DAVIDSON & CO
DUBAI IS OPEN FOR BUSINESS A GUIDE TO CORPORATE STRUCTURES IN DUBAI Davidson & Co’s Founding Partner, Jonathon Davidson, has been practising in Dubai and the wider Middle East for 20 years and acts for a wide mix of clients including high-net-worth individuals and other clients, private banks and Multi Family Offices. Jonathon is well known in the offshore community and is considered as the ‘go-to’ advisor in the GCC’s private client community. Setting up in Dubai Over the last 30 years, Dubai has transformed itself from a local trading community into one of the most popular and successful destinations for corporate and commercial set ups. With its growing multi-jurisdictional nature, and in the absence of income tax for both mainland registered companies and those registered in the free zones, Dubai has become a major trading hub in the region for both High-net-worth individuals and local and foreign companies wishing to establish a business presence in the region. Dubai offers a range of diverse company structures, both onshore, “offshore” and within the designated Free Zones, making it one of the most versatile markets for set ups and investments in the world. Below is a brief guide as to the most common corporate structures available in Dubai.
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1. Mainland Dubai Dubai’s Department of Economic Development (DED) is the department for licensing and registration of corporate entities in mainland Dubai, and the Commercial Companies Law (CCL), as amended, is the federal law that regulates all corporate entities set up in the UAE mainland.
Limited Liability Company A Limited Liability Company (LLC) is the most common form of business set up in Dubai. When forming a LLC, the CCL prescribes that at least 51% of the shares must be registered with a UAE national (natural or legal person). Commonly, where a UAE national (otherwise known as a Local Partner) is used and the foreign investor owns 100% of the beneficial interest in the LLC, the LLC’s memorandum of association can be structured in such a way so as to transfer all authorities, rights and powers to operate and manage the LLC to the foreign investor, including for example the ability to appoint the general manager and the company board of directors. Another safeguard to protect the foreign investors interests in the LLC can be provided in the form of a unique set of contractual arrangements commonly known as side agreements. This comprises a set of agreements entered into between the foreign investor and Local Partner with the aim of vesting all managerial control, voting and dividend rights in the LLC to the foreign investor. As such, the Dubai LLC formation allows companies to establish flexible, differential profit sharing arrangements with a UAE Local Partner. The Local Partner can be paid a fixed annual fee, a percentage of sales or a percentage of profits.
Family Office Investor
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