UAE SubsidiaryReading Time: 3 minutes
Before operating in the United Arab Emirates, you must set up a subsidiary or work with a services organization like ours. You’ll need to incorporate in the country before you can hire employees, run payroll, and work on a compensation and benefits plan.
Fully incorporating on your own can take anywhere from weeks to months, which means you may lose time to access talent and start your business projects in the UAE. Instead, Globalization Partners can get work started on your UAE project in just a few days instead of a few months.
How to Set up a United Arab Emirates Subsidiary
Setting up a United Arab Emirates subsidiary is not a decision for your company to take lightly. You should consider various factors as you decide what you will need for your incorporation and where you should base your headquarters. Business factors such as your particular industry, the nationality of the individuals you intend to hire, and any trade agreements can make a notable difference in your United Arab Emirates subsidiary setup process.
Since the UAE has several different regions, the requirements for a subsidiary can vary based on your location. If you incorporate on the mainland, you will need to find a local sponsor who owns 51% of your company or a local service agent (LSA) with the investor having 100% ownership of the business. There is an associated cost with either structure. You will experience fewer limitations and requirements in the country’s free zones, but you’ll need to decide which trade zone meets your business needs. You will also require a certain level of minimum capital and will only be able to perform the activities you list on your trade license.
While Arabic is the UAE’s national language, different groups speak different dialects and languages. For example, the Emirati people speak the Gulf dialect of Arabic. Other popular languages spoken in the UAE include Persian, Nepali, Bengali, Pashto, and others. Since UAE was a British colony until 1971, most of the population continues to speak English, which can be helpful for U.S. businesses expanding there.
If you are going to setup a business on the mainland, you will need to contact the Department of Economic Development of the specific emirate to obtain initial approval and register a trade name. After that is approved, you can move forward with the next steps.
Many companies incorporate as a limited liability company due to their lack of complexity. Other types of companies include Public Joint Stock Companies (PJSC), PrJSC Companies, civil company, and professional sole establishment. Steps to set up your company include:
- Determine where you want to setup
- Figure out your appropriate legal form
- Determine appropriate business license based on economic activities
- Reserve a company name
- Obtain business license
- Open local bank account
- Set-up and operate
United Arab Emirates Subsidiary Laws
United Arab Emirates subsidiary laws vary based on the type of entity you decide to establish. A limited liability company (LLC) requires at least two partners but no more than 50. Each partner’s liability is limited to the amount of capital they contribute as their share participation.
Capital requirements for a company vary according to the legal form. In the past, LLCs had to meet a minimum capital requirement. Now, the country requires “sufficient capital,” which is judged by the DED of the emirate in which you are incorporating. Foreign companies are encouraged to work with an advisor or another company knowledgeable in United Arab Emirates subsidiary laws to determine the right minimum share capital.
What Do You Need?
If you set up your United Arab Emirates subsidiary, your company should prepare to spend both time and money. Each step of the process takes a significant amount of time and expenses that you will need to budget for, including potentially travel to the UAE. You should retain the expertise of someone who understands incorporation in the UAE to work with you to avoid potentially costly mistakes.
Benefits of a Subsidiary
By setting up your United Arab Emirates subsidiary, you can legally start hiring employees in the country. A local subsidiary also keeps the potential liability of the subsidiary relatively separate from the parent company. In addition, the subsidiary can create a company culture different from the parent company’s culture.
However, if your business won’t derive value from setting up a local subsidiary, but still want access to local talent, your business will benefit from working with Globalization Partners. We offer you all the benefits of access to local talent on our payroll without the time and cost needed to set up a subsidiary on your own. We can hire employees to work on your projects in a matter of days, and we will make sure our services are compliant in every area from payroll to compensation and benefits. We’ll take on all the risk, so you can focus on growing your business.
Contact Globalization Partners
When you’re searching for local talent in the UAE without having to establish a United Arab Emirates subsidiary, contact Globalization Partners.