Ministry Of Economy is a federal department which holds the right to define laws , rules and regulations regarding Foreign Direct investment. It is governed by Federal Authority.
MOE allows a competent authority which is the relevant entity in any of the Emirates of the State concerned with the affairs of foreign direct investment.
Licensing Authority: The local authority concerned with licensing the economic activity and establishing the legal form of the business according to its jurisdiction.
It establishes the necessary rules to regulate granting the Licenses required conducting Economic Activities in the Emirate, and determining the details and validity of these Licenses and the Law No. (13) Of 2011 Regulating the Conduct of Economic Activities in the Emirate
Foreign Investor: A natural or corporate person who does not hold the nationality of the State and who invests in the State in accordance with the provisions of this Law by Decree.
Conditions and procedures for licensing:
A. The Licensing Authority and the Competent Authority, each within its jurisdiction, shall specify the conditions and procedures required to establish and license Foreign Direct Investment Projects listed in the Positive List and the documents required in accordance with the provisions of this Law by Decree, legislation in force in the State, local laws in force in the Emirate concerned and implementing resolutions thereto.
B. Following obtaining a preliminary approval from the Licensing Authority, the Foreign Investor shall submit to the Competent Authority an application for approval to license the Foreign Direct Investment Project in the sectors listed in the Positive List.
The Positive List: which includes the economic sectors and activities, and associated parts, which are permitted to be carried out through a Foreign Direct Investment Project in the State.
The Negative List: The list of sectors and activities those are not available for foreign investment such as
A. Exploration and production of petroleum materials.
B. Investigations, security, military sectors, manufacturing of arms, explosives and military equipment, devices and clothing
Objectives:
- Asserting the position of the State as a major attraction hub for foreign direct investment both regionally and globally.
- Increasing the flow of foreign direct investment in the priority sectors to achieve balanced and sustainable development and create job opportunities in various fields
Legal forms:
a. Sole proprietorship
Sole Proprietor Company in Dubai is a separate legal entity and is operated by one individual. A sole proprietor is in complete control of the company’s operations, and he/her completely bare the profits and losses. A sole proprietor is fully liable for the company’s debts or obligation.
b. Partnership
A General Partnership Company in Dubai is owned by two or partners who bear unlimited liability, and are responsible for the debts and obligations of the company in a personal capacity. A general partnership may dissolve in the event of bankruptcy, withdrawal, insanity, or death of a partner.
c. Joint Venture Company in Dubai
Joint Venture Company in Dubai is a contractual agreement between an international party and a regional party licensed to conduct the coveted business activity. An exclusive license is not issuable in the name of the company. The license belonging to the original partner is enough for the implementation of the project with the collaboration of the other partner who engages in running of the company.
d. Public Shareholding Company
A Public Shareholding Company in Dubai is also called as a Public Joint Stock Company. It is the one where the business capital is split into equal shares, with each shareholder’s liability limited to the number of shares in the company
e. Private Shareholding Company
A Private Shareholding Company in Dubai is also called as a Private Joint Stock Company and is owned by a non-governmental organization. The minimum capital required to register a private shareholding company in Dubai is AED 2 million.
SECTORS:-
- Mainland
A mainland company is a legal entity that can operate inside and outside the country without any restriction.
Mainland Companies are considered to be the most developed business entities that are directed by the Federal Law No.2 of 2015 (the New Commercial Company Law, (NCCL)) which came into effect on 1st July 2015, which replaced the previous Commercial Company Law (CCL) that got initiated in 1984, under Federal Law No. 8 as amended. In the UAE, the Mainland Companies are regulated by the legal structure set by the government and needs to meet the Government policies. They are located within the limitation of commercialized geographical areas that have been covered under the jurisdiction of the Emirati Government. As per the mainland company incorporation law, UAE national has to mandatorily hold at least 51% of the total equity in any commercial company, and 100% of the total equity in any professional license but UAE national must sponsor the company and act as Local Service Agent.
A business entity falling under commercialized geographical areas and directly registered under the Emirates government and its authorities are known as a mainland company. A mainland company in Dubai can carry out business across the UAE but permits maximum foreign shareholder equity capped at 49%. Mainland represents the most developed economy as it is set up directly following the legal structures of the Government policies.
- Free zone
Many businesses shy away from investing in the UAE due to the compulsion of having a UAE national as a partner with 51% shares owned by them. Because of this, free zones have become a popular form of business registration in the UAE, where 100% foreign ownership is allowed. A free zone, or free trade zone, is an area with special tax-free status and low trade barriers where goods can be manufactured, imported/exported, handled, or reconfigured without paying any customs duty. Free trade zones are generally located in strategic geographical locations like national borders, international airports and major seaports, to maximise trading advantages.
- OFFSHORE
An offshore company can be owned by individuals or corporate bodies and is a business entity which does not carry out any substantial business activity in its country of origin. Also known as non-resident company, an offshore company cannot occupy an office space in the UAE.
Such a company is framed under the no-tax jurisdiction law with the sole purpose of enhancing one’s wealth management and reducing any kind of tax payment legally. There are several reasons for offshore company incorporation UAE, with the primary one being complete confidentiality over the financial matters and increase in wealth without interruption. Additionally, offshore companies have the provision of cutting down or eliminating different types of tax payments such as capital gains, death duty, value-added tax (VAT), profits on business earnings, property sales, etc.
