Company Act in Dubai
Dubai’s Company Act was first enabled in 1984 and ever since it has gone through several changes in order to provide local and foreign investors with a suitable business environment. At the beginning of the year, the UAE Government announced a new Company Law would be set in place. Federal Law No.2 of 2015 on Commercial Companies establishes new regulations for those opening companies in Dubai and the other Emirates.
For information about the most significant changes brought to the Company Act you can ask our specialists in Quantum Auditing.
Starting a business according to the Dubai Company Act
The new Company Act only applies to companies operating in Dubai and the other Emirates, free zone companies being subject to different requirements. According to the Company Act 2015, any Company registered in Dubai must have one or more UAE citizens as partners who will own at least 51% of the share capital in the Company. All companies must have a Memorandum of Association which will be drafted in Arabic and legalized by a public notary. Foreign investors opening companies in Dubai may draft the Memorandum in another language provided that they also submit its version in Arabic when supplying the documents with the Trade Register.
From the 1st of July 2015 when the new Company Act was enabled, the shareholders can submit the capital in cash or kind. Companies will also be required to maintain accounting records which will serve as proof of all the Company’s transactions. These records must be kept for at least five years at the Company’s registered office in Dubai. Joint stock companies and limited liability companies must appoint independent auditors.
New provisions in the Dubai Company Act
Other modifications brought to the Dubai Company Act refer to the alteration of the share capital, which is now forbidden if the changes will affect the minimum 51% held by the UAE partner. Foreign investors will now be allowed to register limited liability companies and joint stock companies as holding companies in Dubai. One key provision of the new Dubai Company Act is that a single shareholder is allowed to set up a limited liability Company. Also, in order to register a public joint stock Company a minimum share capital of 30 million AED will be required, while for a private joint stock Company a minimum share capital of 5 million AED was established.
If you want to open a Company in the UAE and need assistance you can contact our experts in Company registration in Dubai.