Branch of Foreign Company Formation Dubai, UAE

A foreign firm can exercise its main activity in the UAE by opening a branch or a representative office, according to Article 313 of the Company Law. The distinction between the two is that a foreign firm that creates a branch in the UAE can engage in any activity for which it has been licenced, whereas a representative office can only engage in promotional efforts for the parent company's products and services. A representative office, unlike a foreign branch, is unable to do business or sell its goods. Before engaging a foreign branch to conduct business in Dubai, the company must first get a licence from the Ministry of Economy, followed by a licence from the Department of Economic Development. Each of these legal structures grants the corporation varying degrees of access to the local market.

Foreign corporations wishing to establish a branch of a foreign company (foreign branch office) in Dubai, Abu Dhabi, Sharjah, or the UAE have two choices under UAE Commercial Law. The first is a full branch of a foreign firm in the Dubai that may perform the same functions as the parent company. A Representative Office, on the other hand, is a marketing office that cannot trade commercially. Both allow international corporations to set up shop in the UAE while maintaining full ownership. As a result, the branch serves as an extension of the parent corporation and has no legal identity of its own. As a result, the parent firm is fully responsible for any operations carried out under this licence. A local service agent is required for both legal forms of international company registration in Dubai.

Foreign professional and service companies can now open a branch in Dubai without having to register with the Ministry of Economy, whereas foreign companies operating as a Representative Office must register with the Ministry of Economy. The major need for establishing a foreign company's representative office or branch in the UAE is to select a Service Agent who must be a UAE national. Standard Documentation Requirements for a Foreign Company Branch Registration For registering a branch in Dubai, a foreign firm must submit the following documents (standard) to the relevant authority(s) and acquire the appropriate approvals.

What's the difference between a Representative Office and a Foreign Branch Office?

In the United Arab Emirates, a foreign company can open a branch.

Foreign Branch Office

Setting up a foreign branch office in the UAE allows you to participate in all of the parent company's activities. This is contingent on the Ministry of Economy's acceptance of the operations indicated in the licence at the time of incorporation.

Representative Office

Establishing a Representative Office in the United Arab Emirates allows you to advertise the parent company's services or products. In the UAE, a representative office is unable to trade commercially or sign contracts.

Registration of Foreign Company in Dubai

Incorporating a Branch or Representative Office (RO), which allows 100 percent ownership by the parent company, is a frequent strategy for international enterprises to retain foreign ownership under the UAE's Commercial Company Law. Because these forms lack a separate legal existence, they are viewed as an extension of the foreign corporation, which is nonetheless responsible for their actions.

A Branch is allowed to engage in commercial activity and earn profits in the UAE. It is only permitted to engage in activities that are identical to those carried out by the foreign firm in its home jurisdiction, as stated in its commercial licence.

An RO is not allowed to make a profit in the UAE, and its operations are restricted to marketing and promoting the products and services of its foreign parent firm.

Both Branches and ROs are needed to operate under the authority of a commercial registration and licence in the name of the foreign firm.

Steps to open a branch or representative office in the Dubai

1. Speak with one of Dhanguard's advisors about the best legal structure for your business based on the activities you plan to do in the UAE and your target markets.
2. Appoint a National Service Agent (NSA), who must be a UAE national or a corporation with 100% UAE ownership. Dhanguard Business Consultants has established a number of 100% UAE-owned companies that it fully governs and controls through power of attorney and other legal arrangements. These businesses potentially take on the role of the National Security Agency (NSA).
3. The required documentation for registration and approval will include but is not necessarily limited to are as follows-

• Certificate of incorporation (or equivalent), memorandum and articles of association, and a certificate of good standing (if one can be acquired) from the parent company's home jurisdiction will all be essential papers for registration and approval.
• A board resolution authorising the opening of the Branch or RO, appointing a general manager and granting the general manager a power of attorney; and confirming that the company assumes responsibility for the office's liabilities once it is created in the UAE.
• For the past two years, the parent company's accounts have been audited.
• The core operations and activities of the company are outlined in this statement.
• For the General Manager, a certified passport copy is required.
• For the General Manager, two certified proofs of address are required.
• 1 × General Manager's Curriculum Vitae
• 1 letter of professional or bank recommendation for the General Manager.

1. All documents must be notarized and attested at the applicant's home country as well as the UAE consulate in question. Because the notarization procedure might take a long time, it should be started as soon as possible.
2. Before being given to the UAE authorities, all documents must be translated into Arabic by an approved translator.

Benefits of a Foreign Company Office in Dubai

The following are some of the advantages of establishing a branch or representative office in the United Arab Emirates:

• In the UAE, foreign companies can keep 100% foreign ownership.
• A foreign company does not need to establish that it has been in operation for more than two years in its native nation (some Free Zones require longer).
• Anywhere in the UAE, including Free Zones, the corporation may lawfully conduct the allowed activity in its licence.
• There are no restrictions on where the corporation can rent or buy office space.
• Any paid-up capital requirements have been permanently waived by the government.

Disadvantages of Establishing a Branch Office in UAE

The following are some of the disadvantages of establishing a branch or representative office in the United Arab Emirates:

• A Branch's business activities are limited, especially when it comes to trade on the UAE mainland. If the parent business engages in any trading activity, the RO can only be formed for the purpose of marketing or promoting the company's products and services, or to facilitate commercial agreements between the parent and its customers. The majority of service operations, however, can be handled through a branch.
• Establishment takes longer than a Free Zone corporation, usually 8 to 10 weeks.
• External permissions from UAE government ministries are frequently necessary, and the Ministry of Economy will require a bank guarantee of AED 50,000.