When you decided that you want to establish an LLC company you need to immediately think of 4 things: how many partners will be in a company, who will be your local sponsor and where to find him/her, what office size you will need to have (bearing in mind the 9 sqm/per visa rule) and where it will be located (bearing in mind that 5% of the contract value will be added as additional fee to the final price of the license), what type of activity you would like to have. To choose the right type of activity please go back to Module 1 (topic 1.5).
At any point of time or registration process you can grant the Power of Attorney to any individual or company representative (in Dubai Courts) for your authorized person to finish the process instead of you if circumstances require you to do so. Check Module 3 (topic 3.8) to learn more about that.
Once you decided on the above.
Step 1. You need to get a pre-approval and make name reservation. To do that you need to visit your nearest DED branch and clearly know you intended business activity (the online search on the database of the available activities can be done online on the website of Dubai Economic Department at dubaided.ae), and apply for pre-approval and name reservation.
For names you should be aware that:
- The name should not have obscene or indecent words, and should not be offending to the general public even if it is a personal name.
- The name should not include Allaah's name nor "God" or His divine attributes, for example (al wader, al alee , al razzes, etc.).
- If the business includes the name of a person, that person must be a partner/owner in the license. (For example, a license issued for Mohammed Al Ghamdi, cannot include the name Mohammed Al Zaheri).
- Family names should not be used as a trade name unless it includes the first name. (For example, Ahmed al Ghandi cannot have "Al Ghandi Contracting", he must change it to "Ahmed al Ghandi Contracting".
- Names should be written literally and not translated. (For example, if the Arabic name is (الصقر للمقاولات) it must be written as "al Saqer contracting".
- The name should not include the name of a country or government.
- The business name must strictly reflect the business activity.
- The name cannot include any restricted names such as global political organisations, religious sectarian organisation etc. (For example, FBI, Mafia.).
- If the name is an abbreviation – it will cost AED 2,000 / annum
- If the name contains GULF – it will cost AED 2,000 / annum
- If the name cannot be translated into Arabic – it will cost AED 1,000 / annum
- If the name contains numbers – it will cost AED 1,000 / annum
- If the name contains foreign words – it will cost AED 1,000 / annum
- If the name is Part of a trade mark/ is a trade mark – it will cost AED 1,000 / annum
- If the name contains regional refernces – it will cost AED 1,000 / annum
As a result you will be given a trade name reservation certificate and a form that should be signed in original by the partner(s) by presenting their original IDs.
You have to pay trade name reservation certificate within 72 hrs since it’s issuance. A trade name reservation certificate is valid for 6 months so you need to finish this process within that time. Trade name reservation costs AED 620.
Step 2. In case your activity requires getting additional approvals, you will need to obtain such approvals from the relevant authorities and come back to get the initial approval certificate. For most of activities such approval can be issued immediately. This step applies only to those companies that have some specific activities.
Initial approval is A4 size paper, that contains:
- Initial Approval Number
- License type, legal type of the company
- Date of approval and date of expiry
- Paid amount
- License members (Role, nationality, name, ID number)
- Name and code of activity
So, as a result you will be given initial approval certificate. Initial approval certificate is valid for six months since the date of issuance and costs around AED 120.
Step 3. After you have Trade name reservation certificate and Activity approval, you need to visit Dubai Courts to sign the MoA with the local partner of the company (in case you register an LLC company) or local agent agreement (in case you register a Sole Establishment company). Some DED branches have Dubai courts in the same building so you can save your time. Moreover, if you don’t have any idea how to make such contract you can approach any Dubai courts typing and do it there.
Many typing centers have standard templates that will require only some details like passport details, Name reservation certificate, Pre-Approval certificate and around AED 400 (depending on the area and typing center) to fill in all the relevant information.
- If you are registering Sole Establishment, your local service agent contract contains: First/Second party details, Preamble on activity, agreement on services, responsibilities and duties of parties, effective date, liabilities clause, service agent compensation amount, term of contract, relationship description, disputes resolution procedure, number of copies and signatures.
- If you are registering LLC company, your MoA contains: First/Second party details, definitions, name of the company, objectives of the company, company address and head office, duration of the company, capital of the company, shares division, transfer of shares, register of partners in the company, management of the company, financial management, general assembly, financial year, profits and losses distribution, Auditor clause, Variation of the memorandum and company capital increase/decrease, dissolutions of the company, liquidation of the company, notices and miscellaneous clause, dispute resolution procedure, copies and signatures clause.
Usually, the standard MoA template is around 14 pages (for LLC companies) and service agent contract is around 4 pages (for Sole Establishment company).
When you have 3 documents: Trade name reservation certificate and Activity approval and signed agreement (MoA or Agent’s), you come back to DLD to submit it.
Step 4. Only now you can sign your office lease agreement. Bear in mind, that office size should be selected with 9 sqm/per visa rule in mind, moreover 5% of the contract value will be added as additional fee to the final price of the license.
Once it is signed you need to register it in eJari. Ejari is a Dubai electronic system of property related contracts that was designed to protect the rights of both landlords and tenants. It serves as a proof of legitimacy of the contract relations. You can learn more about eJari on its official web-page eJari.ae and such registration can be made in any municipality. We cover the topic of eJari in details in Module 5 ( see 5.5).
Step 5. Once everything is done, you come back with all the documents to DLD, they calculate the final price of the license, issue a payment voucher, and upon the settlement of the payment you get your license and can start your business!
If you want to know more about Dubai freezone company formation, feel free to get in touch with our professional consultant team and we would be delighted to assist you and help you to compare Dubai freezone company setup costs and help you to find that free zone, which would suit your business needs the most.
Disclaimer: Business Boutique UAE-Consultants.com is not affiliated with any particular government or legal entity. Business Boutique does not give professional legal advice nor any other professional advice subject to a public office in the government. This article merely sets out a simple and basic idea as to the reasons of Dubai freezone company setup and Dubai free zone company formation cost. Business Boutique in no way holds nor imposes any official governmental or legal authority and the article herein is only to be taken as a guide. All further governmental or legal issues should be addressed to the corresponding authorities.
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