Abu Dhabi

Company Formation and Doing Business in Abu Dhabi

Introduction

Foreign entities (individuals or companies who are not nationals of the UAE can seek to establish a business presence in Abu Dhabi in many ways. The following summary provides a useful guide to the available options for company formation in Abu Dhabi.

Methods of Doing Business

The principal ways a foreign entity can establish a business presence in the UAE are by means of a

  • Branch or representative office of a foreign company
  • Limited Liability Company
  • Professional partnership
  • Free Zone entity

With the exception of Free Zone entities, it is generally necessary to enter into an agreement with a UAE national or a company wholly owned by UAE nationals.

Branch or Representative Office

It is possible for a foreign company to establish locally registered branch offices or representative offices. Federal licences are only available in special cases.

Limited Liability Company (LLC)

The LLC is the most common form of commercial company adopted by foreign companies. The law currently states that at least 51% of the LLC’s total shares must be held by a UAE national (or a company wholly owned by UAE nationals). There are exceptions where certain activities can only be conducted by 100% locally owned entities, for example real estate related business. A reduction in this minimum local shareholding requirement is anticipated to be enshrined in the new Commercial Companies Law, but a timetable for the issue and application of that law has not yet been fixed.

Professional Partnership

Professional business is defined as ”work based on investing in mental talent and acquired information.” The conduct of professional business is governed by Local Orders in each Emirate. If a non-UAE national person or a corporate body wishes to conduct professional business, a UAE national local service agent must be appointed.

Free Zone Entity

The UAE boasts several Free Zones which boast a number of attractions. There is no UAE national shareholding requirement when establishing an entity in one of these areas. The Free Zone authorities generally guarantee investors that they will not be liable for corporation tax for a specific period of time. Free Zone entities are not liable for import or export duties on goods imported into and exported out of the Free Zone. A Free Zone entity can take one of four forms:

  • A branch office of a foreign company
  • A Free Zone establishment
  • A Free Zone company
  • A Free Zone offshore company

Intellectual Property

Considerable progress has been made in the protection of intellectual property rights in the UAE. In early 1993, three federal intellectual property laws were implemented—the Trademarks Law, the Patents Law and the Copyright Law.

The UAE has become a party to the Paris Convention for the Protection of Industrial Property (1996), the TRIPS Convention (1997) and the Patent Cooperation Treaty (1998). These laws protect owners of marks and works by imposing criminal sanctions on anyone who counterfeits, imitates or uses the marks or works of others without consent. Fines, imprisonment, closing down of establishments or companies in breach, or confiscation or destruction of goods are prescribed by these laws.

Intellectual property is governed by the following ministries:

  • Economy and Commerce—registration of trademarks
  • Finance and Industry—registration of patents, designs and models
  • Information and Culture—registration of copyright works

The periods of initial protection vary—10 years for trademarks, 20 years for patents, 10 years for designs and models, and the life of the author (minimum 50 years) plus 50 years for copyright works. Assignments and licences of intellectual property are recognised under the law provided that any such assignment or licence is registered with the concerned authority. The Patents Law expressly allows for pledges of patents and for such pledges to be noted on the register. It has also become possible to mortgage copyrights.

With the rapid growth of e-commerce, many countries have a separate registration for domain names. The United Arab Emirates Network Information Centre is the national register of top and second level domain names. In addition, the Ministry of Economy and Commerce has intimated that it will accept applications to register domain names in the same manner as trademarks.

Disclaimer
Whilst every effort has been made to ensure that the details contained herein are correct and up-to-date, it does not constitute legal or other professional advice. IQTESADI does not accept any responsibility, legal or otherwise, for any errors or omission.