Legal Requirements to Be Fulfilled for Starting a Business in UAE

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Legal Requirements to Be Fulfilled for Starting a Business in UAE

Legal Requirements to Be Fulfilled for Starting a Business in UAE

Here are some things you need to pay close attention to when starting your business in Dubai or elsewhere in the United Arab Emirates.

1. Establish a Company the Right Way

There are different types of company structures possible, such as a Sole Establishment (this is the same as a Sole Proprietorship) for single-owner companies. A Limited Liability Company is when all the shareholders in the company hold an equal amount of shares. If you want to have minority shareholders and majority shareholders, you should look at setting up a Private Joint Stock Company. A company that is fully owned by another company overseas is known as a Branch Office or a Representative Office.

Here is where it would be good idea to enlist the professional assistance of someone who has experience with company setup in Dubai – not all company structures can carry out all types of commercial activities. A Limited Liability Company, for instance, cannot engage in banking / finance / investment. Only Limited Liability Company structures are permitted in free zones, so if you were planning to open your company in a free zone, you might find that there are business activities that you cannot engage in.

2. Apply for the Right Kind of Business License

There are about 2,100 commercial activities permitted in Dubai. It is always a good idea to approach someone experienced in matters of business startup in Dubai with your business plan so that he/she can advise you correctly. You can theoretically apply for up to ten business activities on your Business License, but adding each activity costs more. So a business setup consultant can make use of his/her experience to tell you which are the exact business activities you should be applying for in your License.

A good business setup consultant would also be able to help you when you expand your business. For example, if you open a general trading establishment in Dubai, but decide to sell your goods online later, a business setup expert can help you add e-commerce activity to your Business License. Similarly, if you choose to scale down your operations later, a business setup consultant can help you remove business activities from your Business License and save you money on renewal fees.

3. Choose the Right Commercial Space

It is important to rent commercial space for your operations before you apply for company registration and a suitable Business License. Among the legal requirements to start business in Dubai is a suitable commercial space. This commercial space must meet Government-mandated criteria, such as how there must be 100 square feet of office space for every employee. If you are planning to hire 12 employees, you need an office with an area of 1,200 square feet, failing which you will be refused work visas for your staff.

It has been clearly laid down that office space cannot be used as a godown.
So if you are planning to open an e-commerce company, your godown space must be different from your office space. If you are planning to open a supermarket, there must be a temperature-controlled storage area where you can keep fruits, vegetables, perishables, and packaged foods safely. A restaurant requires a kitchen area that is 40% the size of the seating area. A cleaning company must have a separate area for the storage of cleaning chemicals.
A business setup consultant can help you find the right commercial space for your establishment.
The address of the commercial space leased becomes the registered office address of your establishment when company registration is granted, so it will be hard to move out later. You are not allowed to legally carry out business from a premises that is not the registered office address of your company. You can indeed change the registered office address on your Business License, but this can be done only at the time of renewing your Business License every year.

4. Make Sure Your Commercial Agreements are Properly Worded

Sometimes, it may be necessary to have supplier agreements in place before you start your business in Dubai. Good business consultants in Dubai would have access to a legal team that can make sure that everything is watertight. They would see to it that the contract mentions when the supplies have to arrive at the buyer’s location and in what quantity, in addition to when the payments would be made and the penalties for non-delivery or non-payment. Removing ambiguity is in the best interests of all concerned.

5. Ensure that Your Work Agreements are in tune with Labour Law

For some businesses, they have to hire staff before they can begin their commercial operations. When offering work contracts to potential candidates you think would be a good fit for your organization, you have to double check that Labour Law is strictly adhered to. According to UAE Labour Law, the work contract must specify the salary payable to the employee. As of 2022, only limited contracts that mention the start and end dates of employment are valid as per Federal Law No. 47 of 2021
You are also forbidden from entering into any work agreement where the employee has to work for more than 48 hours in a week – this would be illegal. In case the nature of the job is that this cannot be strictly adhered to, you can cap the amount of work to be performed at 144 hours in three weeks. You also cannot enter into any contract where your employee has to work more than eight hours in day. Working overtime is permitted as long as the weekly cap is not breached and overtime wages are paid.

A good business setup consultant can help you draft work agreements that meet UAE Labour Law norms.

Choose a Good Business Setup Consultant to Help You Meet Your Legal Obligations

SetUpACompany.ae is a provider of corporate services in Dubai, United Arab Emirates. They are backed by an in-house team of legal counsel, as well as experts drawn from various domains such as Business Consulting, Tax Advisory, and Corporate Finance. They have been of professional assistance with business setup in Dubai to clients from 100 countries around the world so far. They currently have an excellent client satisfaction rate, and the aim is to do even better. For more details, call +971 56 408 6728

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