UAE Law and Practice Contributed by: Amir Alkhaja, Gerry Rogers, Daria Selivanova and Danila Kriuchkov, Habib Al Mulla & Partners
Representative office A representative office has a narrower role. • It cannot conduct commercial or revenue- generating activities. • Its function is limited to marketing, promotion or liaison work for the parent company. • It is suitable for businesses that want to main - tain a presence in the UAE without engaging in local transactions. • Like branches, they must register with the rel - evant authority and may need a local service In numerous economic free zones across the UAE, foreign investors can establish companies with 100% foreign ownership regardless of sec - tor (free zones are outside the mainland jurisdic - tion for foreign ownership purposes). Common free zone entities include the Free Zone Estab - lishment (FZE) or Free Zone Company (FZ-LLC), which are essentially LLCs governed by the free zone’s own regulations. They offer limited liability and can often be formed with a single shareholder. Free zone companies are ideal for export-oriented businesses, logistics, holding companies, or regional offices, especially when the business does not require selling in the UAE mainland (or can do so via distributors). Financial Free Zone Companies DIFC and ADGM provide a range of special pur - pose vehicles (SPVs). These SPVs are available to support asset protection, risk isolation, invest - ment structuring and wealth management. The SPVs include: • prescribed companies (in DIFC) and restricted scope companies (in ADGM); • family offices; • holding companies; agent in certain cases. Free Zone Companies
• protected cell companies; • foundations; and • active enterprise structure.
These vehicles are typically used for wealth planning, asset protection, investment holding or risk segregation purposes. Partnerships The UAE also provides for general and limited partnerships under the Commercial Companies Law. A general partnership must consist entirely of UAE nationals – it is rarely used by foreign investors since foreigners cannot be general partners. Sole Establishments A foreign individual can set up a sole proprietor - ship (establishment) to conduct business in a professional or certain commercial fields. This is not a separate legal entity from the owner – the individual owner is fully liable for debts. For commercial sole proprietorships (trading busi - nesses), historically a UAE national local service agent was needed and the licence was often treated similarly to a branch. Other Specialised Legal Forms For larger ventures, the UAE also offers an option of a JSC. JSCs could be classified into public and private companies. For certain professional services (law, consul - tancy, medical, engineering), foreigners may establish a civil partnership or sole proprietor - ship (professional licence). These entities allow 100% foreign ownership for professionals, but they do not limit liability. Often, a UAE national “service agent” is formally required for licensing purposes for foreign professionals, but the agent has no equity or control.
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