The Commercial Companies Law 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 service agent is appointed.
A branch office, legally regarded as part of its parent company, is a full-fledged business, permitted to perform contracts or conduct other activities as specified in its license. A branch office may only be engaged in activities similar to those of its parent company.
A representative office, on the other hand, is limited to promoting its parent company’s activities, i.e. to gather information and soliciting orders and projects to be performed by the company’s head office. Representative offices are also limited in the number of employees that they may sponsor.
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:
Business plan, current profile and last two year financial statements should be submitted to prove the credibility of the company. The Companies who have got a trading nature should have manufacturing units at its country of origin. All branch ventures are subject to an approval from Ministry of Economy. Procedures are almost same for representative office setup except two year financial statements are not mandatory.
The procedure and cost breakup will be given upon request.