Company Registration in Abu Dhabi- An Overview
Abu Dhabi is the second largest city in the Middle East after Dubai. There is constant competition between the above cities; hence there are immense opportunities for a business to establish itself. Many companies prefer going for the process of company formation in Abu Dhabi. This is due to the tax advantages what a business can secure. Many foreign investors would go for the process of company registration in Abu Dhabi due to different forms of benefits related to investment and structuring.
When a company is formed in Abu Dhabi, it cannot be 100% foreign owned. There is a requirement to appoint an Abu Dhabi national to own 51% ownership in the company. The national can be a local UAE national also that resides in UAE. There are different forms of free trade zones in the country that allows investors to consider different forms of opportunities.
In all sectors companies can be wholly owned by the foreign entity. However, when it comes to specific amount of shareholding and control, there is a requirement to appoint an Abu Dhabi national for carrying out business activities.
There are more than 8 free trade zones in Abu Dhabi; hence a foreign investor would get maximum benefits from the process of company registration in Abu Dhabi.
Apart from this, there are different forms of tax incentives which provide maximum benefits for an applicant going for the process of company registration in Abu Dhabi.
Benefits of Company Registration in Abu Dhabi
The following are the benefits of company formation in Abu Dhabi:
- Different types of Business Structures
There are different forms of business structures which can be utilised in Abu Dhabi for the company registration process. Hence a foreigner has different options to choose from for the process of company registration.
- Free zones
There are more than 8 free zones in Abu Dhabi for doing business. Hence an investor can choose one of this free zone for conducting business in Abu Dhabi. A separate free zone company can also be established in Abu Dhabi.
- Unified Legal System
The legal system in Abu Dhabi has changed due to consecutive government intervention. Apart from this, there are also other factors which help the development of the legal system. This would be the increase of UK and American Law firms that carry out business in Abu Dhabi. The government of Abu Dhabi has responded positively to such companies and changed the law to make it a unified system.
- Development of Tourism Sector
In the Middle East, Abu Dhabi has one of the largest revenues just from tourism. Abu Dhabi serves as a global hub and an international financial centre for different companies to operate. There are many destinations which attract tourism here. In 2022, Abu Dhabi will be holding the FIFA, which would attract more firms to invest in Abu Dhabi. Due to all the above reasons companies would want to go for diversification of their business.
- Tax Benefits
Abu Dhabi is an excellent location for companies to reduce their world wide taxation, as the UAE does not impose any form of tax. This tax will include worldwide tax, personal tax, withholding tax, corporate tax and any form of VAT. The only companies which require to pay tax in Abu Dhabi would be oil and gas companies. Abu Dhabi enjoys variety of double taxation agreements with other countries.
Eligible Business Structures for Company Registration in Abu Dhabi
The following are the business structures for company formation in Abu Dhabi:
- Limited Liability Corporation (LLC)
A Limited Liability Corporation or LLC is one of the most prominent forms of business entity in Abu Dhabi. The liability of the shareholders of this form of company is limited to the amount of shares. Minimum of 2 shareholders are required for forming this type of entity. A maximum of 50 shareholders are required for this type off entity. To set up a LLC in Abu Dhabi a minimum capital of more than USD 40,000 would be required to be subscribed. An applicant going for the process of company registration in Abu Dhabi can choose the above form of business.
- Free Zone Company
There are more than 8 free zones present in Abu Dhabi. For a free zone company, there is independence when it comes to foreign ownership of the company. There are no forms of restrictions when it comes to recruiting labour in the company. Each free zone that is established in Abu Dhabi has separate laws and regulations. A company which is registered in these free zones would have to comply with the requirements of local law.
- Branch office
A branch office can be set up by a foreign company. The provisions of the Commercial Companies Act Number 8 of 1984 and Ministerial Decision Number 69 of 198 speaks about setting up of branch offices in Abu Dhabi. For setting up a branch office in UAE a local agent would be required. The branch office would carry out activities which are undertaken by the parent company. A branch office can carry out usual operations related to marketing the products in the country.
- Representative Office
A representative office is set up by a foreign company not to carry out operations, but other forms of activities such as market research can be undertaken by this form of office. Under Article (313) of the Companies Law allows a representative office to be set up by a foreign company.
Eligibility Requirements for Company Formation in Abu Dhabi
An applicant going for the process of company formation in Abu Dhabi has to fulfil the following eligibility criteria:
- Minimum Capital
First and foremost, the applicant has to suffice the minimum capital requirements for company registration in Abu Dhabi. The minimum capital required for forming a limited liability corporation is USD 41,000. The capital requirements for free zone companies would be determined on a case to case basis.
- Register related to Beneficial Ownership
When a foreign entity is set up in Abu Dhabi then the requirements for beneficial ownership must be sufficed. Usually the foreign entity would enter into a shareholders’ agreement to suit their requirements. The shareholders agreement would state the requirements of the beneficial ownership. Not all companies require a UAE national to have 51% ownership of the company. For example a free trade zone company would not require a UAE national for running the operations of the company.
- Suitable Agency
An applicant going for the process of company registration in Abu Dhabi would require to find a suitable agency to carry out the formalities related to company formation in Abu Dhabi. This is not mandatory; however appointing an agent would make it straightforward.
Procedure for Company Registration in Abu Dhabi
Limited Liability Corporation (LLC)
- First and foremost, the applicant must choose the relevant type of business structure. As LLCs are the most utilised business structure in Abu Dhabi, the below will speak about LLC registration.
- In the next step, the company would have to take all the steps in finding a local shareholder. This local shareholder must have more than 51% controlling stake in the company. 49% of the stake would be controlled by the company which is established in Abu Dhabi.
- The applicant would have to choose a relevant trade name for the company. A minimum of three trade names would be chosen for this purpose. The application for the trade name must be submitted to the Department of Economic Development (DED). The applicant must go for the process of search for trade name (https://www.tamm.abudhabi/tamm-centers-services/department-of-economic-development ) and reserve the respective trade name for the company.
- With this the applicant would have to state the initial business activities carried out by the applicant as required by the requisite authority. After the above is carried out, the applicant would receive the name of the business to commence activities.
- After the name is secured, the applicant would have to provide the articles of association and other incorporation documents which are notarised. This must be submitted to the relevant Municipality of Abu Dhabi.
- In the next step, the applicant would have to open a corporate bank account in Abu Dhabi and deposit the initial capital which is required for company formation.
- All the documents for the business license must be submitted to the DED along with documentation. If a foreign company submits these documents then they have to be translated into Arabic. Once these documents are translated they should be attested by the Justice Ministry.
- Once the license is approved, the company can be registered with the Abu Dhabi Chamber of Commerce.
Compliances required for Company Registration in Abu Dhabi
The following compliances are required for company registration in Abu Dhabi:
- Companies do not require to pay any form of corporate tax in Abu Dhabi. Only oil and gas companies require to pay 55% corporate tax. Foreign banks also require to pay 20% corporate tax.
- Custom duties of 5% are imposed on non GCC countries.
- Social Security Contributions have to be carried out in compliance with local labour law. Employers will contribute 12% and employees have to contribute 5%.
- Annual Financial Statements have to be submitted to the Abu Dhabi Ministry of Economy. Along with this the financial statements have to be submitted to the DED.
- Before the company is set up the applicant has to have minimum share capital for forming the company in Abu Dhabi. This would be in accordance with the requirements of the Commercial Companies Federal Law No (8) of 1984.
- A business entity has to appoint a manager to conduct the affairs of the company. This appointment must be stated in the Memorandum of Association.
- The reporting of annual return has to be carried out as per the requirement of the DED.
Documents for Company Registration in Abu Dhabi
The following documents are required for company registration in Abu Dhabi:
- Memorandum of Association
- Articles of Association
- Shareholders Agreement
- Managers Appointment
- Board Resolution Copy (For a foreign company willing to open a branch office or representative office)
- Notarised Documents
- Copy of Documents pertaining to the share capital (Certificate of Paid up Share Capital)
- Deposit Slip – Capital deposited in Abu Dhabi Bank Account
- Name Approval Certificate
- Lease Agreement of the Premises.