UAE Law and Practice Contributed by: Amir Alkhaja, Areen Jayousi, Gulsun Ozmen and Alia AlMarzooqi, Habib Al Mulla & Partners
and a minimum share capital of AED30 million for listed companies, with higher thresholds applicable in certain regulated sectors. PJSCs are subject to comprehensive corporate governance requirements under the SCA’s Corporate Governance Code and are the appropriate vehicle for businesses seeking access to public equity capital markets or looking to raise capital from a broad investor base. Private Joint Stock Company (PrJSC) A PrJSC has a similar structure to a PJSC but its shares are not offered to the public and may not be listed on any exchange. It requires a minimum of two shareholders and a minimum share capital of AED5 million. This vehicle is typically used by larger private enterprises and family-owned business groups, and as a holding structure or a transitional vehicle for com - panies contemplating a future public listing. Branch of a Foreign Company A foreign company may establish a branch on the UAE mainland. A branch is not a separate legal entity; the parent company is directly and fully liable for all obli - gations incurred by the branch. In general, foreign branches are no longer required to appoint a local service agent (LSA). However, certain regulated or restricted activities may still require the appointment of an LSA, who must be either a UAE national indi - vidual or a company wholly owned by UAE nationals. The LSA’s role is limited to administrative and govern - mental liaison functions, and the LSA does not hold any ownership interest in the branch or entitlement to its profits. A branch is most suited to foreign companies under - taking a defined project or specific activity in the UAE without establishing a locally incorporated entity. A branch may also be established as a representative office, in which case its activities are limited to market - ing and promotional functions and facilitating the par - ent company’s business relationships and contracts within the UAE. Free Zone Entities Each UAE free zone offers its own categories of legal entity, most commonly a free zone establishment (FZE, with a single shareholder) and a free zone company (FZCO, with multiple shareholders). These entities
benefit from 100% foreign ownership, full repatriation of profits and capital, and potential tax advantages. However, free zone entities are generally restricted from conducting direct commercial activities with mainland UAE customers and must work through a separately licensed mainland entity or appointed dis - tributor to do so. 3.2 Incorporation Process Key Steps Establishing an LLC involves the following principal steps. • The applicant must first reserve a trade name with the relevant DED. The proposed trade name must comply with applicable naming regulations and must not contravene public morals, imply affiliation with a government authority or otherwise mislead the public. • A follow-up receipt in respect of the proposed activities, shareholder(s) and general manager must then be obtained. This confirms that the proposed activities are permissible and, where applicable, identifies any additional approvals or pre-approvals required from the relevant sector regulator. • The MOA, setting out the company’s name, objects, share capital, shareholders and manage - ment arrangements, must be drafted, executed by all shareholders and notarised by a UAE notary. • The company must secure premises suitable for its licensed activities. Depending on the nature of the activity and the relevant DED requirements, this may consist of a physical office, virtual office or flexi-desk arrangement. The lease agreement must be registered through the applicable Ejari system or equivalent tenancy registration platform in the relevant emirate. • The notarised MOA, shareholder and manager identification documents, Ejari certificate, UBO details and any additional supporting documents must then be submitted to the relevant DED to obtain the payment voucher for licence issuance. • Where any approval or pre-approval from a relevant sector regulator is required, such approval must be obtained prior to submission of the licensing documents to the DED for issuance of the payment voucher.
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