Individuals, and overseas companies, can establish a trading company with their own licence, as long as their activities are defined by the various local governments as commercial in nature. In the case of Dubai, most retail or trading activities are considered suitable under a commercial licence and the company formed to carry out this activity is a Limited Liability Company (LLC). The limit of the liability in this case is normally 300,000 Dirhams. In most industry sectors, the foreign party is restricted to a maximum of 49% ownership of the shares in the company, and must find a local partner to hold the majority 51% shareholding. Certain industry sectors require that the local shareholder retain 100% of the shares in the company, for example real estate and manpower services. We are aware of some changes in the Commercial Companies Law that may increase this maximum allowed foreign shareholding for certain industry sectors, but the exact details are expected shortly. Links Group have the capacity to act as local ‘nominee’ partner for foreign parties who require an LLC partner. Generally, we would agree to hold the 51% shareholding in trust for the foreign party, and provide through management and supplemental agreements, 100% control of the company’s management and finances to the foreign partner. We would also rescind any right to profits, assets, IP or interests in exchange for an annual flat service fee. Links would demonstrate our added value in undertaking all the company formation work and relieving the foreign party from this onerous task. We would normally undertake the labour and immigration services for the new company and the individual foreign parties.
Quite often clients ask us for advice on the legitimacy of establishing their new business in the various Free Zones that exist in Dubai and the other Emirates. Prospective businesses should be aware of the general requirements of each Emirate, that the law requires that, “A company with a majority of their target market or audience for their product or service located in the Emirate, should have a legal presence in that Emirate.” Businesses in a Free Zone should only trade with, or service businesses in that free Zone, other Free Zones or off-shore. Should a company qualify for establishment within a Free Zone, they should contact the Free Zone Authority for advice regarding company formation.
During the first year of operation, Links Group recognised a gap in the market in the support of micro-businesses emerging into these new markets, especially in Dubai. We structured an incubator program that supports mostly small enterprises to establish new Links Group joint ventures that would trade under the auspices of a Links Group licence. Whilst not the perfect solution for all new businesses, this entrepreneur program has proved quite successful for many. The new business is required by law to identify its brand as a member of the Links Group of Companies, but we have found that this is a very cost-effective and rapid route to market. The opportunity exists to transition from joint venture to own licence company structure when the new business has gained sufficient sector knowledge and experience.
Links Group Incubation Services
It is recognised around the world that most entrepreneurs start quite small, sometimes with only the one person working a day job whilst building their empire in their bedroom. The saying, “Rome wasn’t built in a day” applies equally in the business world. There appears not to be any support for these young micro-businesses in starting up in the UAE. At Links, we have successfully grown a number of small businesses by allowing them to enter our incubator program.
The program provides for an unincorporated joint venture to be established that would allow the new business to be established as an autonomous division of Links Group. This arrangement is in line with Article 56 of the Federal Commercial Companies Law. It is normal to employ the entrepreneur and then sub-contract them into running the division. We would then provide the entrepreneur with a management agreement that would give that person 100% control of the management and finances of the business. We would have no right to any of your profits, IP or assets. There are significant cost savings in not having to meet all the regulations applied if the micro-business was to seek to gain their own licence. The timescale to achieve the establishment of the division and any labour and immigration support is usually less than 30 working days.
Links Group can offer this rapid and cost-effective route to market in industry sectors in whish we hold a licence. It does require that the micro-business apply for acceptance into the program, and would require that a business plan and background on the individual accompany the application.
The incubator program provides a real-time test of the validity of the business concept at quite low risk. Should the entrepreneur decide not to continue with the new business, Links Group require 90 days notice for closure with no exit fees. However, should the entrepreneur decide to increase the business in line with any success, Links Group can assist in gaining a licence for the business and the complete company formation process.
Links Group Setups
Links Group has supported over 200 company setups in the UAE and Qatar. The companies that have been assisted range form large multi-nationals through to one-man micro-businesses. A growth in the number of construction services companies has been indicative of the phenomenal surge in this sector due to recent relaxation of laws relating to foreign ownership. Support services to the sector such as design consultants also require fast route to market to give them a competitive edge.
In line with the vision of the Rulers and Government, Links have specialised in emerging sectors such as Real Estate, Travel & Tourism and support to the construction industry.
A key strength of the Links proposition is the partnerships nurtured with professional services such as Legal, Accounting & Audit, Banking, IT and Marketing. Links have completed thorough due diligence on these independent firms and can provide relevant introductions to start-up companies on a ‘best of breed’ basis.
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