How to conduct your business in the mainland of Dubai through a free zone entity
The Department of Economic Development (DED) is the government body for issuing all licenses for corporate entities or individuals who wish to have their business in the mainland of Dubai, not in the free zone areas. The enterprises licensed by DED are known as “local company”. DED acts as the only service centre for all local companies in order to encourage the efforts of doing business in Dubai which will eventually ease the licensing processes for investors. DED is known to provide much faster services than most of the free zones in the UAE. For some SME’s, getting a nearby permit works out as a favored choice since you can open an office anywhere in Dubai.
Opening a branch with the DED through a free zone entity
Most companies registered in a particular free zone are required to have the appropriate license from the local authority if they wish to do business outside the free zone in the mainland of Dubai otherwise the company is not permitted to perform any form of business not in the free zone.
In addition, as indicated by the Law no. 13 of 2011 the DED is the sole accountable authority for issuing licenses outside the free zones. Any form of economic activities conducted in Dubai outside the free zones are not allowed unless the company has a corporate entity licensed by the DED, as stated by the law. A fine of almost AED 100,000 will be charged to any individual who abuses the procurements of this law.
The common legal forms for free zone entities to conduct business in Dubai are:
- Civil Work Company – this form of entity can be owned 100 per cent by a non UAE national or foreign corporate bodies which include companies that are registered in a free zone as long as the practices of both the corporate bodies and the common work company are the same. It is required that a UAE local service agent be assigned to the civil work company
- Limited liability Company – this entity requires the company to have a UAE national own 51 per cent of the company (in the case of a non UAE national or foreign corporate body) or be fully owned by a UAE national
- Branch – only companies that are registered in the free zone can own a branch with the same trade name as its parent. However much like the Civil work company, a UAE local service agent will need to be appointed to the branch unless the free zone entity is owned 51 per cent or more by a UAE national, in which case the Ministry of Economy will exempt the branch from having a local service agent. A local service agent’s sole purpose is to make sure that the branch is able to continue its business in Dubai. They are not allowed to have any form of legal interest when it comes to the branch (such as the management, profits and assets)
Activities that can be conducted by a free zone entity’s branch
Is a free zone entity wants to open a branch they are also required to register the branch with the Ministry of Economy as well as DED. There are a few restrictions placed by the Ministry of Economy on the activities that a branch can conduct in the UAE mainland. Some activities not allowed are, trading, labor supply services, commercial agencies or restaurants.
Requirements of the Ministry of economy to register a branch from a free zone entity include the following:
- Trade name and approval certificate that is issued by the DED
- Passport copy of both the general manager and the local service agent. If the local service agent is a corporate body, then a copy of the license is needed.
- Copy of the corporate documents of the free zone entity including duly notarized resolution calling for opening the branch and power of attorney in favour of the branch’s general manager.
- Local service agent agreement duly notarized at the notary public.
- Bank guarantee of AED 50,000 in favour of the Ministry of Economy
- Payment of AED 15,000 as the Ministry of Economy fees.
Doing Business In The Mainland Of Dubai
For more details : http://www.pbsolutions.ae/company-setup-in-dubai/