Salient Features of LLC Business Set Up in Dubai Mainland
While the free zones in the UAE put multiple restrictions on the activities, the LLC company formation attracts the investors with the flexibility to choose from more than 2,000 business activities permitted by the Dubai Economic Development (DED).
Also read: Why LLC Company is Still a Preferred Choice for Businessmen in Dubai?
Investors who form an LLC in the Dubai mainland are allowed to conduct business in broad categories of activities under industrial, commercial, professional or tourism. The investors need to select their business activities from the list of activities permitted by the DED. However, certain special activities such as medical, transport, construction etc require approvals from the concerned authorities that regulate them. These authorities include the DHA, RTA, Dubai Municipality, etc.
The DED mandates that at least 51% of the shares in the LLC should be owned by a UAE national who acts as the local sponsor. The foreign shareholder, individual or corporate can be 49% shareholders in the LLC business setup. UAE National (called the sponsor) are usually not active and get annual fixed sponsorship fees as against any share of profit.
The entrepreneurs can appoint up to 11 managers for the LLC business setup in Dubai. The partners of the company are allowed to become managers. The manager has full powers of administration subject to the clauses in the Memorandum of Association. Within the scope of his or her powers, the manager’s actions and commitments are binding to the business.
The DED mandates that the investors need not specify the capital ( AED 300,000 minimum in Dubai and AED 150,000 in Sharjah) but it must get a mention in the Memorandum of Association. The LLCs are not allowed by the DED to offer its shares to the public. Dubai Mainland LLC, therefore, cannot have a public subscription to establish or increase its capital or secure loans, and it may not issue any negotiable stocks or shares.
e) Trade Name
Reserving a trading name with the DED is one of the first steps in LLC formation. Dubai Mainland LLC’s trade name should be based on its activity or it could be derived from the name of its partners. The company’s name should have the term “with limited liability” suffixed to it.
The LLC company formation allows investors to open one or more branches. Each of the branches can carry out activities of the main trade license. The investors are also allowed to sell and waive the LLC branches to any party.