For an engineering Civil Company engaged in business activities that pertain to national security like construction or defense, a Local Sponsor who will own 51% of the company is required. The Local Sponsor must be an Emirati who has attained the age of 21 or a company incorporated in the United Arab Emirates that is fully owned by Emiratis.
If you are not sure whether the professional business activity you are planning to undertake requires a Local Service Agent or a Local Sponsor, talk to us. We can help you find the right Local Service Agent or Local Sponsor for your business.
In case you need a Local Sponsor, the right Local Sponsor will agree to a hands-off approach to the running of your business, entrusting the affairs of the company to you by signing over a Power of Attorney document, while still retaining legal responsibility for the operations of the company.
Depending on the number of business owners and whether you need a Local Service Agent or a Local Sponsor, you need to draw up the company formation documents. The company formation documents outline the name of the company, the purpose it is being set up for, and who the owners are. You can see for yourself how the ownership structure of the company will change if a Local Sponsor is required to be on board. With a Local Service Agent, you can own 100% of your company, but with a Local Sponsor, you can enjoy only 49% of your company. The company formation documents must be drawn up accordingly.
Since you are also required to come up with a name for your company, a good business setup consultants, who has experience in matters of company formation, will also tell you that there are certain rules that pertain to the nomenclature of a company, For example, you are not allowed to have religious names for your company. The names of countries and cities are not allowed, but the nationalities are permitted. You can also use the names of geographical regions as part of your company name. A first name may be allowed if it is the first name of one of the shareholders.
There is the possibility that two applications for the same company name may be lodged at more or less the same time. If this happens, only the company which lodged the application first would be granted company registration. The other company’s application would be rejected, and they would have to redraft the Articles of Incorporation with another name. To prevent this from happening, the Department of Economic Development allows you to reserve the name in advance, prior to you lodging your application for company registration and a Professional Service License.
The company formation documents have to be notarized by a Notary Public for them to have legal validity. The company formation documents may be known as Memorandum of Association if there is only a single owner for the company, or as the Articles of Association if there are multiple owners for the company.
You also need to lease a commercial office space for your professional company. You need to do this before you register your professional company. Once company registration is granted, the address of the space you have leased becomes the registered office address of your professional company.
The rule of thumb is that you need 100 square feet of office space for every employee you plan to hire. So depending on your business plan – it would be unwise to enter the UAE market without one – you need to zero in on a suitable office, and enter into a Tenancy Agreement with the landlord. The Tenancy Agreement needs to be registered so that it becomes a legally binding Tenancy Contract. In Dubai, the Tenancy Contract would be known as Ejari.