Foreign investors desiring to establish a business presence in the U.A.E. may choose from several available options. The least expensive method of course is just doing business on an invoice basis. Arguably, the second easiest, low cost entry strategy is to structure agency/distribution agreements with local partners. If the investor desires to actually establish a company, options include forming a limited liability company, establishing a wholly owned free trade zone entity or registering a branch office. Each option has advantages and disadvantages and their attractiveness is dependent on the entity structure best suited to the foreign investors' business desires, taxation issues and desired activities as permitted by license in the U.A.E.
Of the options available, establishing a branch office is arguably the most utilized corporate entity structure for a foreign company. This structure offers the least amount of local control and broadest freedom of operation available to foreign entities.
In order to establish a branch office, a foreign company is required to appoint a U.A.E. citizen or a company wholly owned by U.A.E. citizens to be the branch office's "national agent". A national agent does not contribute capital to the branch office, participate in the operations, management or financial activities of the branch office or bear any of the branch office's liabilities. A national agent is generally compensated by an annual fee which is mutually agreed upon in a U.A.E. National Agent Agreement which appoints the national agent and details the national agent's scope of services.
Although registering a branch office varies from Emirate to Emirate, the variation occurs primarily in navigating the system of numerous governmental ministries and department requirements, including fees, which are the foundation of the registration process in each Emirate. Understanding the documents required to navigate the system is one of two keys to facilitate registration. The other key is to select an experienced local representative to carry the documents through the system.
The documentation and processing steps required for opening a consultancy branch office in Abu Dhabi, U.A.E. are as follows:
I. Required Documents
A. Legalized documents which, once in the U.A.E., must be translated into Arabic by a legal translator and stamped by the appropriate governmental office (Some of the documents required for branch office formation in Abu Dhabi must be legalized, for example in the U.S., that is notarized by the relevant State’s Notary Public, which Notary Public’s qualifications are then certified by the relevant State’s Secretary of State, and each further authenticated by attaching a Certification by the U.S. State Department and by the Embassy of the United Arab Emirates in Washington D.C.):
- Certificate of Good Standing of mother company (the “CGS”) (Also called Certificate of Incorporation/Existence);
- Certificate of Incorporation of mother company (the "CI"). The CI must include the name and date of incorporation, legal status, capital, business activities, and the names, titles and powers of the mother company's representatives;
- Resolution(s) of the Board of Directors of mother company (the "RBD");
- Power Of Attorney from mother company naming the general manager as the attorney-in-fact (the "POA");
- Audited financial statements of the mother company; and,
- Depending on the branch office's business activity or activities, certain documents may be required including the general manager's C.V., degree and professional certificate(s).
B. Application for Reservation of the Branch Office’s Commercial Name (Trade Name) with the DED
A commercial name (trade name) must be reserved from the DED which must be the same name as the mother company. To reserve the name, the DED requires a photocopy of the U.A.E. National Agent Agreement (see I.B.2.); a photocopy of the national agent documentation (see I.C.3.) and of the cover and photo page of family registry certificate of national agent if national agent is a natural person or of authorized representative if national agent is an entity;a photocopy of passport of the general manager (see I.C.2.); and, the commercial name reservation fee (currently AED 1,200). The initial Trade Name Reservation Certificate is valid for one (1) month and may be renewed upon a new fee payment.
C. Leasing Office Space for the Branch Office
The Branch Office must lease office space to comply with local law. Also required are an office posted sign board which includes an Arabic translation of the branch office name, company stamp and the establishment of a local mailing address. A photocopy of the branch office’s commercial name (trade name) license (see II.E.) will likely need to be supplied for any office space leased in the branch office’s name.
D. Licensing of the Branch Office by the MOE
- Once the MOE accepts the license application, it will issue a receipt of payment of the license fee (currently AED 5,000), and will issue a letter to the DED confirming its consent to establishment of the branch (“No Objection Letter”).
- For the license application, the MOE requires submission of photocopies of the CGS, CI and RBD (see I.A.1.-3.).
- Additionally, the MOE requires the completed MOE application form, license fee (currently AED 5,000) and photocopies of the following documents:
- Letter of Appointment from a certified auditor licensed to practice in the U.A.E. confirming its retention by the branch office (see I.C.1.); POA (see I.A.4.);
- General manager’s passport (see I.C.2.);
- If the branch office is a consultancy, the general manager’s C.V., diplomas, and professional certificates (see I.A.6.);
- National agent’s Identity Card (if he is a natural person), or Identity Card of the owner of the U.A.E. – 100% owned company serving in such national agent’s role. When the national agent is a corporate entity, an official certificate must be attached that indicates that all of the corporate entity’s partners are nationals of the U.A.E., along with a copy of the corporate entity’s trade license, certificate of registration in the trade register, and a copy of all U.A.E. specific corporate formation documents of the corporate entity;
- If not set forth in the RBD (see I.A.3.), a written confirmation from the mother company that it will bear all financial liabilities of the branch in the U.A.E., which will need to be legalized, translated and stamped by the appropriate governmental office;
- U.A.E. National Agent Agreement which has been notarized by a Notary Public in the U.A.E. (see I.B.2.) The Notary Public will notarize six (6) copies of the U.A.E. National Agent Agreement (Notary Public will keep one (1) copy and will give five (5) back – one (1) each for the business facilitating the registration, general manager, Abu Dhabi Chamber of Commerce, DED and MOE). Also, the Notary Public will require the branch office’s Trade Name Reservation Certificate (see II.B.), RBD (see I.A.3.), POA (see I.A.4.), passport photocopy for general manager (see I.C.2.) and the applicable Notary Public Fee; and,
- Statement of the main business activities practiced by the mother company abroad, demonstrating previous expertise in the field of activities it wishes to practice in Abu Dhabi and indicating the various countries in which it has performed similar activities and the number of employees expected to be hired by the branch office.
E. Approval from the DED – Issuance of Trade License
The DED will require submission of the No Objection Letter from the MOE, a photocopy of registration fee receipt from the MOE and fees consisting of business activity registration fees, which vary depending upon the business activity(ies) to be performed by the branch office as listed on the application and other fees currently charged by the DED which include, but are not limited to, new license issuing fees, sign board approval fees, commercial registration fees and form typing fees. Additionally the DED will require photocopies of the following documents: valid lease agreement for branch office space in Abu Dhabi (see II.C.); U.A.E. National Agent documentation (see I.C.3.); all of the documents required for licensing by the MOE (see II.D.); Bank Guarantee letter (see II.A.); signature authentication forms (see I.C.4.), Trade Name Reservation Certificate (see II.B) and a specimen of the sign board for the leased branch office premises showing branch name and its Arabic translation (see II.C.).
F. Registration with the Abu Dhabi Chamber of Commerce and Issuance of the Branch Office’s Chamber of Commerce Certificate
The branch office must register with the Abu Dhabi Chamber of Commerce which will issue the branch office a Chamber of Commerce Certificate upon submission of: the Trade License issued by the DED; all of the same documents necessary to obtain both the MOE license (see II.D.) and the DED Trade License (see II.E.); and, payment of the Chamber of Commerce Certificate Fee which varies depending on the type and number of business activity(ies) listed on the Trade License (currently, typically AED 10,000 to AED 15,000 which includes the DED fees listed above).
G. Commercial Registration of the Branch Office by the MOE
To complete the registration of the branch office, the MOE will issue a Certificate of Commercial Registration. To issue such certificate, the MOE will require submission of photocopies of the following documents and fee: Trade License from the DED (see II.E.); Chamber of Commerce Certificate (see II.F.); Bank Guarantee Letter (See II.A.); Letter of Appointment from a certified auditor licensed to practice in the U.A.E. confirming its retention by the branch office (See I.C.1.); the name of the general manager and physical address of the branch office in Abu Dhabi; and, payment of the Commercial Registration Fee (currently AED 10,000 annually).
H. Additional Miscellaneous Fees
Additional fees will be incurred in licensing and registering a branch office such as fees for signage for the branch office, office stamp, document presentation to various governmental offices and to open a branch office file at Ministry of Labor and Immigration for the purpose of hiring employees and applying for applicable visas.