How to Set Up Private Shareholding Company in Dubai, UAE: Step by Step Guide
Dubai fosters a dynamic and adaptable business environment, offering a diverse range of legal structures for company formation. Each structure defines the permissible business activities. By establishing a Private Shareholding Company, investors gain the opportunity to participate in Dubai's thriving global economy.
- 100% Foreign Ownership
- Easy Business Setup
- Ownership Structure Flexibility
- Intellectual Property Protection
A Private Shareholding Company (PSC) in the UAE is a distinct legal structure compared to publicly traded companies. Unlike publicly offered shares, PSC ownership is held by a minimum of three shareholders who cannot sell shares to the general public. This structure offers advantages like greater control for founders and potentially less complex regulations. To establish a PSC, a minimum share capital of AED 2 million (approx. USD 544,959) is required, with the Chairman and majority of the Board of Directors being UAE nationals.
Legal Requirements for Private Shareholding Company (PSC) Setup
To form a PSC in Dubai, approval from the Department of Economic Development (DED) is required. This legal structure is suitable for most commercial and industrial businesses, but not for professional activities. While ownership is open to partners of any nationality, UAE nationals must hold a minimum of 51% of the shares. GCC nationals can own up to 100% of the company. The chosen trade name should be relevant to the company's business activity and must include the phrase "Private Shareholding Company." Please note: An appointed manager is not mandatory for a PSC, as this requirement applies to private partnership companies.
Benefits of Establishing a Private Shareholding Company in Dubai, UAE
Dubai offers a compelling environment for businesses seeking to establish a presence in the Middle East and beyond. Here are some key advantages:
- Ownership Structure Flexibility: Private Shareholding Companies offer significant flexibility in ownership structure. Shareholders enjoy greater autonomy in determining share distribution, allowing for customization to meet specific business needs. This contrasts with shareholding companies in some jurisdictions, like Bahrain, which may have ownership restrictions.
- Tax Advantages: Dubai's renowned tax-friendly environment grants Private Shareholding Companies exemption from corporate tax on profits, capital gains, and personal income. This exemption offers a substantial advantage compared to many other locations, including Bahrain. The absence of taxes allows for greater reinvestment of revenue back into the business, fueling growth and expansion.
- Economic and Currency Stability: Dubai boasts a resilient and stable economy, providing a secure and predictable business environment crucial for investors. This stability is further bolstered by the strong UAE Dirham, pegged to the US Dollar.
- World-Class Infrastructure: Dubai's well-developed infrastructure empowers businesses to flourish. The city offers state-of-the-art facilities, transportation networks, and communication systems that facilitate smooth operations.
- Strategic Location: Situated at the crossroads of Europe, Asia, and Africa, Dubai serves as a strategic gateway for businesses. This location offers access to a vast consumer base, particularly beneficial for companies aiming for international expansion.
- Business-Friendly Legal Framework: Dubai's legal framework is designed to attract foreign investment. The emirate offers various free zones catering to specific industries, with incentives including 100% foreign ownership, customs privileges, and streamlined import/export procedures.
- Access to Global Markets: As a prominent business hub in the Middle East and a key link to global markets, Dubai offers companies easy access to European, Asian, and African markets through its modern ports and world-class logistics.
- Intellectual Property Protection: The UAE enforces robust laws safeguarding trademarks, patents, and copyrights. This protection is particularly attractive for businesses involved in research and development or innovative industries.
- Developed Banking and Financial Services: Dubai's mature banking and financial sector, with numerous international banks and institutions, provides Private Shareholding Companies with easy access to a variety of financial services.
- Attractive Lifestyle: Dubai's high standard of living and cultural diversity make it an attractive location for top talent globally. This fosters a favorable environment for businesses to recruit and retain skilled employees.
Share Capitalization and Conversion Requirements for Private Shareholding Companies
- A minimum initial capital contribution of AED 5,000,000 is required.
- All issued shares must be fully paid for at their par value.
- The company must have been operational for at least two financial years.
- During the two years preceding a conversion application, the company's average net distributable profits to shareholders must be no less than 10% of the capital.
- A resolution for conversion, adopted by a majority of shareholders representing at least three-quarters of the company's capital, is necessary for conversion from a private shareholding company to another legal structure.
Business Structure and Planning in Dubai, UAE
Choosing the right business structure is vital when launching a firm in Dubai. Options include:
- 1. Free Zone Company: A free zone company provides foreign ownership, and simplified registration processes, ideal for global operations.
- 2. Mainland Company: Mainland companies adhere to UAE laws and regulations and are suitable for businesses targeting the domestic market.
Consider factors like your business services, target market, and long-term goals when selecting a structure, and consult legal and business experts for guidance.
Steps to Launch a Private Shareholding Company in Dubai, UAE
Establishing a Private Shareholding Company in Dubai involves several steps:
Embark on the journey of opening a business in Dubai by partnering with Smart Zones® UAE. Our adept company formation specialists will guide you through the business license application and setup process, liaising with relevant government and municipal authorities on your behalf.
The first step involves selecting a unique and appropriate company name that complies with Dubai's naming regulations.
Define the specific business activities your company will undertake. This selection is crucial as it determines applicable regulations and licensing requirements.
Choosing the optimal location for your business is essential. Consider factors such as target clientele, accessibility, and infrastructure needs.
Secure preliminary approval from the Department of Economic Development (DED), potentially requiring permissions from additional government entities depending on your chosen activities.
Compile the necessary documentation required to obtain your business license. The specific documents will vary based on your business activity and location.
Upon approval and payment of applicable fees, you will receive your official business license.
Complete the process by opening your corporate bank account for your Dubai Business with Smart Zones® UAE. This final step paves the way for the successful opening of your Business.
Remember that the process may vary depending on your chosen jurisdiction and business activities. Consulting legal and business experts familiar with Dubai's business setup landscape is highly recommended.
Looking for a seamless business setup experience? Trust Smart Zones® Dubai to pave the way.
Conversion from Private to Public Shareholding Company
While shares in a private shareholding company cannot be directly offered to the public, the company itself can undergo a legal conversion to become a public shareholding company. This process typically requires a minimum of two years of operation after the company's formation.
It's important to clarify that individual branches of a private shareholding company can be sold and transferred to another party or company. The new owner(s) of the branch can then pursue a legal form change according to the Department of Economic Development (DED) procedures.
Documents Required to Start a Private Shareholding Company in Dubai, UAE
The following documentation is required to establish a private shareholding company in Dubai:
Documents for Initial Approval
- Application for registration and authorization, including verification of the chosen trade name.
- Four notarized copies of the Company's Memorandum of Association (MoA) and Articles of Association (AoA).
- Two copies of the Project Feasibility Study.
- Any required approvals from other government departments relevant to the specific business activity.
- Evidence of compliance with Economic Department regulations for private shareholding companies.
- (For public shareholding companies) Endorsement from the UAE Securities and Commodities Authority.
Documents Required After Initial Approval
- Receipt for the Initial Approval.
- Copies of all documents submitted for the Initial Approval.
- Photocopy of the office lease agreement, including the plot number.
- Detailed information on Board of Directors, including names, dates and places of birth, occupations, and a sample signature for each director.
- >Please provide original documents along with one copy of each.
- A signed declaration from each Board member acknowledging their acceptance of the appointment.
Submitting incorrect documents can lead to immediate rejection. Our consultants at Smart Zones® UAE ensure you have the right documents, avoiding any complications in the process.
Cost of Establishing a Private Shareholding Company in Dubai, UAE
To establish a private shareholding company in Dubai, a minimum capital investment of AED 2 million is mandatory. Startup costs beyond this initial capital will vary depending on factors such as company size, location, and business model. Obtaining a trading license typically incurs a cost between AED 15,000 and AED 35,000. Additional ongoing expenses may include costs associated with business premises, staffing, visas, equipment, materials, and potential customs duties for imported goods.
For a precise quotation, reach out to Smart Zones® UAE to obtain an updated estimate tailored to your specific requirements. This ensures that you are securing the most competitive rate for the services essential to your business.
A Private Shareholding Company (PSC) in the UAE is a legal structure where ownership is held by a minimum of three shareholders, not open to the general public. It requires a minimum share capital of AED 2 million, with the Chairman and majority of the Board of Directors being UAE nationals.
To establish a PSC in Dubai, approval from the Department of Economic Development (DED) is necessary. It's suitable for most commercial and industrial businesses, excluding professional activities. Ownership is open to partners of any nationality, but UAE nationals must hold at least 51% of shares.
Dubai offers numerous advantages for PSCs, including ownership structure flexibility, tax exemptions, economic stability, world-class infrastructure, strategic location, business-friendly legal framework, access to global markets, intellectual property protection, developed banking services, and an attractive lifestyle.
Private Shareholding Companies require a minimum initial capital of AED 5,000,000, fully paid issued shares, at least two years of operation, and average net distributable profits of at least 10% of the capital for two years preceding conversion. A majority shareholder resolution is necessary for conversion.
When planning a business structure in Dubai, consider options like Free Zone Companies for global operations or Mainland Companies for domestic market focus. Factors such as business services, target market, and long-term goals should guide your decision. Consulting legal and business experts is advisable.
Steps to launch a Private Shareholding Company in Dubai include partnering with Smart Zones® UAE, selecting a unique company name, defining business activities, choosing a location, obtaining preliminary approval from DED, compiling necessary licensing documentation, fee payment, license issuance, and opening a corporate bank account.
A Private Shareholding Company can undergo legal conversion to become a Public Shareholding Company after a minimum of two years of operation. Individual branches can also be sold and transferred, with new owners able to pursue legal form changes as per DED procedures.
Documents required include applications for registration and authorization, notarized copies of Memorandum of Association and Articles of Association, project feasibility study, approvals from relevant government departments, compliance evidence with Economic Department regulations, and more. Smart Zones® UAE ensures correct documentation submission.
Establishing a Private Shareholding Company in Dubai requires a minimum capital investment of AED 2 million. Additional startup costs vary based on factors like company size, location, and business model. Smart Zones® UAE can provide a precise quotation tailored to specific requirements.
Want to know more, talk to Smart Zones® Dubai advisory team they will be happy to help. Ready to invest in your future?
