The Limited Liability Company or LLC is the most common structure in the Mainland region in the UAE. The Department of Economic Development (DED) regulates and classifies the economic activities of LLCs and grants them all kinds of licenses. Unlike Free Zone companies, LLCs are not restricted to conducting businesses in the UAE or the GCC, real estate ownership, the number of visa applications, or the minimum share capital.
Key characteristics of LLC:-
- Shareholder Structure: A minimum of 2 and a maximum of 50 shareholders, either individuals or corporate entities, or a mix of both.
- Limited Liability: The liability of each shareholder is limited to the extent of the capital they have invested in the company or the shares they hold. This enables protection of their assets from business liabilities.
- Local Sponsor Requirement: Requires a UAE national as local sponsor to own at least 51% of the company shares. The foreign business owner owns the remaining 49%.
- Management Structure: Managed by the shareholders or appointed managers.
- Business Activities: Can undertake various commercial activities, except banking, insurance, or investment activities.
- Capital Requirements: No minimum capital requirement. However, the capital must be adequate for completing the proposed project.
- Profit and Loss Distribution: The distribution of profits and losses is in accordance with the company's contract.
- Registration and Legal Compliance: Registered with the Department of Economic Development (DED).
- Auditing and Financial Records: Requires maintenance of financial records and annual audits, depending on the activities and size.
Benefits of LLC company formation in Dubai
These are some of the benefits that come from forming an LLC in Dubai –
- Flexibility in Ownership – An LLC can be formed by up to 50 shareholders, providing flexibility in ownership structure.
- Simplified Process - With all processes digitized, LLC company formation in Dubai is now simple, with minimal paperwork and easy setup rules.
- 100% Foreign Ownership – With the new amendments introduced in the UAE’s Commercial Companies Law, many categories of LLC companies can be 100% owned by foreign entrepreneurs, without the involvement of a local sponsor.
- Instant Licenses – The Instant License initiative allows LLCs to acquire business licenses quickly and streamline the setup procedure.
- No Minimum Share Capital – LLCs have no specific requirement for minimum share capital. However, it is up to the DED to determine if the pledged capital is enough for the planned ventures.
- Independent Trading Rights - LLCs have full control over their trading activities and legally trade within the UAE.
- Visa Flexibility – The visa quota is unlimited for LLC owners, which allows them to meet the needs of their growing business.
- Legal Protection – The LLC protects its shareholders from personal liability as it operates as a separate legal entity.
LLC company formation in Dubai: Step-by-step guide
Registering an LLC in Dubai is a straightforward process. However, the business owners need to navigate a structured process to establish their LLC efficiently:
Decide on the Business Activity
Start the registration process by deciding on the nature of the business. The DED has classified business activities into various categories. The business owners need to select the relevant activity for their LLC based on their desired offerings. Once selected, the Department of Economic Development (DED) will approve the activity if it is permissible and in compliance with the legal requirements in the UAE.
Choose the Company Name
Choosing the right name for your company is important as it will reflect your business activity. However, make sure it adheres to the naming conventions of the UAE government. For instance:
- Not in conflict with the existing business names.
- No use of offensive language or religious references.
- Complements the business activity.
Once you have chosen a name, check for its availability and get it approved by the DED.
Select a Business Location and Office Space
The LLC is typically a Mainland structure that mandates the requirement for a physical office in the UAE. You can either rent or purchase office space as per the size requirements of the DED or opt for a virtual office if your business model allows so.
Prepare Legal Documents
Once the business name and activity are approved, prepare the required documents for business registration, such as:
- Passport copies of the owners and shareholders.
- Residency visa copies.
- Proof of address (such as a utility bill or bank statement).
- No Objection Certificate (NOC) from the current sponsor (for expatriates).
- Memorandum of Association (MOA) and Articles of Association (AOA), outlining the internal governance and shareholding structure of the company.
If the LLC ownership is shared between the UAE national and the foreign investor(s), then it must be explained in the MOA.
Initial Approval from the DED
After verifying the documents and company name, the DED in the relevant emirate will issue the Initial Approval certificate indicating its consent to proceed with the LLC company formation in Dubai.
Draft the Memorandum of Association (MOA)
The MOA is one of the most significant legal documents that defines the ownership structure, management responsibilities, operational details, and shareholders’ contribution and rights. Once it is drafted, get it notarized by a public notary to make it legally valid.
Submit Final Documents and Pay the Fees
Now you need to submit the final set of documents for final approval, along with the relevant registration fees, to the DED. The exact LLC company formation cost Dubai will vary depending on the business location and type. However, some of the general fee requirements include
- Business license fee
- Office lease registration fee
- Government service charges
The DED will approve all the payments and documents and issue your trade license.
Open a Corporate Bank Account
Once your LLC is officially registered in Dubai, you need to open a corporate bank account to handle the financial transactions of your company. The documents required at this stage include the following:-
- Trade license
- Passport copies - shareholders and authorized signatories
- MOA and AOA
- Proof of business address
Certain banks may have conditions for maintaining a corporate bank account. Therefore, it is advisable to research the options before the final selection.
Apply for Visas
LLC company formation in Dubai allows business owners to sponsor employees for work permits and employment visas. The number of visas they can apply for depends on the size of the office and the nature of the business activity. The visa process involves submission of necessary documents, a medical assessment, and biometric registration.
Start Operations
Once the LLC is legally registered, get started with your business activities. Make sure to maintain annual filings, including audited financial reports, trade license renewals, etc. Compliance with economic substance regulations may also be required based on the nature of your business.
Documentation requirement:-
- Application form
- Business plan
- Company name reservation documents
- Passport copies of shareholders and managers
- Local sponsor's passport (if required)
- Emirates ID (if applicable)
- Lease agreement for office space
- Memorandum of Association
- Initial approval receipt
- No Objection Certificate (NOC) (if applicable)
- Other government approvals (if required)
Cost of forming an LLC in Dubai
The LLC company formation cost Dubai is highly variable. It mainly depends on the specific business and industry, registration charges, business location, number of visas, additional approvals from relevant governmental authorities, and so on.
Start your LLC with us!
LLC company formation in Dubai requires an in-depth understanding of the UAE’s business dynamics. Our business consultants can educate you about the LLC requirements and assist you with the company documentation, adequate licenses and approvals, and other specific business requirements.
Get in touch right away!