BRANCH OFFICE OR REPRESENTATIVE OFFICE SET UP:
The Companies Law, in article (313) allows a foreign company to exercise its main activity in the UAE by opening a branch or a representative office.
The difference between the two is that the foreign company which opens a branch in the UAE may exercise freely the activities for which it is licensed whereas a representative office may practice only promotional business for the products and services provided by the parent company.
Unlike a foreign branch a representative office cannot conduct business operation or market directly its product. In order to engage a foreign branch to conduct its operation in UAE it should obtain a license from the Ministry of Economy & Planning prior to obtain the license from the concerned authority in the respective Emirate. Foreign companies licensed to operate in UAE may not start their activities before being inscribed in the Ministry's Register of foreign services.
An agent should be a UAE national. A service agent is not an empowered agent who can bind his principal as explained in the definition of the term agents in the Commercial Companies Law. A service agent is not responsible to undertake any financial obligations concerning the activities of the company's branch or office within the UAE or abroad. He should not interfere in the matters related to the company's management or activities.
His duties towards the company and others are confined to providing such services as required by the principal. These services usually include obtaining of entry/residence permits, acquiring of the necessary licenses or facilitating the processing of its transactions with the government authorities.
The service agent is remunerated in lump sum for the services rendered to the foreign company, which sum shall be the subject of an agreement between him and the company.
Foreign company's branch or representative offices are required to submit a bank guarantee of AED 50,000 favoring the ministry being part of the license processing procedure. The license of the foreign company's branch/representative office shall be cancelled if it is not renewed within two years after the expiry date and the fee due to the ministry shall be deducted from the guarantee.
Branches and Representative Offices of Foreign Commercial Companies
The Commercial Companies Law also covers the formation and regulation of branches and representative offices of foreign companies in the UAE and stipulates that they may be 100% foreign owned, provided a local agent is appointed.
Only UAE nationals or companies 100% owned by UAE nationals may be appointed as local service agents. Local agents - also sometimes referred to as sponsors - are not involved in the operations of the company but assist in obtaining visas, labour cards, etc and are paid a lump sum and/or a percentage of profits or turnover. In general, branches and offices of foreign commercial companies are not licensed to engage in importing activity except for re-export or in the case of products of a highly technical nature. To establish a branch or representative office in Dubai the following documents are required:
The difference between the two is that the foreign company which opens a branch in the UAE may exercise freely the activities for which it is licensed whereas a representative office may practice only promotional business for the products and services provided by the parent company.
Unlike a foreign branch a representative office cannot conduct business operation or market directly its product. In order to engage a foreign branch to conduct its operation in UAE it should obtain a license from the Ministry of Economy & Planning prior to obtain the license from the concerned authority in the respective Emirate. Foreign companies licensed to operate in UAE may not start their activities before being inscribed in the Ministry's Register of foreign services.
An agent should be a UAE national. A service agent is not an empowered agent who can bind his principal as explained in the definition of the term agents in the Commercial Companies Law. A service agent is not responsible to undertake any financial obligations concerning the activities of the company's branch or office within the UAE or abroad. He should not interfere in the matters related to the company's management or activities.
His duties towards the company and others are confined to providing such services as required by the principal. These services usually include obtaining of entry/residence permits, acquiring of the necessary licenses or facilitating the processing of its transactions with the government authorities.
The service agent is remunerated in lump sum for the services rendered to the foreign company, which sum shall be the subject of an agreement between him and the company.
Foreign company's branch or representative offices are required to submit a bank guarantee of AED 50,000 favoring the ministry being part of the license processing procedure. The license of the foreign company's branch/representative office shall be cancelled if it is not renewed within two years after the expiry date and the fee due to the ministry shall be deducted from the guarantee.
Branches and Representative Offices of Foreign Commercial Companies
The Commercial Companies Law also covers the formation and regulation of branches and representative offices of foreign companies in the UAE and stipulates that they may be 100% foreign owned, provided a local agent is appointed.
Only UAE nationals or companies 100% owned by UAE nationals may be appointed as local service agents. Local agents - also sometimes referred to as sponsors - are not involved in the operations of the company but assist in obtaining visas, labour cards, etc and are paid a lump sum and/or a percentage of profits or turnover. In general, branches and offices of foreign commercial companies are not licensed to engage in importing activity except for re-export or in the case of products of a highly technical nature. To establish a branch or representative office in Dubai the following documents are required:
- Company registration certificate
- Board of directors’ resolution for establishing a branch
- True copy of company’s memorandum / articles of association
- Power of Attorney to the representative
- Financial statements for the last two years
- Local service agency agreement
- Details of local service agent
- Company profile