A typical way for Russian companies to keep foreign ownership under the Commercial Company Law in the UAE is to incorporate a Branch or Representative Office (RO), which permits 100% ownership by the parent company. Therefore, these forms do not have a separate legal identity and are an extension of the foreign company, which stays liable for its activities.
A Branch is permitted to engage in commercial activity in the UAE and to earn profits. It is licensed for the purposes set out in its commercial license. It may only engage in activities similar to those carried on by the foreign company in its home jurisdiction.
An RO is not permitted to earn profits within the UAE, and its activities are limited to marketing or promoting the products and services of its foreign parent company in the UAE.
Both Branches and ROs must operate under the authority of commercial registration and license in the name of the foreign company. Both are required to appoint a National Service Agent (NSA), which has to be a UAE national individual or a 100% UAE national-owned corporate entity.
Please speak with one of the Russian lawyers. They will advise the correct legal structure based on the activities a business intends to undertake in the UAE and its intended markets. A client may further choose to obtain a legal opinion to confirm a Russian lawyer’s advice.
Appoint a National Service Agent (NSA), either a UAE national or a company wholly owned by UAE nationals. Russian lawyers Corporate Services has created several 100% UAE-owned LLCs that it fully manages and controls through the power of attorneys and other legal agreements. These companies can act as the NSA.
The required documentation for registration and approval will include but is not necessarily limited to:
- Certificate of incorporation (or equivalent), memorandum and articles of association, and a certificate of good standing (where one can be obtained) from the parent company’s quarters jurisdiction;
- A board resolution to authorize the opening of the Branch or RO, to appoint a general manager and to grant a power of attorney to the general manager; and to confirm that the company accepts responsibility for the liabilities of the office when established in the UAE;
- Audited accounts of the parent company for the last two years;
- A statement setting out the company’s primary operations and activities;
- Certified passport copy for the General Manager;
- 2 x Certified proofs of address for the General Manager;
- 1 x CV for the General Manager;
- 1 x Professional / bank reference letter for the General Manager.
All documents are required to be notarized and attested in both the applicant’s home country and at the relevant UAE consulate. Who should commence the notarization process as early as possible because it can take a significant time?
All documents must also be translated into Arabic by an official translator before they can be presented to the authorities in the UAE.
All requested documents must be submitted to Russian lawyers, managing the application process from start to finish. The licensing authority will be the Department of Economic Development, with the approval of the Ministry of Economy.
Foreign companies can retain 100% foreign ownership in the UAE;
The foreign company is not required to show more than two years of incorporation and business experience in its home country (some Free Zones require longer);
The company may legally conduct the approved activity in its license anywhere in the UAE, including Free Zones;
No restrictions on the location where the company can rent/buy office premises;
The government has permanently waived any paid-up capital requirements.
Like the NSA, Russian lawyers have multiple signatories unrestricted all year round, unlike individual regional partners who frequently travel in the summer months.
A Branch is restricted in respect of its business activities, especially to trading in the UAE mainland. Suppose the parent company conducts any trading training. In that case, it can only incorporate an RO for marketing or promoting its products and services or to facilitate commercial agreements between the parent and its customers. However, most service activities can be conducted through a branch.
Longer time to establish than a Free Zone company, typically 8 to 10 weeks;
External approvals are often required from UAE government ministries and a bank guarantee of AED 50,000 (approx. US$15,000) will be required by the Ministry of Economy.
- Please tell us your business and which kind of service you need;
- Reply a few questions;
- We’ll conclude business profile and contact you in shortest period of time.
What language should the company documentation be in for application to the Department of Economic Development (DED) and Ministry of Economy (MoE)?
Do I need to rent an office to obtain a Branch or RO license in the UAE?
Do I need to appoint a local services agent to incorporate a Branch or RO in the UAE?