Holding companies are widely recognized as a popular means to manage assets like property or investments in subsidiary businesses, all while enjoying protection from potential liabilities. It's a common misconception that holding companies are solely associated with large enterprises; in reality, even individual entrepreneurs can initiate them.
If you're considering establishing a company in Dubai for the purpose of acquiring residential or commercial properties or investing in other businesses, a holding company structure could be the ideal choice for your objectives.
In the UAE, the structure of a holding company closely aligns with global standards. However, it's important to note that holding companies are restricted from participating in independent commercial endeavors. Consequently, a holding company does not possess the authorization to manufacture or market any products or services.
The primary role of a holding company revolves around holding interests in subsidiary firms or acquiring and maintaining real estate assets. Holding companies are also well-suited for the ownership of trademarks, patents, and shares.
With a holding company license, your business activities are categorized under 'activities of holding companies.' This classification strictly limits your operations to the ownership of assets and interests as previously specified. It does not encompass active management, strategic planning, or other related functions.
Incorporating a holding structure offers several key advantages:
Subsidiaries can make use of the parent company's assets such as trademarks, name, logo, real estate, and equipment.
Modifying the operational company's legal framework can be streamlined by making adjustments within the holding structure itself.
Shareholder information can remain confidential within the confines of the holding structure.
A holding structure allows you to invest in multiple ventures, including international franchises and diverse sectors like retail, real estate, and hospitality.
Managing human resources becomes more flexible as employees can be moved between organizations to maximize their skills and contributions.
There are two primary types of holding companies that you can establish in the UAE.
Your first option is to establish an onshore or mainland holding company. UAE law mandates that any holding company must be registered as a commercial business or activity. The Ministry of Economy (MoE) in the UAE serves as the regulatory authority for such establishments, and compliance with the UAE's Companies' Legislations is mandatory.
The legislation permits your mainland holding company to engage in commercial and administrative activities through subsidiary companies within the UAE and abroad, without direct involvement in trading or commercial activities.
The alternative option is to establish a free zone holding company. The UAE government has set up over 60 economic free zones across major Emirates, including Dubai, Abu Dhabi, and Sharjah, to facilitate foreign investment and commerce.
Operating in a free zone provides greater flexibility and comes with various incentives, such as generous tax exemptions, absence of currency restrictions, and the ability to repatriate 100% of profits and initial investment.
To initiate a Free Zone Holding Company in the UAE, you must first select from the numerous business-friendly free zones available in the country. These options include Dubai International Financial Centre (DIFC), Jebel Ali Free Zone Authority (Jafza), Abu Dhabi Global Market (ADGM), Sharjah Airport International Free Zone (SAIFZ), among others.
It's important to note that holding companies are restricted to specific activities, primarily the ownership of assets such as physical properties (both commercial and residential), intellectual property, and subsidiary businesses.
As a result, they do not have the capability to engage directly in manufacturing products, selling goods or services, or directly managing the assets held within the holding company.
The process for establishing a holding company in the UAE may vary depending on your chosen location. Typically, you will need to submit your application to the governing authority of the specific free zone where you intend to operate.
It is advisable to collaborate with a professional company setup expert when submitting your application. These experts not only assist in preparing and managing your application but also handle all legal obligations, including interactions with relevant industry bodies and government authorities.
When you establish your business, you commit to adhering to UAE Company Law and its regulations governing holding companies.
In accordance with Company Law, you must appoint a management board responsible for overseeing the organization of any subsidiaries held by the company. The management board is also tasked with supervising all activities conducted by these subsidiaries.
Additionally, holding company shareholders are responsible for appointing a director for each subsidiary and ensuring that the subsidiaries possess the necessary financial resources to conduct their business operations.
Depending on your business structure, you may need some of the following documents:
Looking for a seamless business setup experience? Trust Smart Zones® Dubai to pave the way.
The expenses associated with establishing a holding company can vary significantly, contingent upon several factors. However, since these companies are often located within free zones, the overall cost is typically lower compared to other locations.
The overall cost encompasses various components, including obtaining the necessary license, registering the company's name, and, if needed, addressing visa requirements. In total, the establishment of a holding company in Dubai generally ranges from AED 12,500 to AED 14,500.
Collaborating with specialists like Smart Zones UAE can help you optimize these expenses, ensuring that the cost remains as economical as possible.
A holding company in Dubai, UAE is primarily established to manage assets such as property, investments in subsidiary businesses, and intellectual property while providing protection from potential liabilities.
Establishing a holding structure in Dubai offers advantages like effortless asset management, a simplified legal structure, enhanced privacy for ultimate beneficiaries, diversified investments, and flexible employee mobility.
There are two main types of holding companies in the UAE: onshore holding companies and free zone holding companies. Each has its own set of regulations and advantages.
Holding companies in Dubai are restricted to specific activities, including the ownership of assets such as physical properties, intellectual property, and subsidiary businesses. They cannot engage in manufacturing, selling goods or services, or directly managing the assets they hold.
The cost of establishing a holding company in Dubai can vary but is typically lower than other locations due to many being located within free zones. The overall cost includes expenses like obtaining a license, registering the company's name, and addressing visa requirements, usually ranging from AED 12,500 to AED 14,500. Collaborating with specialists like Smart Zones UAE can help optimize these expenses.