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What is the Process of Civil Company Formation in Dubai?

By Shivangi - 20 Dec 2021 Last Updated: 06 May 2022
What is the Process of Civil Company Formation in Dubai?

For having a clearer idea about the process of Civil Company formation in Dubai first we need to have clarity in our minds about What a Civil Company actually means. In our study, we will further discuss about the process of Civil Company Formation in Dubai.

What is a Civil Company?

A civil company is a type of corporate partnership used by professionals in well-known industries like doctors, lawyers, and engineers as well as accountants. Moreover, international expert partners could own 100% of the company. However, in the case of Dubai, if there is no UAE-national partner in the firm, a Local Service Agent (LSA) is required. In exchange for an annual fee, the LSA is a UAE national that administers licensing requirements and other government-related problems for the company. The LSA has no financial or managerial responsibilities for the firm or its activities in Dubai or elsewhere.

A civil company must have at least one UAE national partner that owns at least 51% of the company and should possess a relevant experience or qualification of the same kind as the company's activity. Also, foreign ownership gives the investor unrestricted access to the local market, but it also comes with unlimited liability.

What is the Process of Civil Company Formation in Dubai?

A civil corporation can be formed when two or more professionals with professional qualifications in their field of specialty agree to carry out professional/consultancy activities as well as be liable to third parties in exchange for a fee. Also, the owner/investor can file for civil company formation if he/she is a competent and licensed professional in a variety of fields, including law, accounting, medical, engineering, and more. It gives for 100% ownership and access to the local market, but it also comes with infinite responsibility. A civil corporation must also be established as a partner of the business owners who have professional certifications in their fields of expertise. However, in comparison to an Limited Liability Corporation, it is a riskier strategy because the partners will be responsible for a substantial portion of the company's share.

Read More: How to Open a Branch Office in UAE Mainland or Free Zone?

What are the Features of Civil Company Formation in Dubai?

Civil Company formation comes with several distinguished features out of which some may sound beneficial and vice versa. Our study further gives a clearer idea about the several features of Civil Company Formation in Dubai with their brief explanation as follows:

Easy to arrange your Corporate Bank Account

For a civil company, obtaining a Corporate Bank Account becomes a less complex job as it becomes quick and simple to open a bank account once a professional license is received and the company is formed. Our company formation experts can further assist you in choosing the right bank for your needs and even set up meetings in-branch for you if you want.

Owners can apply for Multiple Visas

A civil company formation in Dubai is often associated with larger firms since it allows the owners to apply for more visas; on the other hand, the mainland firms have no maximum limit to apply for them. Despite the fact, more visas you apply for, the more office space will be needed. Also, there is a typical guideline is that each visa requires 100 square feet of office space. However, the DED holds full control over the modification of this visa rule.

Multiple Shareholders

Another key feature of civil company formation is that it allows the investors to start the company with more than one stakeholder. In Dubai, a civil company must have a minimum of two shareholders and a maximum of 50. Also, individuals or corporations might be included under this category.

Less Complex Setup

One of the most prominent reasons for Civil Company Formation in Dubai is that it is quite beneficial for young entrepreneurs who are looking forward to entering into a business. The key reason is that forming a civil company in Dubai is both quick and simple. It's simply a matter of submitting an application to the DED for your license. Also, regulations by the government have to promote the growth of businesses has further made the process simpler. The investor should only meet the eligibility criteria that is required to form a Civil Company, which further reduces the time that is taken for the company formation. 

Cost-Effectiveness

The high costs of doing business in this country further delay the procedures by new businessmen. In actuality, however, starting a business in the UAE with a small investment is fairly feasible. To form your civil corporation, you must apply for a professional license in Dubai, which will cost you around AED 17,000 (approximately). Furthermore, because no paid open share capital is required when forming a new civil corporation, total initial costs are quite minimal.

Easy Sponsorship

As a shareholder in a civil firm, you owners are able to sponsor the employees for Visas, and as well as the families for resident visas. Sponsorship visas for employees such as drivers as well as other dependents, if you meet the application criteria. The procedure is rather straightforward the application for an entry permit is to be applied first followed by the change of status, and medical fitness test, followed by Emirates ID registration and visa stamping.

100% Liability vs. LLC

Civil companies are subject to 100 percent liability, so understanding what that includes is critical before making a decision. In the case of LLC, the liability of the partners is limited and not to their personal assets. As a result, there is an additional layer of security. On the other hand, in the worst-case scenario, creditors may be able to confiscate the assets and property because a civil business has 100 percent accountability (or 'unlimited liability,' as the case may be). While there are certain fundamental parallels between the two types of firms, the distinctions become apparent in the case of a liquidation.

Criteria for Civil Company Formation in Dubai

Given below is the required criteria for Civil Company Formation in Dubai:

  • In accordance with DED business legislation, partners of any nationality can engage in professional activity.
  • A thorough Civil Agreement is required between the expat partner and the civil license.
  • A Service Agent Agreement is required when a Local Service Agent is appointed to the company.
  • The trade name should be consistent and proportional to the company's commercial activity.
  • A civil corporation in Dubai or elsewhere can have multiple branches.
  • Each branch is allowed to engage in any or all of the activities covered by the main company license.

Conclusion

Connect with Dhanguard for the Process of Civil Company Formation in Dubai. Our Company Formation Team will gladly assist you in forming your company from the start of the process till its end. Let us help you in choosing the right bank account for your entity and performing the required paperwork as well. If you need any services related to Civil Company Formation in Dubai. Please contact us, we will gladly assist you.

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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