Includes steps involved in establishing a local office.
Last Published: 8/7/2019
Foreign companies can establish a formal presence in the UAE via a number of means including by way of the establishment of a branch office.  Unlike the case with a local limited liability company, a branch office can be established with 100 percent non-UAE national ownership and has the same legal identity as its parent company and conducts business under the name of its parent company.  While each emirate has its own licensing rules for branch offices, this type of entity can carry out a variety of activities (as approved by the Department of Economic Development of the relevant emirate) although generally speaking branches are more apt to be licensed for services rather than trading activities.  Branch offices are regarded as fully-fledged businesses permitted to perform contracts or conduct other activities as specified in its license. 

The general characteristics of a branch office are as follows: 
  • Although the branch can be completely foreign owned, there is, however, a requirement that a UAE national party be appointed to act as the branch's local service agent
  • The local service agent must be a UAE national or a company wholly owned by UAE nationals.  The arrangement between the company wishing to set up a branch and the local service agent will be set out in an agency agreement prepared in English and Arabic and signed before a local notary public
  • A branch office does not have limited liability.  Its exposure to liability extends generally to the company that established it
  • There are no minimum capital requirements for a branch, although the foreign company is required to provide a standard form bank guarantee from a local bank in the amount of $13,615 (AED 50,000) and to provide details of its own capitalization and good standing, together with its two most recent sets of annual audited accounts
  • The branch must carry on business activities which its parent company is authorized to undertake, and which must be approved in advance by the relevant authorities.  It is important to note that approval for the issuance of a license for a branch depends on the type of activity the branch is proposing to conduct
  • Since 2011, Free Zone companies have been permitted to set up branches in the UAE on essentially the same terms and under the same procedures as apply to foreign companies
  • The branch must be under the control of a manager, who need not be a UAE national.  In the case of some free zones however, the manager may be required to be locally resident
  • A branch must obtain a certificate of registration from the UAE Ministry of Economy in the emirate in which it operates and a license from the Department of Economic Development of that emirate
  • Upon issuance of its license, the branch must register with the UAE Ministry of Labor and the UAE Department of Immigration to be able to sponsor its own employees or invitees.  The branch may also open local bank accounts and post boxes
Alternatively, a foreign party may establish a representative office.  The function of representative office is limited to promoting its parent company’s activities.  This means that a representative office is only permitted to perform such activities as gathering information, soliciting orders, and marketing projects to be performed by the company’s head office.  This type of office is also limited in the number of employees that it sponsors (usually three to four employees).  As with branch offices, representative offices require the appointment of a service agent who is a UAE national and who would provide the parent with services such as obtaining permits and licenses.  Also, like branch offices, representative offices are required to submit a bank guarantee in favor of the applicable Ministry of Economy as part of their registration process. 

Free Zones, Specialized Economic Zones, & Offshore Companies
Foreign companies can also establish a formal presence in one or more of the UAE’s free zones.  A free zone is an economic area created in one of the seven UAE emirates, established to be governed by rules and regulations that are generally different from those governing “onshore” UAE.  More precisely, federal criminal law applies to the free zones while federal civil law (such as the Commercial Companies Law and the Commercial Transactions Law) applies only to the extent the free zone has not developed its own laws or regulations on the matter.  In many respects, the free zones are almost like foreign countries, territorially located within the UAE. 

Free zones allow for up to 100 percent foreign ownership and may be subject to reduced or different trade barriers, tariffs, and quotas.  However, free zone companies may only operate within the boundaries of the free zone in which they are formed and licensed or outside the UAE and are limited to performing solely those activities listed in their license(s).  Generally, free zones are designated by the government to a specific commercial sector.  Different types of licenses that can be issued in a free zone are: General Trading License, Trading License, Industrial License, Service License, and National Industrial License.  Over the past year, free zones in both Abu Dhabi (TwoFour54, Khalifa Industrial Zone, Abu Dhabi Global Market) and Dubai (Dubai International Financial Center) have introduced plans to offer dual licensing, allowing firms the option of partnering with government entities.  A non-comprehensive list of UAE free trade zones is provided at the end of this section. 

The UAE also has specialized economic zones, such as those established by Zones Corp in Abu Dhabi, which offer investment incentives such as certain reductions on infrastructure costs, administrative support, simplified approvals processes and residential cities for workers.  Companies situated in specialized economic zones are subject to the requirements of the UAE Commercial Companies Law (including the requirement for 51 percent UAE ownership).  

Following the introduction in 2003 of the Regulations for Jebel Ali Free Zone (JAFZA) Offshore Companies, international companies can establish JAFZA offshore companies, with benefits similar to other international offshore jurisdictions.  Ras Al Khaimah has, since 2006, allowed for the establishment of offshore companies. 
A non-comprehensive list of UAE free zones:
Abu Dhabi
  • Abu Dhabi Global Market (ADGM)
  • Twofour54 Media Free Zone
  • Masdar City Free Zone
  • Abu Dhabi Airport Free Zone
  • Khalifa Port and Industrial Zone (KIZAD)
  • Jebel Ali Free Zone (JAFZ)
  • Dubai Airport Free Zone (DAFZ)
  • Dubai Internet City (DIC)
  • Dubai Media City (DMC)
  • Dubai Gold and Diamond Park (DGDP)
  • Dubai Cars & Automotive Zone
  • Dubai Health Care City (DHCC)
  • Dubai International Financial Centre (DIFC)
  • Dubai Maritime City
  • Dubai Logistics City
  • Dubai Knowledge Village
  • Dubai Outsource Zone (DOZ)
  • Dubai Techno Park (DTP)
  • Dubai Silicon Oasis Authority (DSOA)
  • Dubai Studio City (DSC)
  • Dubai Textile City (DTC)
  • Dubai Flower Centre (DFC)
  • Dubai Carpet Free Zone
  • Jumeirah Lakes Towers Free Zone (JLT)
  • Sharjah Airport Free Zone (SAIF Zone)
  • Hamriyah Free Zone (HFZ)
Ras Al Khaimah
  • Ras Al Khaimah Free Trade Zone (RAKFTZ)
  • Ras Al Khaimah Media Free Zone
  • Ras Al Khaimah Investment Authority (RAKIA)
  • RAK Maritime City
  • Fujairah Free Zone (FFZ)
  • Fujairah Creative City
  • Ajman Free Zone (AFZ)
Umm Al Quwain
  • Ahmed Bin Rashid Free Zone
Civil Companies
In the case of professional bodies, it may be possible depending upon the circumstances and location of the business, to establish a formal presence in the UAE through the establishment of a “civil company” under the provisions of Federal Law No. 5 of 1985, as amended (the Civil Code).  These entities are establishments which are sole traders operating under a license.  Civil companies are usually not intended to trade (e.g., engage in the purchase and sale of goods, contracting, transport, banking and finance, and other similar transactions) and are in practice used by the professions only.  Civil companies are not companies in the traditional commercial sense since they do not have limited liability – liability for their operation devolves to the individual constituent professional members. 

In May 2018 the UAE Cabinet announced that it passed a resolution to relax 100 percent foreign ownership restrictions to spur economic growth.  Further details are not yet available.  However, in July 2019, the Cabinet announced plans to allow for outright foreign ownership for 122 distinct economic activities across 13 sectors in an effort to attract additional investment.
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