Tax Agency Number (TAN) 30004113
According to the rule for LLC company formation in Dubai and other six Emirates, it can be formed by a minimum of two and a maximum of fifty people whose liability shall be limited to their shares in the company’s capital. Furthermore, being a flexible form of company, differential profit sharing arrangement among the partners is also possible in an LLC. The company must have 51%[1] participation for a UAE national while the rest 49%*[1] can remain with the investor(s).
Hence, the formal shareholding pattern for an LLC is as follows:
*The UAE has repealed the need to have UAE nationals as sponsors, thus allowing expatriate investors 100 per cent ownership with effect from December 1, 2020. The long-awaited 100 per cent ownership by foreign nationals of companies licensed and registered in the UAE is allowed as per Cabinet Resolution No. 16 of 2020. (Read More)
At present, the minimum capital requirement for a LLC company in UAE is three hundred thousand dirhams which can be in cash or in kind. It is also important to note that the capital must be divided into equal shares with the value of each not being less than thousand dirhams. Furthermore, as stipulated in the Companies Law, LLC can engage in any kind of business activity except to activities relating to banking, money investing on behalf of others and insurance.
Forming a LLC in Dubai gives foreign investors a host of advantages, thus making LLC the most popular of the legal forms of entity in Dubai. Though the foreign equity of the company cannot exceed 49 %, but the profit and the losses incurred in the operations are shared in a ratio that is different than that of the share capital ratios, and the day to day activities can easily be undertaken by the foreign investors without the interference of the local UAE partner. [1]
A limited liability company in UAE offers wide access to the Emirates economies. The following are benefits of establishing LLC in UAE: –
In order to establish a LLC in Dubai, six basic steps must be followed: –
Accounting Records 1- Every company shall keep accounting records showing its transactions to accurately reveal at any time the financial position of the company and enabling the partners or shareholders to confirm that the accounts of the company are properly kept in accordance with the provisions of this Law. 2- Every company shall keep its accounting books in its head office for a period of at least 5 (five) years from the end of the financial year of the company. 3- The company may keep an electronic copy of the original of the documents and records kept and deposited therein in accordance with the controls issued by a Ministerial Decision.
Accounts of the Company 1- Every Limited Liability Company shall have one or more auditors to audit the accounts of the company every year. 2- The company shall prepare annual financial accounts including the balance sheet and the profit and loss account. 3- The company shall apply the International Accounting Standards and Practices upon preparing its periodical and annual accounts, to give a clear and accurate view of the profits and losses of the company.
The Legal Reserve: A Limited Liability Company shall set aside in every year 10% of its net profits to form a legal reserve. The partners may decide to stop such deduction if the reserve reaches half the capital.
[1] The UAE has repealed the need to have UAE nationals as sponsors, thus allowing expatriate investors 100 per cent ownership with effect from December 1, 2020. As per the new FDI regime, several categories of business licences will no more require Emiratis as sponsors with 51 per cent shareholding rights from December 1.
[2] Department of Planning and Development - Trakhees is the regulatory arm of Ports, Customs and Free Zone Corporation (PCFC) in Dubai and the authority responsible for licensing and regulating businesses in special development zones and areas.
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