What are the agreements required when setting up a company in Dubai mainland?

April 17 2019

Setting up a company in Dubai is easier when you are aware of the steps involved and documentation requirements. Here is a quick look at the agreements involved during the process.

Your cheat sheet as per legal form

Legal Form MoA Required? Local Service Agent Agreement Required?
(When no local partner present)
Individual Establishment (Sole ​​Proprietorship) No Yes – Professional
​​One Person Company ​Yes ​NA
Civil Company Yes Yes
Limited Liability Company Yes NA
Private Shareholding Company (Private Joint Stock Co) Yes NA
Public Shareholding Company Yes NA
Simple Limited Partnership Yes NA
Partnership Company Yes NA
Branch of Foreign Company Copy of the main company’s MoA attested by Ministry of Foreign Affairs Yes
Branch of Dubai Based Company Copy of the main company’s MoA No
Branch of U.A.E. Based Company Copy of the main company’s MoA ​No
Branch of GCC Company Copy of the main company’s MoA attested by Ministry of Foreign Affairs No
Branch of a Free zone Company Copy of the main company’s MoA Yes
(commercial/industrial/professional– no local)
Intelaq NA NA

 

As you can see from the above table, two main agreements are mentioned in most cases – the Memorandum and Articles of Association (MoA), and the Local Service Agent Agreement (LSA).

Here is the lowdown on both.

Memorandum and Articles of Association

The Memorandum details the agreement between the partners of a company, and is most frequently used in the context of setting up of Limited Liability Companies (LLCs) and Civil Partnership companies. It is governed by the Commercial Companies Law of 2015. The document can be wholly in Arabic, however, usual practice is to have this in English and Arabic, in a dual-column format.

The Memorandum lists out the following salient terms:

  1. Name of the Company– The trade name of the Dubai company is mentioned. There are certain rules governing the name approvals at the Dubai DED. Read this article to know more about trade names in the UAE.
  2. Objectives of the Company– Here the intended activities are listed as per the Standard Classification of Economic Activities of the licensing authority. These activities require pre-approvals from the Dubai DED.
  3. Share Capital– Lists out the capital contribution of each partner. Normal share capital for an LLC is Dubai is AED 300,000, with the value of each share being AED 1,000. This capital is not required to be deposited in a bank account.
  4. Managementof the Dubai company– The names and details of the directors and manager are mentioned. Every company has to appoint a Manager, who takes care of the day-to-day operations of the company.
  5. Company governing matters– Other mandatory details include auditor appointments, financial management, and distribution of profits and losses of the company.

Click here to access a draft Memorandum for an LLC in Dubai.

Local Service Agent Agreement

This agreement is more like a services agreement that details the arrangement between the company and the UAE National who is appointed as the service agent.

The main responsibility of the Local Service Agent is to act as the liaison between the company and government bodies, like the Ministries of Immigration and Labour.

The service agent receives a fixed annual fee for services rendered.

This agreement is signed in front of the notary public at the Dubai Courts. The Local Service Agent can be changed by the company at any time.

Click here to access a draft Local Service Agent Agreement for an LLC in Dubai.

Do you want to know about setting up LLCs in Dubai? Read this article for all the details.