly, as set out in the Companies Law, or if their powers are limited in the company’s memorandum of association.
Managers may not, without the consent of the general assembly, manage a competing company or a company with objects similar to those of the company or make, for his own account or for the account of third parties, deals in a trade that competes with or is similar to the business of the company, otherwise the manager may be dismissed and required to pay compensation.
A supervisory board must be appointed in the memorandum of association if number of partners exceeds 7.
Supervisory board may be removed or discharged at any time by general assembly for good cause.
Supervisory board is not liable for actions of manager(s) unless is aware of faults and fails to report same to general assembly.
Branch & Representative/ Liaison Offices of Foreign Companies
No seperate legal personality from its parent company and therefore not considered a separate legal entity.
A Branch Office:
must have a license to operate in the UAE, and file a name with the Foreign Companies Registry affilaited to the MOE.
Upon registration, it carries out business under the name and form of the company it represents.
It may only render certain services and carry out some professional activities (e.g. maintenance/repair services to customers of the company it represents), but may not carry out commercial activities and cannot physically deal in or trade in goods within UAE.
A Liason office:
May only be engaged in promoting, advertising and marketing the goods of the company it represents.
Wholly owned by the parent company (since no separate legal personality)
No minimum capital required, but a bank guarantee of AED 50,000 must be issued from a licensed bank in the UAE and submited to the MOE.
No separate legal personality from its parent company. Acordingly, issues of liability will be determined in the jurisdiction of registration of the parant company and not under UAE law. However, if it carries activities without or before its registration, all persons who perform the activities will be personally and jointly liable.
Notwithstanding the above, a branch of a foreign company is recognised under the Companies Law and therefore can sue and be sued in the UAE.
It must have a general manager (as an authorized representative), who does not need to be a UAE national but must be a resident.
Authorised representative(s) named in the memorandum and articles of association of and the resolution or power of attorney issued by the foreign companies will be used to establish authority of branch/office.
Dissolution of the branch would follow any dissolution of the parent entity in its home jurisdiction. Otherwise, dissolution of the branch would involve de-registration (i.e. surrender of its license) in the UAE at the election of the parent entity.
Public Company (PLC)
A public company can engage in various activities, subject to the applicable laws and regulations.
Can make a public offer of its securities, and invite the public to subscribe for or purchase its shares or debentures.
There is no limit on the amount of shareholders a public company can have.
A registers of shareholders and debenture holders (creditors of the company) must be kept at the company
Capital requirements
Minimum share capital of USD 100,000, excluding treasury shares.
The amount represents the amount of money or assets that the shareholders have contributed to the company in exchange for shares.
The shares must be at least 25% paid up on allotment.
Principles of liability
Shareholders are liable up to the amount unpaid on their shares.
The company must be managed by at least 2 directors, who may or may not be shareholders.
A secretary must also be appointed, its duty is to ensure that the directors have the requisite knowledge and experience to perform their functions.
Annual accounts must be prepared and audited by an independent auditor.
The company may be dissolved by:
Voluntary dissolution which requires the approval of the shareholders with a special resolution, and a declaration of solvency by the directors.
Involuntary dissolution can be triggered by a petition to the court by the shareholders, the creditors, or the Registrar of Companies, on various grounds.
Private Company (LTD)
A DIFC private company is a type of company that has a separate legal personality and limited liability for its shareholders.
DIFC Companies Law imposes certain restrictions and requirements on the transactions and distributions that a private company can make. For example, a private company cannot provide financial assistance to its directors or to persons connected with them, unless it obtains the prior approval of the shareholders by a special resolution.
A LTD cannot make a distribution to its shareholders, such as a dividend or a repayment of capital, unless it satisfies the solvency test and the amount of the distribution does not exceed the amount of the company's distributable profits.
There needs to be at least 1 shareholder and no more than 50.
There is no minimum capital requirement, unless specified by the relevant regulator.
However, the company must issue shares with a fixed nominal value, which is the minimum price at which the shares can be allotted to shareholders.
The company must be managed by at least 1 director, who may or may not be a shareholder.
There is no requirement for the appointment of a company secretary.
The company must keep accounting records and prepare annual accounts but may be exempt from audit if it meets the criteria for a small private company.
The company may be disolved by voluntary disolution or compulsory dislolution, striking off or court order.
A private company can be involuntarily disolved if it is unable to pay its debts or if the court considers it just and equitable. This can be initiated by a creditor, a contributor, or the registrar by filing a winding up petition with the court. The court then decides whether to issue a winding up order, which triggers the liquidation of the company's assets and liabilities
Company Branch (Recognised Company)
A recognised company is not a separate legal entity from the foreign company.
It must comply with certain requirements under the difc Companies Law in respect to conducting business in the DIFC.
These requirements include having a place of business in the DIFC, appointing an approved person, filing details with the Registrar, submitting a confirmation statement, and maintaining accounting records.
This is not applicable to these types of entities, as a Recognised Company is not a separate legal entity from the foreign company.
No minimum capital requirement, unless specified by the relevant regulator.
Principles of Liability
The foreign company is liable for the debts and obligations of the Recognised Company.
The Recognised Company must appoint at least 1 authorised representative, who is responsible for the management and administration of the company in the DIFC.
By deregistration, which may be initiated by the recognised company or the Registrar
A Public Company Limited by Shares (PLC)
A company limited by shares that can offer its shares or debentures to the public/be listed on the stock exchanges, subject to licensing and compliance with ADGM regulations.
There is no limit on the number of shareholders a PLC can have.
Capital Requirements
The minimum share capital requirement for a PLC is US$ 50,000.
The shareholder of a PLC is not personally liable for any of the debts of the company. The liability is limited to the amount of shares held by it.
A PLC is managed by at least 2 directors, who may or may not be shareholders.
A company secretary and at least one authorised signatory is required.
Voluntarily or by the court
By striking off the company from the register by the Registrar
By merging or converting the company into another type of company.
A Private Company Limited by Shares (LTD)
A private company may be limited by shares, limited by guarantee or unlimited, depending on the liability of its members as stated in its constitution. An LTD is the most common type used.
A private company may also apply to be registered as a restricted scope company, subject to certain conditions relating to its ownership and group structure. A restricted scope company is a type of private company that has less disclosure and reporting obligations than other private companies.
Cannot offer its securities/shares to the public.
There is no limit on the number of shareholders a private company can have.
If the company is limited by guarantee, the liability of the shareholder is limited to such amount as he or she undertakes to contribute to the company's assets in the event of its winding up.
If the company is unlimited, there is no limit on the liability of the shareholder.
A LTD is managed by at least 1 director, who may or may not be a shareholder.
No requirement for a company secretary, but at least one authorised signatory is required.
By winding up the company voluntarily or by the court
Branch or Representative/ Liaison Offices of Foreign Companies
A foreign company may apply to ADGM Registrar of Companies for registration of a branch if it is incorporated outside the ADGM and carries on business in the ADGM. company.
Once the branch is registered, it must comply with the same requirements as a company incorporated in the ADGM, including the filing of annual returns and financial statements.
Not applicable, as the Branch/Rep Office is not a separate legal entity from the foreign company.
As per the foreign company.
The foreign company is liable for the debts and obligations of the recognised company.
A Branch must appoint at least 1 authorised representative, responsible for the management and administration.
The representative must be a natural person and must be named in the application for registration of the branch.
By deregistration, which may be initiated by the branch or the Registrar.
