CORPORATE SERVICESUAE Mainland Company Formation (LLC Company Setup Dubai UAE)

There are Four ways a foreign company can operate from UAE as a branch, representative office, registered company, or through a commercial agent who will be selling its products in GCC or export them.

As per the law, to conduct economic activities in mainland Dubai, outside the free zones, a corporate entity licensed by the Dubai Department of Economic Development (DED) must be established. The different types of registered companies are: Joint stock companies (JSC), Limited liability companies (LLC), unincorporated joint ventures and branch or representative offices of foreign or free zone companies.

Onshore LLCs are granted custom duty exemption in UAE, GCC and countries of GAFTA, (unlike UAE Free zone companies) when trading in UAE and GCC. A UAE mainland company (UAE LLC Company) has no restriction on real estate ownership and is not required to pay 5% customs duty on imported goods.

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However, there are foreign ownership limitations to an LLC Company Setup as per the Mainland Commercial Companies Law (CCL), which requires at least 51% of the share capital of all mainland UAE Companies, outside free zones to be held by UAE nationals or their wholly-owned companies.

The main risk is that the 51% local national shareholder has control over the Investors’ UAE Mainland Company, dividends and capital gains distributions and its bank account.

UAE Mainland Company Formation Objectives

Wincore Advisory Group assist you to regain and maintain 100% control over your UAE mainland company in respect of the UAE LLC Company's mandatory local 51% requirement through gradual solutions by :

Introducing a reliable and trustworthy local national partner to hold 51% of your mainland company’s shareholding in confidence under side agreements compensated through a “Fixed yearly Sponsorship Fee”.
Establishing a UAE mainland company corporate sponsor where the involvement of the mandatory local national individual partner will be highly mitigated and limited under side agreements. The Corporate Shareholder can also act as the local services agent where local shareholder is not required – for example, for a Professional License, Branch or Representative Office; or,
Establishing a common law corporate entities layer located in UAE freezones to maintain the highest level of control and benefit over 100% of your UAE LLC shareholding.
Establishing a common law double tier structure using common law corporate entities held by more sophisticated holding entities located in freezones to avoid latter sponsor’s involvement in the business, the related sponsor’s succession planning issues, sponsor’s claim of company’s dividends and the fluctuation of the sponsor fee to act as sponsor.
Wincore Advisory Group could assist you also in the structuring of your 49% foreign shareholding, through an offshore planning, to mitigate risks implied by Sharia inheritance Law in case of your dismissal or in order to attract foreign investors wanting to safely and easily penetrate the local market through a more accessible and flexible vehicle.

Case Study :

Strengthen the investor’s control over the 51% local shareholding of his mainland company formation – Uses of ADGM SPV to establish a common law corporate entities layer.

Current Mainland Company Structuring

New Mainland Company Structuring Or Restructuring

This example is a First degree of structuring – More confidential and
sophisticated structuring are possible

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Outcome

The local and foreign shareholdings are uplifted from a dual sharia law and civil law jurisdiction to a common law jurisdiction:
Allowing more flexibility to gain a higher investor’s protection while the ultimate local shareholding complies with the mainland regulatory framework;
Granting access to more sophisticated contractual and structuring environment;
Subjecting the resolution of conflicts to a common law jurisdiction, court and arbitration rules.
Exiting from the heavy legalisation and notarisation costs (unlike foreign IBC used or corporate actions are executed).