Easy steps to opening branch office

OPENING A BRANCH OFFICE IN THE UNITED ARAB EMIRATES

This Article is intended to guide all the foreign companies who are looking forward to establish their branch company in the United Arab Emirates. All the information contained herein is obtained from our practical experience and is subject to change as per the regulations of the local government authorities.

A branch company is an outlet of a company or, otherwise,  an organization that – unlike a subsidiary – does not constitute a separate legal entity, while being physically separated from the organization’s main office.

This is a more smart way for international business owners to own fully their company in the United Arab Emirates.

Within a branch office,  all the normal commercial activities of mother company can still be carried out in the UAE and profits earning is permissible. It is licensed for the purposes set out in its commercial licence but may only engage in activities similar to those carried on by the foreign company in its home jurisdiction.

Apart from opening a branch office, an international investor seeking to establishing her footprint in the United Arab Emirates’ business soil can also chose the option of opening a representative office. This is equally a smart way of retaining 100 per cent ownership but with restrictions as not being permitted to earn profits within the UAE and the activities it may undertake in the UAE are limited to marketing and/or promoting its foreign parent company products and services.

In a nutshell, the actual procedure for establishing either a branch or representative office is very similar and this forms the core purpose of this article.

Documents required from the Parent Company

  1. Certificate of Incorporation of the Parent Company
  2. Memorandum and Article of Association of the Parent company
  3. Share Certificate of the Parent company
  4. Board Resolutions for opening the Branch Company
  5. Certificate of Good standing of the Parent Company
  6. Certificate of Incumbency, in case the Certificate of Incorporation is not stipulating activities of the Parent Company.
  7. Power of Attorney to the Manager of the Branch, issued by the Parent Company.
  8. Tenancy contract of the new Branch Company.

NOTE: All the above documents shall be attested by the notary public, ministry of foreign affairs and UAE Consulate of the parent country. Thereafter, all the documents are attested from the Ministry of foreign affairs in UAE.

Documents required from the Manager:

  1. Passport copy
  2. Education Qualifications (for certain activities only)

Documents required from the Local Service Agreement
(Only in case where a branch company will be situated in Mainland area)

  1. Passport copy of the Local service Agent
  2. If the Local service agent is the company, then trade license of that company
  3. Labour card/e-signature card of the Local Service Agent (if there is no such document available, then in such case, a document from the court stating the local is not working anywhere)
  4. Local Service Agent Agreement with the Parent Company.

NOTE: The Local Service Agent Agreement has to be attested by the notary public of the emirates where the Branch Company will be established. This document can be signed by the Manager on behalf of the Parent Company.

Having fully listed all the necessary documents need for activating the process of branch office opening in the United Arab Emirates, we’d now dive into the process activation steps:

STEPS to register a Branch Office of a foreign company

  1. All the documents are attested in the country where the parent company is located. Thereafter, all the documents are again attested from the Ministry of foreign affairs in the UAE.
  2. Application is made to the Department of Economic Development (DED) for the Trade Name Approval, which is accompanied with all the attested documents of the Parent company. The DED provides the approval within 3 business days.
  3. Thereafter, an application is made to Ministry of Economy (MOE) for the Branch approval. Such application should be submitted along with Local Service Agency Agreement and all other documents. The MOE reviews the documents and if all the documents are complete, provides the approval within 5 working days.
  4. Again the application is made to DED, along with the MOE approval. Here, DED reviews the documents again and may ask for any additional documents. If there are any external approvals required by any government authority, it has to be done at this stage. DED issues the Trade License upon reviewing all the documents. If there is no additional document required, this process may take another 4 to 5 working days.

5. After the Final License is issued by the DED, the Branch Company has to immediately initiate procedures for bank account opening. After the bank account is opened, the Branch Company has to provide a security deposit of AED 50,000. The proof of the security deposit has to be submitted to the MOE within One (1) Month from the date of issuance of the final license. If this is not submitted within time, the MOE may cancel the license or may charge additional penalties.

From our experience and professional attitude, we can assist in obtaining Branch Company license in more efficient manner. For details, inquiries, or, for knowing about our value added services, kindly feel free to contact us at info@awsuwaidi-advocates.com.

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