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Step by Step Guide for LLC Company Formation - #Latest 2024 Update

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LLC Company Formation in Dubai, UAE

Introduction

LLC Company Formation in Dubai: Now You Can Own 100%!

Your heart is set on setting up an LLC company in Dubai in 2024, but don’t know how to go about it. Not just that, you have dozens of questions in your head like how to set up an LLC company in Dubai? And where can I find the best business setup consultant in Dubai who can assist me throughout the Dubai LLC formation process? What is the cost of forming an LLC Company in Dubai? Fret not. Google has brought you to the right people. We have got you. Our step-by-step guide ahead will answer all your doubts. But before that let’s know what exactly an LLC is and why is it preferred by most business persons and entrepreneurs when it comes to company formation in Dubai.

Understanding the basics of LLC formation in Dubai

Before diving into the process, it’s necessary to understand the basics of LLC formation in Dubai. A Limited Liability Company, as the name suggests, is a type of company structure where the liability of the company’s members is limited to their respective shares in the company’s capital. This clearly means that the shareholders’ liability is limited to the amount they have invested in the company and their personal assets are protected in case of any financial or legal issues faced by the company. Combining elements of both a corporation and a partnership, the legal entity not only offers limited liability protection to its owners but also allows for flexible management and profit distribution along with certain tax advantages. And these are some of the features that make LLC a safe and amazing alternative for business setup in Dubai or anywhere in the world.

Furthermore, an LLC in Dubai can have a minimum of two and a maximum of 50 shareholders who can be corporate entities or individuals of any nationality. The minimum share capital requirement varies depending on the type of business activity. Apparently, an LLC offers a flexible and transparent framework for entrepreneurs to establish and operate their companies.

What is an LLC?

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An LLC is a popular business structure that limits personal liability for the owners (called members). This means your personal assets like your car or house are protected from business debts.

Advantages of an LLC in Dubai:

Limited Liability: Your personal finances are shielded.

Wider Business Scope: LLCs allow for a broader range of business activities compared to other structures.

Things to Know:

Local Sponsor Required: To form an LLC, you’ll need a local UAE partner (sponsor) who holds a majority share (51%).

Operational Control: Despite the ownership structure, you can maintain full control over daily operations (often as the 49% owner). Reliable sponsors typically act as silent partners.

 

Your 2024 Guide to LLC Company Formation Process in Dubai

Benefits of LLC Company formation in UAE

 Reduced Barriers to Entry:

  • No Minimum Capital Requirement: Unlike some company structures, LLCs in the UAE don’t have a mandatory minimum amount of capital you need to invest upfront. This makes it easier to get your business started.

Investor-Friendly Environment:

  • Invest and Gain Partnership:  Forming an LLC allows you to become a partner in the company, sharing in its profits and growth.

  • Visa Sponsorship:  An LLC can sponsor visas for you and your employees, simplifying the work visa process in the UAE.

Operational Flexibility:

  • Freedom to Choose Office Location: Unlike some restricted zones, LLCs have the liberty to rent office space anywhere in the UAE mainland, offering greater flexibility for business operations.

  • Simplified Regulations:  LLCs generally face fewer regulations and reporting requirements compared to some other business structures, reducing administrative burdens.

Overall Stability and Security:

  • Strong Legal Framework: The UAE enforces a robust legal system that protects businesses and fosters secure operations for LLCs.

Additional Advantages:

  • Limited Liability Protection: An LLC is a separate legal entity. This structure protects the personal assets of shareholders from business debts.  Shareholders are only liable up to the amount they invested, and their personal assets cannot be seized to cover company losses. This protection is a major advantage for entrepreneurs.

  • Broad Range of Permissible Business Activities:  LLCs allow for a wider selection of legal business activities in the UAE compared to other structures. The Department of Economic Development (DED) maintains a list of over 2,000 approved activities for LLCs.  These activities can vary depending on location and jurisdiction.  You can establish your LLC in various fields like agriculture, finance, technology, and more. The registration process for LLC formation is streamlined, allowing you to obtain a trade license quickly with the right documentation.

  • Freedom to Choose Business Location:  An LLC formation in Dubai allows you to select any legal location for your business. For access to the Dubai market, consider mainland company formation. You can compare office spaces to find the best fit for your needs. Consulting with a business advisor in Dubai can help you find the ideal location considering factors like overhead costs and relevant jurisdiction.

  • Opportunity to Apply for Multiple Visas:  Forming an LLC in Dubai qualifies you for an investor visa, granting residency in the UAE for three years. You can also apply for multiple visas for your family and employees. The standard rule requires 100 sq. ft. of office space per visa application. Discussing your visa needs with DED can be helpful, especially when applying for multiple visas. This allows you to stabilize your work and personal life in the UAE by obtaining visas for your loved ones and employees.

By combining these benefits, LLC company formation in the UAE offers a compelling option for entrepreneurs seeking a business-friendly environment with simplified procedures, investor advantages, operational flexibility, and strong asset protection.

Your 2024 Guide to LLC Company Formation Process in Dubai

Starting an LLC in Dubai requires thorough research and planning. This includes understanding the market demand, identifying your target audience, and assessing the competition. It’s important to have a clear business plan in place, outlining your goals, strategies, and financial projections. Researching the legal requirements and regulations for LLC company formation in Dubai is also crucial to ensure compliance. These include drafting a Memorandum of Association (MOA), specifying the company’s activities, capital, and shareholding structure and most importantly, obtaining an LLC license, categorising and regulating the types of economic activities that may be undertaken, from the Department of Economic Development (DED) categorising and regulating the types of economic activities that may be undertaken.

Additionally, an LLC might be required to team up with a local sponsor, who is a UAE national to perform some crucial tasks for a nominal annual fee. However, it is important to note that as of June 1, 2021, with the implementation of the updated UAE Commercial Companies Law (Federal Decree-Law No. 26 of 2020), it is no longer mandatory for foreign investors to give the local sponsor a 51% share in their mainland limited liability companies. This change applies to various sectors, including trading businesses, and allows foreign investors to own 100% of the shares in mainland LLCs. Without further ado, let’s look at the steps to LLC company formation in Dubai in 2024.

Step 1. Choosing a business activity and trade name

The first step in LLC company formation in Dubai is selecting a business activity and trade name. Dubai offers a wide range of business activities (2000+) across myriad sectors, such as trading, manufacturing, consulting, and more. It’s important to determine a business activity that aligns with your expertise and market demand. Once are sure about a particular business activity, you need to decide a trade name for your company. Need we say that the trade name should comply with the guidelines set by the Department of Economic Development and should reflect the nature of your business? Don’t worry, our LLC company setup experts in Dubai will help you choose not just the perfect trade name for your business but also suitable activities that can be covered by a single LLC trade license.

 

Step 2. Decide the location for your LLC company formation in Dubai

Deciding on the location for an LLC formation in Dubai is a critical decision that can impact the success of your business. It is not as simple as it seems because you want your business location to be not only perfect but also advantageous and economical, given the sky-scraping property rents in Dubai. We have you covered at this point as well. Our LLC company formation experts in Dubai will help you choose the best site for your LLC formation amongst the various free zones and mainland areas by the UAE government, each with its own advantages and considerations.

Step 3. Obtain approvals and licenses required for LLC formation in Dubai

After finalising a trade name and choosing the right location you are required to attain necessary approvals and licenses for your LLC company formation. This includes obtaining initial approval from the DED, which involves submitting relevant documents such as passport copies, NOC from sponsors (if applicable), and a lease agreement for the office space. You also need to apply for a trade license with DED to be able to conduct the chosen business activities in Dubai. Additionally, depending on the nature of your business, you may need to obtain specific industry-related licenses from relevant authorities. For instance, a Food and Beverage License from the Food Safety Department (FSD) under the Dubai Municipality, a Tourism License from the Department of Tourism and Commerce Marketing (DTCM), a Media and Publishing License from the National Media Council (NMC), a Healthcare Service Provider License from Dubai Health Authority (DHA) and so on. Our company setup experts will make the documentation process an easy breeze for you.

Step 4. Draft the Memorandum of Association for LLC formation in Dubai

The Memorandum of Association is a crucial document in LLC company formation in Dubai. It outlines the rights, responsibilities, and ownership structure of the shareholders. The MOA should include details such as the company’s name, business activities, shareholders’ names and shares, and the capital contribution of each shareholder. You will get professional assistance from our legal experts in Dubai in preparing the MOA, as it requires careful consideration of legal requirements and provisions.

Step 5. Open a corporate bank account and deposit share capital

The LLC company formation process doesn’t get completed until you need to open a corporate bank account in Dubai. Our LLC company formation experts suggest you do thorough research and select a reputable bank in Dubai that aligns with your business needs. Typical choices include local and international banks, each offering various services and account types. Submit the necessary documents such as a completed account opening application form, MOA, board resolution, proof of address, utility bills or rental agreements to verify the business address, certificate of incorporation granted by DED (or relevant free zone authority) and passports as well as UAE residency visa copies of shareholders, directors, and authorised signatories.

The bank account should be in the name of the LLC and requires the presence of all shareholders. Along with the bank account opening, you also need to deposit the share capital as mentioned in the MOA. The share capital requirements vary depending on the business activity, and it is crucial to ensure compliance with the regulations set by the Central Bank of the UAE. Once the share capital is deposited, the bank will provide a certificate of deposit, which is required for the final step of company registration. 

Step 6. Company registration and obtaining the trade license

The last step in LLC company formation in Dubai is company registration and obtaining the trade license. This involves submitting all the required documents, including the MOA, bank certificate of deposit, lease agreement, and other relevant approvals, to the DED. The DED will review the documents and issue the trade license if everything is in order with no discrepancies. The trade license is a legal document that allows you to operate your business in Dubai. Once you have obtained the trade license, you can start your business operations and enjoy the benefits of LLC company formation in Dubai.

Last but not Least

The process of LLC company formation in the UAE has been streamlined over the years. Thanks to government initiatives and business setup services. Engaging a business setup consultant can definitely make the whole process of setting up an LLC company in Dubai a cakewalk, from choosing the right business activity and trade name to obtaining necessary approvals and licenses. Not to mention drafting the MOA and ensuring compliance with legal requirements. Not just that but a business setup consultant will save you time, money, effort, and potential pitfalls, allowing you to focus on other aspects of your business.

How much LLC company formation in Dubai will cost me?

The cost of establishing a Limited Liability Company in Dubai can vary based on several factors, including the business activities, the chosen location (mainland or free zone), the size and rent of the office space, additional licenses or permits, visa fees, and other miscellaneous expenses. If you choose Mainland to set up your LLC in Dubai, the cost of obtaining a trade license from the DED can range from AED 10,000 to AED 20,000 or more. On the other hand, free zones in Dubai have their own fee structures. If you decide to open an LLC company in any of the 28 free zones in Dubai then the costs can vary significantly between different free zones.

It’s important to note that these are general estimates, and actual costs may vary based on the specifics of your business and the current regulations. Additionally, fees and regulations may change over time, so it’s crucial to consult with our LLC company setup consultant or directly with the relevant authorities for the most accurate and up-to-date information.

Frequently Asked Questions (FAQs) about LLC Company Formation in Dubai, UAE​

Is an LLC right for my business?

An LLC is a popular choice for many businesses in Dubai.  If you are looking for limited liability protection, operational flexibility, and a simplified setup process, an LLC may be a perfect fit.  Our business advisors can help you assess your specific needs and recommend the most suitable structure.

Great news! Under the current law, any individual or group of people (minimum of 2, maximum of 50) can establish an LLC in Dubai, regardless of their nationality. This simplifies the process and opens exciting opportunities for international businesses to operate with full ownership and control.

Benefits of 100% Foreign Ownership:

  • Greater Control: You have complete decision-making authority over your business operations.
  • Increased Flexibility: Operate your business independently without the involvement of a local sponsor.
  • Simplified Setup: The process becomes more streamlined and efficient.

The cost can vary depending on factors like chosen business activity, license fees, and chosen service provider. Generally, it ranges from AED 20,000 to AED 30,000 (approximately USD 5,400 to USD 8,100).

The specific documents may vary slightly, but common requirements include:

  • Passports of all shareholders and the local sponsor
  • No Objection Certificate (NOC) if a shareholder is currently employed in the UAE
  • Emirates ID for UAE national shareholders
  • Business activity application form
  • Attested tenancy contract for office space
  • Attested Memorandum of Association (MoA)

The timeframe can vary depending on the complexity of your business activity and government processing times. Typically, it can be completed within a few weeks with proper preparation and assistance from a business setup company.

While not mandatory, using a business consultant can significantly streamline the process. They can guide you through legalities, paperwork, and ensure you meet all requirements.

Yes, you can exit your LLC business. There are established procedures for selling your shares or dissolving the company. Consulting with a legal professional is recommended for navigating this process.

Our team of experienced professionals offers comprehensive support throughout the entire LLC formation process, including:

  • Business Activity Selection: We guide you in choosing the most suitable business activity for your goals.
  • Local Sponsor Facilitation: We can help you find a reliable local sponsor if required.
  • Document Preparation: Our team ensures all documents are completed accurately and efficiently.
  • Government Liaison: We handle communication and applications with relevant government authorities.
  • Visa Assistance: We guide you through the visa application process for yourself and your employees.
  • Ongoing Support: We offer ongoing business advisory services to ensure your LLC runs smoothly.

How L.F.L Consultancy can help you set up an LLC company in Dubai

 Setting up an LLC company in Dubai may seem like a daunting task, but with the right guidance and knowledge, it can be a smooth and successful process. Known for providing expert business setup services in Dubai and the UAE, we at LLC company assist entrepreneurs and investors throughout the business formation process from brainwork to paperwork to legwork. We ensure that all the company formation documents are properly prepared, reviewed, and submitted to the relevant authorities, streamlining the process and minimizing delays. We also help new business persons understand local regulations. With our proficient LLC company formation experts in Dubai by your side, you don’t have to worry about:

  • Market research and business planning

  • Choosing the right business activity and location

  • Document preparation and submission

  • Name reservation and approval

  • Local sponsorship arrangements (if applicable)

  • Office space selection and lease agreement

  • Bank account opening

  • Trade license application filing

  • Navigating legal and regulatory challenges

  • Ongoing compliance support

 

Book expert consultancy from one of the best LLC company setup consultants in Dubai at LFL by clicking here. The sooner the better!

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