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Importance Of Legal Assistance To Set Up A Business In Dubai

Our blog posts on How to Set Up a Business in Dubai-Part I and Part II gives a deeper insight into the factors that needs to be taken into consideration before making a final move. Today, Dubai has evolved as one of the world’s leading trade investment hub owing to the liberal trading rules and policies that prevails here.

Dubai’s Department of Economic Development (DED) has been working on constituting simple procedures to help trade investors to launch and expand businesses without having to wait for a long time avoiding the complicated paperwork. Once you have decided to set up a business in the Dubai Mainland, you need to seek legal assistance to help you with the trade registration and related procedures.

Here we will provide you with a detailed guide on the legal procedures that are involved while setting up a company in Dubai

As we have already discussed, Dubai’s Department of Economic Development plays an important role in the company formation process and so your first step is to register with the DED. Once you are done with the registration, the DED will immediately issue you with the Dubai business license.

For anyone planning to set up a business in Dubai, it is recommended that you seek legal assistance to help you with the procedures involved while registering your company with the DED.

As we have already discussed, Dubai’s Department of Economic Development plays an important role in the company formation process and so your first step is to register with the DED. Once you are done with the registration, the DED will immediately issue you with the Dubai business license.

1. Plan your business activity

This is the first and foremost step to setting up a business in Dubai as the DED has classified business activities into a number of groups and subgroups. Already there exists around 2000 business activities which are further classified into groups and subclasses,

It is important to plan your business activity because DED determines the kind of business license to be issued based on your choice of business activity.  Your business license determines the structure of your business which falls under either of the following categories:

  1. Limited Liability Company
  2. Sole Establishment

Plan-your-business-activity

Also, for certain business activities, the Dubai government is the supervising authority that needs to provide the approval. To get through with these complicated procedures, you need to seek legal assistance in Dubai.

2. Choosing a legal form for your business

Once you have decided your business activity the next step is to choose a legal form for your business. A legal form is nothing but something that contains the description on the type of business you are planning to set up in Dubai.

Factors to be considered while choosing a legal form for your business:

  1. Business type
  2. Business activities

The number of owners and their nationality and also ownership options.

Choosing-a-legal-form-for-your-business

You can choose your legal form based on the business activity you have planned. Also, it is not all the legal forms are available for certain specific business activities. Please seek legal assistance to help you with choosing an apt legal form for your business activity in Dubai.

3. Trade Name for your business

What is a trade name? It is the name given to your company or the official name of your business. This is the name that will appear across your trade license and other official documents. Also, select your name carefully as it reflects your brand during product promotion. You will not be issued with a final license unless you have a trade name. Here are some of the important points to note while choosing a trade name:

Trade-Name-for-your-business

    1. No punctuation marks
    2. Do not use names of existing brands in Dubai
    3. Family names cannot be used as trade names
    4. Also, while choosing the names ensure that it is not a God’s name and should not contain any religious references.

The names should not be obscene, discriminatory, indecent or offensive to the general public.

Some more important points

  1. The validity of a trade name certificate is 60 days
  2. Online renewal is permitted only once
  3. It needs to be renewed within one week of the expiry date.
  4. A trade name certificate that has expired cannot be renewed.

Some-more-important-points

It is recommended that you seek legal assistance to help you with the trade name registration process in Dubai.

4. Initial Approval

Initial-Approval

Initial approval refers to the approval of business activities of your company. Initial approval is the government’s way of expressing no objection with regard to a business initiation in Dubai. This means you are free to proceed with your business intentions and this gives you with the provision to apply for a business license.

How to apply for an Initial Approval Certificate?

This depends mainly on the legal form of your business. Here are the documents required for Initial Approval:

How-to-apply-for-an-Initial-Approval-Certificate

  1. Business License Registration, Form BR1 in Arabic or EnglishM
  2. Copy of Passports of all the shareholders
  3. Also, the copy of passport visa page of the foreign partners.
  4. UID number of foreign partners if they are on visiting visa

Points to remember

  • You need to make the payment for your Initial Approval within 7 days of applying
  • In order to get your license approved you need to have an Initial Approval Certificate and Initial approval form
  • Validity is for 6 months without renewal facility

Points-to-remember

The process seems to be a bit complicated when you are new to the place and have little or no knowledge of the business procedures in Dubai, so it is recommended that you seek legal assistance for the same.

5. Local Service Agent Agreement

Drafting and notarization of the Memorandum of Association are the next step of business set up in Dubai where you cannot proceed without legal assistance.

Once you have the Initial Approval and trade Name approval, you can start these processes. This forms a crucial part of the company incorporation processes in Dubai as it specifies the relationship of the shareholders or the relationship between you and your local partner/ sponsor. Here comes the role of an Notary public or an lawyer to help you draft the agreement.

Depending upon the legal form of your company, you might need Memorandum of Agreement (MOA) or Local Service Agent (LSA) Agreement with your sponsor who is representing your business with regard to its licensing and compliance.
A business activity that falls under the category of commercial or industrial needs to have an MOA that represents the Constitution of the company drafted.

Also, you need to get the MOA or LSA legally translated into Arabic by a legal translator approved by the Ministry of Justice before it is handed it over to Notary public for Notarization.

The important components of an MOA includes:

  1. Company Name
  2. Details of the partners of the company
  3. Business objectives
  4. Capital investment of the company Share transfers
  5. Company’s financial management schema
  6. General Assembly
  7. Overall profits and losses of the Company
  8. Company Dissolution

6. Office Location and Office lease Agreement

Select your location
It is required that all businesses in Dubai need to have a physical address within the permissible commercial space in Dubai. In order to register a company, you need to have at least 50 sqm of the area. The business activity and the office area are the two factors that determines the number of visas that will be issued to a particular company.

Office-Location-and-Office-lease-Agreement

Things to consider before you choose an office location:

  1. The office space needs to be within the Emirate of Dubai
  2. Also, you can choose any other authorized business centers for your company.

Seek legal assistance to get help with your business setup in Dubai with ease.

7. External Department Approval

The business activities require special licensing approvals from different government departments.

For instance, if you are in plans to start a business related to health care then you need to seek approval from the Dubai health Authority even though the DED has approved the initiation.
Seek legal assistance if your business belongs to specific criteria as in the above-mentioned instance because in some cases you need to get approval from various other government authorities in Dubai to proceed with your business set up. Once you have expert law consultants assisting you the process becomes easy as they are aware of the legal procedures that are involved in the company incorporation process.

But there are certain business activities that need approval only from the DED department and do not need any further approvals from other departments.

8. DED is the final decision maker

The final approval for the license is provided by the DED or Department of Economic Development. Here is the list of documents that needs to be submitted for final approval

  1. Initial Approval Form
  2. initial Approval Certificate
  3. Trade Name Certificate
  4. MOA or LSA

The processing of your business license might take a week depending on the kind of business activity you are planning to set up in Dubai.

DED-is-the-final-decision-maker

Seek legal assistance to get help with the checklist of documents that needs to be verified so that DED provides the final approval for your business activity in Dubai.

Are you planning for trade investments in Dubai? Or have you set up a business in Dubai? Did you seek legal assistance for getting you through the business set up in Dubai? How smooth was the process?

Legal Maxims is one of the leading law firm consultants in Dubai providing all kinds of legal and corporate assistance. Our range of services includes legal services, IP services, Liquidation services, HR consulting, market research and feasibility study services. For further inquiries or for any legal assistance contact us today.

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