Setting up a Branch of a Foreign Business in a UAE Free Zone
Beginning in 1985 the UAE Free Zones offered attractive incentives to promote foreign investment. To date 22 free zones are in operation offering 100% ownership, zero taxes and other incentives. Some of these Free Zones are designated for specific business sectors such as biotechnology, healthcare, media and several others. Each Free Zone is governed by an independent Free Zone Authority but except for some minor variations the business formation, rules are the same among the Free Zones.
Defining a Branch of a Foreign Company
Establishing a Branch of a Foreign Company in one of the UAE Free Zones provides some tangible benefits to your business. One important benefit is 100% foreign ownership – a local sponsor is not required. There are two types of foreign company businesses – branch and representative. The activities allowed by these business types are different and there may be some minor differences in required documentation. Representative offices are permitted to provide promotional activities for the parent company but cannot conduct business transactions or market products. Many foreign companies use this type of office to maintain a local presence which satisfies social and cultural expectations. Branch office activities are the same as the parent company within the limits recognized in the business license.
Steps to Establishing a Branch Office
The basic steps involved in formation of a branch office are:
• Connect with a local service agent that will help you deal with local authorities. Push Digits can become your local agent for all the dealings with local authorities.
• Request trade name registration and receive initial approval
• Make an application to the Ministry of Economy
• Get a license from the Department of Economic Development
• There may be some additional administrative requirements that must be completed. This includes acquiring a physical address for the office
• Become a member of the Chamber of Commerce and Industry
• Pay all required fees
• Get the required documents notarized and translated
To meet business formation requirements a number of documents are needed. The list of documents includes:
• A business plan (Feasibility Study & Financial Projections)
• Your Company Profile
• A lease agreement for your business’s physical address certifying the minimum space requirement is met
• A certificate of good standing for the parent company from the registrar of companies in the country or place of origin
• A registration certificate or license for the parent company notarized by the UAE Embassy in the country of origin.
• A resolution by the board of directors of the parent company indicating the intent to establishing a new branch abroad. This must be notarized by the UAE Embassy in the country of origin
• A Memorandum of Association or Article of Association for the parent company – also notarized by the UAE Embassy in the country of origin
• Initial approval of activities for the new branch
• Trade name reservation documents
• Personal Information Sheet for each shareholder and manager
• Copies of the passport and C.V. (Resumé) for the branch manager
• Copies of shareholder passports
• If you are utilizing a Local Service Agent, you should include a power of attorney for the LSA to act on behalf of the shareholders
• Depending on the rules of the local Free Zone Authority, there may be some additional documents needed
• There is no Capital requirement – no local sponsor is needed
Connecting with a Local Service Agent
You should see how important it is to have a Local Service Agent to guide you through this process and make sure all the steps are performed properly and all the documents are complete. This list of steps and required documents will look intimidating but Push Digits can help remove the intimidation factor and make the process as painless as possible. We will make sure all the documents are ready for submission and all the local regulations are met. We have the skills and experience as well as the local connections to get your Branch Office up and running quickly and smoothly. After your business is operating we will be here to provide additional services to make your business life easier. We offer bookkeeping & accounting supervision, management accounting, audit preparation, internal audits as well as accounting software and implementation services in addition to our company formation assistance.