Doing Business in UAE - Morison Menon

Ministry of Economy prior to obtain the licence
from the concerned authority in the respective
Emirate. Foreign companies licenced to operate
in UAE may not start their activities before being
inscribed in the Ministry’s Register of Foreign
Companies. The main stipulation for opening a
representative office or a branch of a foreign
company in the UAE is to appoint a Service Agent
who should be a UAE national. A service agent is
not an empowered agent who can bind his principal
as explained in the definition of the term
“agent” in the Commercial Companies Law. A
service agent is not responsible to undertake any
financial obligations concerning the activities of
the company’s branch or office within the UAE
or abroad. He should not interfere in the matters
related to the company’s management or
activities. His duties towards
the company and others are
confined to providing such
services as required by the
principal. These services usually
include obtaining of entry/
residence permits, acquiring
of the necessary licences
or facilitating the processing
of its transactions with the
government authorities. The
service agent is remunerated
in lump sum for the services
rendered to the foreign company, which shall be
subject to an agreement between him and the
company.
Foreign company’s branch or representative
offices are required to submit a bank guarantee
of AED 50,000 favoring the Ministry being part
of the licence processing procedure. The licence
of the foreign company’s branch/representative
office shall be cancelled if it is not renewed
within two years after the expiry date and the fee
due to the Ministry shall be deducted from the
guarantee.
11. Establishments by GCC Citizens
The states of the Gulf Cooperation Council (the
UAE, Saudi Arabia, Sultanate of Oman, Qatar,
Kuwait and Bahrain) signed the United Economic
Doing Business in UAE and UAE Free Trade Zones 4th Edition 2006
Agreement in Riyadh on 7th June 1981, with a
view to coordinate and unify economic, financial,
monetary, commercial and industrial legislations
and UAE endorsed this agreement in 1982. It is
conditional as per the Federal Law No. 2 of 1989
concerning permitting the GCC citizen to con-
duct a business operation in UAE that the inves-
tor should be a natural person residing in UAE
and practice the required activity by himself and
have a licence to practice the activity in his coun-
try of origin.
Setting up of Branch of GCC Companies in
Dubai
The Department of Economic Development(DED),
Dubai has recently released a circular clarifying
the procedures of setting up Branches of GCC
companies wholly owned by GCC nationals.
The circular stipulates that Branches of GCC
Companies shall be required to register only in
DED and the concerned parties shall not refer to
the Ministry of Economy, provided other Govern-
ment Departments’ approvals may be required
for the activities in question.
The GCC companies shall not be required to
appoint Service Agents.
If there are shareholders who are not from the
GCC in the mother company, such company shall
be considered as a foreign company and is
required to register at the Ministry of Economy
in accordance with usual procedure.
Morison Menon
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Setting up a business
entity in the UAE