It can be said that the legal framework in relation to commercial companies, being taken after the best of the world’s practice, is quite flawless. The French system for classification of companies is mainly used here. There are two main types of companies classified in the system. These companies are companies set up by single owner and commercial enterprises which include 7 types of companies’ corporate forms (including a company with 1 shareholder).
Each and every of these types has its own requirements for the company’s shareholders in UAE.
There are several types of commercial companies permitted on the territory of the United Arab Emirates:
- Partnership companies
- Companies with limited partnership
- Limited Liability Companies
- Joint commercial enterprises
- Open joint stock commercial companies
- Closed joint stock commercial companies
It must be noted, that partnership, as a type of UAE company, is not permitted for foreign corporate entities. All other forms are permitted.
The most prevalent type of commercial companies on territory of UAE is a limited liability company involving foreign investors.
In order to register such company in the United Arab Emirates, in some cases, the requirement of transferring financial assets, as a share capital, which must be transferred as funds or other assets, may be applicable. This requirement is minimal or not applicable at all for a fair segment of business areas and types of companies.
In order to set up a company in UAE, it is mandatory to draft a Memorandum of Association, which includes details of the share capital’s value, business activity, the distribution of shares among the shareholders, the appointment of directors and other terms of a company’s business activity.
This MOA in particular is recognized on the territory of UAE as a legal base for this type of company.
The form of such Memorandum depends on the type of company registered in the United Arab Emirates – LLC (local onshore company), onshore company in one of the free trade zones or offshore company in one of the free trade zones. Depending on the above, the MOA may have its specific differences and distinctions in the procedure of its signed – for some, the signing must be executed in the presence of the public notary or in the presence of the free zone representative, and for others, in the presence of a registered agent of the particular free trade zone.
It must be noted, that for some types of companies, if it has one shareholder only, the signing of MOA is generally not applicable.
