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Do You Need a UAE Citizen to Setup Service Companies in UAE Mainland?

By Akshat - 08 Jan 2022 Last Updated: 12 Jan 2022
Do You Need a UAE Citizen to Setup Service Companies in UAE Mainland?

The services sector has a large presence on the UAE's mainland. In the United Arab Emirates, there is a high demand for a services company. The UAE offers to expand business opportunities and a large target audience for firms to test their service offerings.

Business Culture in the UAE

So, you want to start a company in the United Arab Emirates?

That could be a good idea. Because the local government is supporting investment and entrepreneurs in a variety of ways, now is an excellent time to jump on board. Foreigners will find doing business in the Emirates to be rather simple. It is simple to establish a business in the UAE, and business is thriving thanks to the government's recent announcement that long-term visas for investment are now available. When you consider that 80 percent of people are foreign-born, it's evident that the UAE offers plenty of opportunities for foreign investment. In addition, the UAE declared in 2019 that it would allow foreign ownership of 100 percent of 122 economic operations in 13 sectors. Renewable energy, logistics, hospitality, food services, and manufacturing are among the fastest-growing sectors. Despite this, each Emirate has the authority to impose its own limits.

In the United Arab Emirates, starting a business is rather simple. It's so simple that almost anyone can do it. This is due to the fact that the government provides numerous advantages for establishing a business there. The most important thing to remember is that, with the exception of a sole proprietorship, most types of businesses require an Emirati partner who owns 51 percent of the company. After that, you only have to worry about registering and licensing your company. You may also be required to achieve minimum capital requirements in some circumstances.

How to Setup Service Companies in the Mainland?

An investor must follow certain measures in order to establish a services firm in the United Arab Emirates. A UAE citizen or a UAE corporation must act as the Local Service Agent when forming a services firm. The company will be owned entirely by the foreign investor. The Local Service Agent will function as a liaison with the Department of Economic Development (DED) for all administrative procedures such as company registration, visa processing, and other relevant activities.

They will have no influence over the company's operations or share capital. The investor must, however, pay the Local Service Agent cost each year when renewing the Professional Business License. The payment terms and other conditions will be negotiated separately with the Local Service Agent. The Service License allows an individual or a group of shareholders to legally conduct the desired business activity under the company name. The Department of Economic Development (DED) of the different emirates is in charge of providing service licenses for companies operating on the UAE mainland.

Documentation Required to Setup Service Companies in the Mainland

The company must first apply for an establishment card before proceeding to apply for a resident visa and a bank account in the UAE for the investor and sponsor personnel.

  • A copy of the investor's passport and a photograph (white backdrop, black shirt/dress)
  • Company incorporation form for a professional license from the DED of the respective emirate.
  • Educational Certificate and previous work experience papers for examination (Dhanguard will assist you with the document attestation from the Embassy and Ministry of Foreign Affairs)
  • If there is more than one partner, a shareholder agreement is required (Dhanguard will assist you in preparing it).

What will the Service Companies receive after the setting up of the Company?

When the services companies are registered, the Department of Economic Development will send the following documents:

  • DED Professional License is required to lawfully operate the services firm.
  • Contract for the rental of office space in accordance with the requirements
  • DED provided the company's Memorandum of Association and Articles of Association.
  • Return of educational documents, license fee receipts, and other documents submitted for examination
  • Any other specific clearances or documents required (if any)

Type of Local Service Agents (LSAs) that can be opted by Service Companies

There are two types of LSAs that can be opted which are discussed in detail below:

A Local Service Agent who is a UAE citizen

In order to establish a service company on the UAE mainland, the Local Service Agent must be a UAE national. They'll help with the administrative process, visa applications, and acquiring the company's government clearance. They will have no ownership in the business and will solely be responsible for administrative chores. To keep the service and renew the company, you must pay a yearly fee to the Local Service Agent. In the case of a UAE national working as a local service agent, there is always the option to change the local service agent in the event of a disagreement or unforeseen circumstances.

UAE National Owned Company as Local Service Agent

The other option for investors who own a firm under a professional license is to use a UAE-owned corporation as a Local Service Agent. Having a corporate as the local service agent contributes to security and trust. Furthermore, the Corporate Company would are not involved in the workings and operations of the company. Obtaining a Corporate Local Service Agent for the investor will avoid personal disinterest or related issues.

Conclusion

If you are looking to setup a company in the UAE, connect with Dhanguard, our business setup team will help you throughout the setup process from that start to its end, and also assist you in the required paperwork. Connect with us, we will gladly assist you in setting up your own company.

Dhanguard provides the business setup and company formation services in Dubai, UAE with the guidance of our professional team of consultants. Faster and hassle-free company setup in Mainland and Freezone in UAE.

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