February 15, 2015 admin

Corporate Incorporation in the Middle East

Foreign investors can carry out any activities in the UAE only after being registered and licensed by the relevant authorities in the UAE. In general, a foreign investor can establish a suitable business presence in either the UAE mainland (also commonly known as ‘onshore’) or a business presence ‘offshore’. An ‘offshore’ business presence typically refers to a registration in one of the UAE free trade zones. This type of registration of business inside the free trade zone is not to be confused with the regulatory system for offshore companies (also referred to as ‘International Business Companies’) which exist in certain freezones.

The Limited Liability Company (L.L.C.) remains the most popular form of company registration in the UAE because its offers a wider range of activities and geographical area to trade in. Under the laws of the United Arab Emirates, it is mandatory that a UAE national or UAE national company holds 51% of an onshore limited Liability Company (L.L.C.). The Private Office can provide a 100% UAE owned affiliate company to provide the service(s) of a nominee 51% and provide all documentation to effect this including the powers of attorney (PoA) to the foreign party so that it may have 100% effective management control of the L.L.C., we strongly recommend this in place of an individual to safeguard your business. All of the documents put in place will protect the shareholders and empower them with effective management control over the 51% shareholders and thus 100% control of the L.L.C. bound by contract and enforceable in Dubai International Financial Centre (DIFC).
A limited liability company (L.L.C.) is the most common vehicle in Dubai and Abu Dhabi, and is recommended where the purpose is to make retail sales within the region. It should be noted that 100% foreign ownership of such an entity is not permitted in the U.A.E. except for non-trading branches and representative offices of foreign companies and provided that a local agent is appointed.

A L.L.C. can be formed by a minimum of two and a maximum of fifty persons and the minimum capitalrequirements vary from Emirate to Emirate (e.g. Dubai is AED 300,000, whereas Abu Dhabi requires AED150,000). The foreign minority shareholder is, however, able to exercise control of a L.L.C. through powers vested to the foreign partner in the Memorandum and Articles of Association. It is also possible to attribute profit entitlements in favour of the foreign partner in a ratio other than the respective shareholdings would otherwise suggest. It takes approximately eight to twelve weeks to incorporate a L.L.C., since there are a number of steps, and supporting legalised documentation, to complete in the incorporation process.If the intended activity of the company involves industrial production, prior approval of the industryauthority in the Ministry of Finance and Industry must be obtained. In contrast to pure tradingcompanies, industrial companies benefit from financial incentives and exemptions, such as subsidizedelectricity and water tariffs, equipment and raw materials, tariff protection, export subsidies, financialsupport and preferential consideration in tender participations.

Side agreements to the partnership contract
The foreign investor, despite the given law, is usually keen on acquiring the majority of capitaland thus occupying the power of decision regarding the L.L.C. In practice, therefore, oftencontractual side agreements (so-called sponsorship deals or partners agreement) to thepartnership contracts are made in which the true intention of the partners is determined. Theforeign investor pays the entire share capital of the society. The local partner acts as a trustee of the shares of the foreign shareholder who becomes the sole owner of the L.L.C.
In exchange for his services, the local shareholder receives a certain annual compensation, and is exempted of internal liability claims. Despite the various prohibitions in UAE company law, such side agreements are customary, according to the former provisions of law; they are at least ineffective against third parties.

Link to Dubai FDI webpage: http://www.dubaifdi.gov.ae/en/fdiservices/startup/businessforms/pages/limited-liability-company.aspx

SEED MENA, SEED Group and The Private Office
The Private Officeof His Highness Sheikh Saeed Bin Ahmed Al Maktoum (http://the-private-office.com/) was established in 2011 to managehisprivate investment portfolio in the region. As a member of the Royal Family of Dubai, The Private Office has access to the most influential and powerful decision makers in the MENA region.Whilst leveraging our network with decision makers, we also empower our partners by extending to them our network of decision makers; opening doors to new ventures and assisting international firms setup a successful presence in the region.

Seed Group of Companies is a conglomerate of corporate entities across different verticals such as general trading, business services, telecommunications, interior and architectural design and healthcare. These vehicles facilitate us to provide advisory services and sponsorship in some of the fastest growing sectors in the Middle East.

SEED MENA is the flagship organisation of Seed Group and identifies high potential companies to gain market traction and deal conversion in the GCC region. Our joint-venture partnerships have been instrumental in creating a strategic market entry for some of the biggest players in the region. As your local sponsor, we also excel in guiding our partners through legal pitfalls and avoid unnecessary bureaucracy while closing deals. In addition to this, SEED MENA also provides financial mediation and assistance in legal resolutions for existing companies in the MENA region.Our specialist knowledge and over 14 years of experience in GCC (Gulf Co-operation Council) enables us to provide an insight into the market that few partners can.

Hisham Al Gurg, CEO Seed Group of Companies

The CEO of The Private Office and Seed Group of Companies is Mr. Hisham Al Gurg an Emirati national who has been hailed as a pioneer in setting up and running new businesses inthe MENA region. Hisham advises the Royal family of Dubai on investment opportunities in the region. Having worked at Emirates and Global Management Consultants following graduation from Southwest Texas State University, Hisham Al Gurg is also a graduate of the Sheikh Mohammed Leadership Programme, UAE sponsor for Chinese petroleum giant Sinopec Group, board member of private equity company Signature Group and CEO of Al Fajer Investments and Development – the investment division of Al Fajer Enterprises, a holding group of companies owned by HH Sheikh Hasher Al Maktoum.With SEED Group, he has helped start and manage eight growing companies in six different fields with investments worth more than $1bnacross the MENA region.
You can read the following article about him and Seed Group of Companies in Arabian Business magazine: http://www.arabianbusiness.com/tips-from-top-hisham-al-gurg-560207.html
Hisham’s professional credentials can be viewed on his LinkedIn profile: (ae.linkedin.com/pub/hisham-al-gurg/10/a54/87a).
You can also go to the ‘News’ section of our website http://seedmena.com/ and know more about our client portfolio and companies we have partnered with.

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