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Difference Between a Branch Office and Representative Office in UAE

By Shivangi - 29 Mar 2022 Last Updated: 13 Apr 2022
Difference Between a Branch Office and Representative Office in UAE

We've already examined a few industries with significant demand, and as a result, entrepreneurs are more likely to start those enterprises. However, there are situations when you already have a company in your home country and want to open a representative office or a branch in the UAE. Then this chapter is for you, because we'll go through the requirements, costs, and other aspects of establishing a branch or representative office in Dubai mainland.

Overview Of Branch and Representative Office

It is possible to set up your existing firm in the UAE while maintaining 100 percent foreign ownership. You must choose between establishing a branch of your firm and establishing a representative office for your company. It may be difficult to choose between a branch and a representative company, but to put it simply, if you want to conduct business in the same way that you do in your home country, you will need to establish a branch of your firm. You only need to open a representative office if you simply want to obtain some exposure and sell your firm in your native nation.

A branch and a representative office are both considered extensions of the foreign parent firm. A representative office would be set up only to market and/or promote your foreign firm in the United Arab Emirates. This is because a representative office in the UAE is not permitted to participate in commercial activities or earn revenues. However, establishing a branch of your foreign firm in the UAE allows the branch to do business in the same way that your company does in its home jurisdiction. As a result, it's critical that you figure out what kind of activities you'd like to do in the UAE before determining which type of company extension you'd like to start.

Establishing Branch or Representative Office

 Branch office in the UAE follows a similar procedure. It can be split down into five key steps for Establishing a branch or representative for your ease of understanding:

  • Attestation and Legalization of Parent Company Documents
  • Identifying a Local Service Agent (LSA)
  • Approval from Ministry of Economy
  • Obtaining a License from the Department of Economic Development
  • Becoming a Member of the Chamber of Commerce and Industry

Let us now take a deeper look at each of the processes, beginning with the attestation and legalization of parent company documents.

Attestation and Legalization of Parent Company Documents

Please note that if the Parent Company is registered in a foreign jurisdiction, all of the Parent Company's documentation must be legalized. This entails attestation by the UAE Ministry of Foreign Affairs and the UAE Embassy in the nation where the documents were issued, as well as additional attestation by the UAE Ministry of Foreign Affairs. In addition, an authorized translator must translate all documents into Arabic.

Identifying a Local Service Agent (LSA)

After that, you'll need to find a Local Service Agent. A Local Service Agent is on hand to help you with the administrative side of things. The activities of the branch or representative office are not the responsibility of the Local Service Agent. In order to come to an agreement on topics such as duties and fees, you and the agent need establish a written agreement. After the written agreement is completed, both parties must sign it in front of a notary public.

Approval from Ministry of Economy

You'll need to get authorisation from the Ministry of Economy moving forward. At this point, you must apply to the applicable emirate's Ministry of Economy. This application will include a number of documents, including the following:

Initial approval and trade name certificate

  • Corporate documents of the foreign company
  • Power of attorney documents
  • Notarized agreements
  • Personal Document
  • Bank deposit certificate

The application and all other documentation must be sent to the Ministry of Economy in hard copy format. You will receive initial approval after submitting your application. You will be able to reserve a trade name for your branch or representative office after receiving initial clearance. Once you have received initial permission, you can submit your preferred trade name, which will be reserved, and the application procedure will proceed at the Ministry of Economy.

Obtaining a License from the Department of Economic Development

You will be needed to submit a new application to the DED once your application has been approved by the Ministry of Economy. This application will include a lot of the same information and papers as the previous one, with the exception that you will be required to supply the branch or representative office's potential address. Your license will be issued as soon as the DED has approved your application. After that, you'll be able to focus on other important administrative tasks including getting residence visas, opening bank accounts, and moving into the office space that was granted in your application.

Becoming a Member of the Chamber of Commerce and Industry

Finally, you must join either the Chamber of Commerce and Industry in Abu Dhabi or the Chamber of Commerce and Industry in Dubai. An application must be completed once more, and some documents must be provided with it. After that, it will be processed and forwarded for approval. You will be a member of The Chamber of Commerce and Industry once your application has been approved.

As you might expect, there will be a variety of fees related with the opening of your branch or representative office. It is important to remember that these costs are subject to change. Fees may also be adjusted based on your specific circumstances. We've compiled a list of costs associated with opening your branch or representative office. The fees are classified as follows:

  1. Ministry of Economy Fees
  2. Department of Economic Development (Dubai) Fees

The DED charges fees based on a variety of factors, including the size of the office you'll be renting, the trade name you'll use, and more. As a result, a precise charge cannot be determined. We've calculated a preliminary estimate of what DED fees would cost based on our previous experience. DED fees are estimated to range between 13,000 and 15,000 UAE dirhams. This, on the other hand, is susceptible to change and is dependent on a number of circumstances, some of which have previously been addressed.

Conclusion

UAE is a major business centre that services the entire Middle East. It maintains its dominance in the broad region by encouraging foreign investors to use various company start-up structures, such as foreign company formation.

Because they are owned and controlled by foreign investors, most of whom go into worldwide markets, subsidiary firms are also known as non-resident companies or international business companies. As a result, a foriegn company formation in the United Arab Emirates is perfect for investors seeking international corporate control. To know more or to register your company connect to us at Dhanguard.

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.

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

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