A UAE national (or a firm owned entirely by UAE nationals) must legally own at least 51 percent of a limited liability company.
A branch, on the other hand, will be entirely owned by the free zone entity and will trade under the same name as its parent. A UAE local service agent will be required once again, but if the free zone entity is held 51 percent or more by UAE nationals, the branch will be spared from hiring a local service agent by the Ministry of Economy.
The local service agent is not responsible for any civil or financial responsibilities arising from the branch’s operations. The local service agent’s responsibility is to ensure that the branch may continue to do business in Dubai, but he has no legal stake in the branch’s management, business, earnings, or assets.
Activities that can be initiated in Dubai
Despite the fact that Law No. 13 of 2011 is silent on the activities that can be carried out by a branch in Dubai, there are some constraints in practise. The branch will also need to register with the Ministry of Economy, which has some restrictions on what activities a branch of a free zone corporation can do on UAE main territory. The Ministry of Economy, for example, will not allow a free zone company’s branch to engage in trading, commercial agency, labour supply services, or restaurants.
While the DED’s procedures for registering a branch appear to be less onerous. The following are the conditions of the Ministry of Economy for registering a branch from a free zone entity:
- The DED granted a first approval certificate and a trade name certificate.
- A copy of the free zone entity’s corporate records, including a legally notarized resolution authorising the branch’s opening and a power of attorney in favour of the branch’s general manager.
- For the general manager and the local service agent, a copy of their passports or, if the local service agent is a corporation, a copy of their licence.
- Notarized agreement between a local service agency and a notary public.
- AED 15,000 in Ministry of Economy fees is required.
- AED 50,000 bank guarantee in favour of the Ministry of Economy
Both the DED and the Ministry of Economy are involved in the registration of a free zone company’s branch office. Therefore, doing business in freezoneis truly efficient for every entrepreneurs.
