There are many different ways to trade in the UAE, but we have distilled the options down to just three. Here’s an outline:
A Branch office set up in the UAE can be 100% owned by the foreign entity wanting to do business in the UAE. This foreign entity needs a local service agent, which is defined as a national of the UAE or an Emirati company already set up, acting as its sponsor to do business. The branch office is limited in the number of people it can hire under its license and limited to the types of businesses it can operate. The branch office is generally created to act as a marketing arm for the mother company in the country it originates from. Services that can be provided mainly include advice whether legal, financial, creative, commercial or business orientated. This entity however cannot directly import any goods and cannot directly take part in any physical service in the country.
An Agency would include the signing of an agency agreement with a local Emirati company that has been given the right to represent agencies, and for the foreign entity to be represented 100% by the Emirati company, the foreign entity will be entitled to sell its goods or services directly to the market through this national legal entity. An agreement can be made with the local entity to be more involved and invest the time and effort of their employees into the venture, they would then expect a higher share of the profits or conversely an agreement can be made for the foreign entity to invest more of its time and send its people to work under the agency in the UAE in which case the foreign entity can agree to pay a smaller fee to the national agency. Marketing of brand names in the UAE can be done however proposals and invoices need to be drawn up mentioning that this brand is trading under the license of the national entity.
This form of company gives the foreign entity more legal control over itself, it will be registered under the department of economy in any Emirate in the UAE as a 51% Emirati owned 49% foreign owned entity. Each Emirate however does have their own internal rules over doing business with certain industries within the Emirate in question, further study will have to be done on the best Emirate to form the JV once a business plan is drawn up and a business focus identified.
The joint Venture entity will be set up through a memorandum of association which defines the partnership, names and hires the management team, and forms a board to help govern the entity. The benefits of this entity is that all partners under the law, have as much control as their shares allow and will be able to directly enter the market with their products and/or services under the name of the joint venture itself or any partner involved in the joint venture.