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There are two types of courts in the UAE, ie, federal (the Emirates of Abu Dhabi, Sharjah, Fujairah, Ajman, and Umm Al Quwain) and local (the Emirates of Dubai and Ras Al Khaimah, which have retained their independent judiciaries). Both federal and local courts comply with the UAE Temporary Constitution of 1972. Both federal and local court systems are composed of three levels, ie, courts of first instance, courts of appeal, and the Federal High Court in Abu Dhabi or the Court of Cassation in the Emirate of Dubai. In the Emirate of Ras Al Khaimah, the judiciary is of two levels only, ie, courts of first instance and a court of appeal.
The Civil Procedure Act regulates the jurisdiction of the federal courts, their formation, and level in the hierarchy. The Act is applicable to all civil proceedings before the courts, ie, civil, commercial, and personal. Although the courts in the Emirate of Dubai are formed under and regulated by Act Number 3 of 1992, the Civil Procedure Act has been adopted and enforced in Dubai pursuant to Act Number 5 of 1992.
Limited-Liability Company (LLC)
In a limited-liability company, the minimum number of shareholders is two and the maximum is 50. The liability of shareholders is limited to their shares in the capital. The company may carry on any type of activities except insurance, banking, or money investment. In UAE, The minimum capital requirement law was abolished on 10th August 2009. The memorandum of association must include the following:
Trade name of the company, its objectives, head office, duration, names of shareholders, their nationalities, addresses, and places of residence; and Amount of capital, share of each shareholder, and a statement of capital paid in kind (if any), names and nationalities of the company managers, distribution of profits and losses which may not necessarily be in the same proportion as the capital, and the adopted method of notification.
In Dubai, Capital Deposit rule has been cancelled. i.e. Limited Liability Company can be formed without Bank Deposit Certificate and Auditor Certificate. In Abu Dhabi, minimum capital requirement is Dh150,000. The manager of the company will be allowed to operate the account as soon as the incorporation is completed. The Manager of the company can be more than one and he/they shall have all administrative and financial powers. A shareholder may transfer his share in the company or part of it to another shareholder or to a third party. Management is handled by no more than five designated managers, who are not necessarily members of the company. Non-UAE nationals may own up to 49 per cent of an LLC.
In distribution of profit and loss, foreign investor can have 80% and 20% local UAE sponsor.
It is imperative that each limited-liability company appoints auditors to satisfy the requirements of the Commercial Companies Act. The law does not permit this form of company to issue share certificates. Evidence of ownership in the company is related and evidenced by the percentage contributed, assigned, or transferred in the share capital.
Silent Partner
A larger portion of Dubai Limited Liability Companies use the local UAE sponsor as a “silent partner.” In this arrangement, the local UAE sponsor is usually paid an annual “sponsorship fee” in return for giving up management control of the company to the foreign investor. To prepare your LLC Agreement call +97150-7447833 read more
Steps of forming a Limited-Liability Company (LLC)
Name reservation from Department of Economic Development (DED) or Ontime office at Business Village near Clock Tower or Tas’heel Centre at Al Tawar Centre, Qusais. Fees: Dh260 including service charge. Foreign/English words and short words/Abbreviation will be charged extra fee per year at the time of license renewal. First time fees should be paid along with first license fees.
Note: Trade Names that cannot be reserved: Name of country, Name of Continent, Famous regions and Towns, Colour (blue, red etc.).
Initial Approval for activity from Department of Economic Development (DED).
Documents required for initial approval: Filled form, Passport Copies of Partners, Naturalization book’s (Jinsiyya) copy of Local Partner, No Objection Letter from the sponsor for expatriate partners (NOC is not required for visit/Tourist visa holders and their visa copy should be attached). If UID Number is not mentioned in the Visit/Tourist/Transit visa, it has to be collected from Immigration Department on payment of Dh130.
Some activities require initial approval from concerned departments (eg. Municipality, RTA, National Media Council etc.)
Preparing Memorandum of Association (LLC Agreement)
Attestation of Memorandum of Association from Notary Public. As per the new rule, the court agreement must be typed by legal translator or get seal and signature of the legal translator on the agreement if it is typed from normal typing centre.
Tenancy Contract (It is suggested to contact the counter of the Planning Dept. of Dubai Municipality, at the Department of Economic Development, on Telephone No. 04-2020105, or the Municipality’s Telephone No. 04-2063788, before leasing the premises in order to ensure that it is suitable for the business). Get approval on Tenancy contract from Planning Dept. of Dubai Municipality at DED.
Submit Initial approval, Name reservation certificate, Attested Memorandum & Tenancy Contract at Department of Economic Development.
Payment voucher will be issued same time or can be printed from DED Website after two days (for some type of business).
Special approval required for certain business activities from the concerned authorities
