There are generally two pre-requisites of setting up an office in one of the Gulf States.
Firstly, unless you are exempt, you need to have a national of that country who is either an individual or a company wholly owned by nationals involved in your Gulf business to a greater or lesser extent. Exemptions are sometimes given to independent professionals.
Secondly, you will need a licence from the concerned authority in the country. In the UAE, for example, his is the Municipality in the Emirate in which your office is established. The licence is very important not only because it is illegal not to have one but also because without a licence, you won’t get your own dedicated phone line electricity supply, and be able to obtain visas etc. for staff.
Before getting the licence you have to establish a business structure.
The Federal Companies law requires that at least 51% of the shares must be held by a UAE national in the emirate. Similar rules apply in the other Gulf States.
It is also possible to have an agreement with the local partner that he takes less than 51% of the profits – i.e. share the profits in a different ratio from the capital.
The Federal law in the UAE provides for several different types of company formation but the limited liability company, not so different from a private company in England, is generally used by foreigners. There are standard forms of Articles of Association to be used when forming the company.
If you do not want to form a local company, you may be able to establish either a branch office or a representative office. Whether you go for a branch or a representative office, you will need a local service agent (“sponsor”) who, in return for an agreed fee, will assist with the formalities, residence permits etc.
View the other posts in this 4 part series:
- Doing Business In the Gulf And Middle East (introduction)
- Free Zones in the Gulf
- Appointing Agents In the Gulf
