Company Registration in Sharjah- An Overview
Sharjah is considered as one of the most populated emirate after Dubai and Abu Dhabi. This emirate forms a part of the Dubai-Sharjah-Ajman metropolitan area. Sharjah is present between Dubai, Ajman, Umm Al Quwain and Ras Al Khaimah. Hence it makes it a prime location for investors to go for company registration in Sharjah. This emirate has access to the Persian Gulf.
As Sharjah is a part of the UAE, there is no form of corporate tax, personal tax, withholding tax or any form of capital gains tax levied on corporates and individuals. There is no tax on different types of imports and exports. Hence it would be a good location to start a business.
A local Emirati resident is required to have more than 51% stake in a company which is incorporated in Sharjah. However, the ratio of profit sharing would only be determined by the company. Hence it provides flexibility for the client to start a business in Sharjah.
Sharjah is known as an industrial hub which attracts lot of manufacturing companies in the world. More than 80% of manufacturing occurs in Sharjah. Due to this, it would be ideal to set up a manufacturing or production company in Sharjah. In the UAE, Sharjah is considered as the top 10 destinations for ease of doing business. Investors can easily incorporate a company here with ease. There are different forms of free trade zones in Sharjah which allow 100% foreign ownership in the company. Apart from this, there are also different forms of incentives of incorporating a company in Sharjah free trade zones. These free trade zones include Sharjah Airport International Free Zone and Hamriyah Free Trade Zone.
Manufacturing facilities is cheap in Sharjah as there is immense amount of resources such as water and electricity. Hence manufacturing companies can utilise the above resources to produce their required output.
All the above benefits make it attractive for an investor to go for the process of company registration in Sharjah.
Benefits of Company Registration in Sharjah
- World Class Infrastructure
Sharjah is a part of the UAE, which makes it the third largest by population after Dubai and Abu Dhabi. This is a prominent location which is present close to Dubai. It is quite straightforward to incorporate a business here, as the government provides lot of support to companies. Investors can either incorporate a company in Sharjah non-free trade zones or Sharjah Free Trade Zones. If they incorporate a company in Sharjah free trade zones, then more benefits and incentives can be provided by the government.
- Availability of Resources
Manufacturing facilities is cheap in Sharjah, as there is immense amount of resources such as water and electricity. Hence manufacturing companies can utilise the above resources to produce their required output. The government takes up more than 60% of the cost related to resources which are used for day to day production activities.
- Free Trade Zones
There are different free trade zones present in Sharjah which include the Sharjah Airport International Free Zone and Hamriyah Free Trade Zone. Setting up a business in a free trade zone would allow 100% foreign ownership. Apart from this, there are also different forms of benefits and incentives offered by the government.
- Large Cargo Hub
Being in the centre of four emirates, Sharjah is one of the largest cargo hubs in the world. This is due to the presence of the Sharjah International Free Trade Zone.
Eligible Business Structures for Company Registration in Sharjah
The following are the business structures which can be utilised for company registration in Sharjah:
- Limited Liability Companies (LLC)
This is one of the most preferred type of business structure utilised for company formation in Sharjah. The liability of the partners of this form of entity is limited. Under the Second Federal Company Law, an LLC formed in Sharjah must have minimum of two partners. However, the maximum number of partners must not be more than 50. The managers of an LLC in Sharjah can be a foreign resident. To set up a limited liability company in Sharjah, the minimum amount of investment must be AED 150,000.
- Branch Office
A branch office in Sharjah is a mere extension of the foreign parent company. The branch office can be incorporated either in a Sharjah Free Trade Zone or a Non Sharjah Free Trade Zone. However, there would be restrictions to foreign ownership if the company is incorporated in a non Sharjah Free Trade Zone.
- Joint Stock Companies
Companies can be registered in Sharjah as a Joint Stock Company. Joint Stock Companies are similar to a public company that lists it shares in a public limited stock exchange.
- Sharjah Free Trade Zone Company
There are different free trade zones present in Sharjah. A foreign company can incorporate a branch office in the Sharjah Free Trade Zone. There are lot of benefits of incorporating the company here. The company can be 100% foreign owned.
Minimum Eligibility Criteria for Company Registration in Sharjah
The following eligibility criterion is required for company registration in Sharjah:
An applicant going for the process of company registration in Sharjah would have to own only 49% stake, if the company is incorporated in a non free trade zone. The company must appoint a local Emirati resident to have 51% ownership in the company. Hence no foreign ownership is allowed for this form of entity. If the company is incorporated in the Sharjah Free Trade Zone, then 100% foreign ownership is allowed.
The minimum capital required for company registration in Sharjah is different for every company. For an LLC, the minimum capital required for company incorporation is AED 150,000.
- Foreign Directors
An LLC can appoint foreign managers and directors. The applicant has to make sure that the directors suffice the requirements for company registration in Sharjah. One such requirement would be to secure appropriate visas for the foreign directors.
Procedure for Company Registration in Sharjah
The following procedure is required for company registration in Sharjah:
- Business Type
First and foremost, an applicant has to decide the type of business which is suitable for company registration in Sharjah. If the applicant wants 100% foreign ownership of the company in Sharjah, then the appropriate business structure would be the Sharjah free zone company. However, if the applicant wants some form of independence and control by foreign managers then choosing a limited liability company would be appropriate in Sharjah.
- Local Sponsor
The laws of UAE require a foreign company to ffind a local sponsor. The local sponsor must be a majority shareholder in the company. This would mean that the local sponsor requires to own more than 51% stake in the company. The foreign company must have up to 49% shareholding in the company. However, if the applicant for company registration in Sharjah wants 100% foreign ownership, then going for a free zone company would be appropriate.
- Register the Company with Department of Economic Development
After choosing an appropriate structure and finding a local sponsor, the applicant would have to register with the Department of Economic Development (DED). Apart from this, the applicant can go to the website of the Sharjah Chambers of Commerce for the process of company registration.
- Application for Respective License
After registering the company, the applicant would apply for the respective license. There are three types of license which can be applied for: Trade License, Industrial License and Professional License.
- Trade Name Registration
After securing the trade license, the applicant would have to register the trade name. The trade name would be the name of the company. Such name must be unique to the public. There must not be any intellectual property infringement against the chosen name. The name must be distinctive from all other names.
- Municipality Approval
In the next step, securing approval from the municipality would be required by the applicant.
- Drafting of Memorandum of Association
The applicant would have to draft the memorandum of association. Here the applicant would have to provide valid information regarding the company. Once the memorandum is drafted, it has to be notarised in the respective notary.
- Lease Agreement
From 2019, the government of Sharjah require companies to hire local employees and have a physical office space in Sharjah. If the applicant requires office space in Sharjah, then securing office premises must be carried out. Once this is finalised, the lease agreement has to be notarised.
- Make Payment for License Fee
The applicant has to make payment for the respective license fee. Once this is completed, the approval from the name board has to be secured for the company. With this the process of company registration in Sharjah is complete.
Compliances required for company registration in Sharjah
The following compliances have to be carried out for company registration in Sharjah:
No Corporate Tax is present in Sharjah. Even there is no personal income tax on income accrued in Sharjah. Value Added Tax (VAT) at the rate of 5% is levied since 2018. If dividends are provided by the Sharjah subsidiary, then withholding tax would not be taxed. However, this would only be if the dividends are paid to the foreign parent company.
- Annual General Meeting
According to UAE Commercial Companies Law of 2015, under Article 92 and Article 171, all UAE companies must hold an Annual General Meeting (AGM) within four months of the end of the financial year.
- Penalties for not holding AGM
If an Annual General Meeting is not held as required by the law, then the company is liable to pay fine of AED50,000 to AED 100,000.
- Board Meetings
Board Meetings have to be held at least once a year if such a provision is present in the memorandum of association.
The following documents are required for company registration in Sharjah:
- Application form for company registration
- Business card of the contact person
- Copy of business plan
- Notarized and attested Memorandum of Association (MOA)
- Notarized and attested Articles of Association (AOA)
- Passport copies of the partners and business managers
- Original bank reference letters and license of the partner’s existing company, if applicable
- Lease agreement
- Bank Statements of the Parent Company (Last three months)
- Power of Attorney (For representative)
- Board Resolution of the Foreign parent company
- Feasibility report of the project which is going to be carried out.