Representative Office in UAE
Set Up a Representative Office in the UAE
Under UAE Federal Law No. 2 of 2015 on Commercial Companies, foreign companies, even those fully owned by individuals outside the UAE, can set up a Representative Office in the country. A Representative Office functions as either a regional administrative hub or offers support for the parent company’s products/services in the local market. Importing goods or engaging in trade is not allowed for a Representative Office. Additionally, aside from these limitations, a Representative Office cannot access credit facilities. Nevertheless, it can maintain a bank account to cover its local expenditures.
What is the difference between a Branch Office and a Representative Office?
The primary distinction is that a Branch Office can engage in commercial activities within the United Arab Emirates, while a Representative Office cannot. Instead, a Representative Office must delegate all business activities to its parent company. In essence, a Representative Office is not permitted to generate profits. However, it can maintain a bank account to cover its operational costs, resulting in a negative cash balance at the end of the fiscal year. This differentiates a Representative Office from a Branch Office, which can conduct business, generate profits, and potentially have a positive cash balance by the end of the financial year.
Mainland Company
Sole Proprietorship→
CIvil Company →
Limited Liability Company →
Branch Office →
Representative Office →
How to Establish a Representative Office in the UAE?
The initial step is to appoint a Local Service Agent, who must be either an Emirati (an individual holding UAE citizenship) or a company registered in the UAE that is fully owned by Emiratis. This Local Service Agent will act on behalf of your company with all government agencies and will receive a fee in compensation for their services.
*The fee for the Local Service Agent is variable and depends on the agreement reached between both parties. Typically, fees may increase for more complex paperwork, like visa applications. With a Representative Office, there’s flexibility in applying for multiple work visas.
After securing a Local Service Agent, the next step is to finalize your trade name. Ideally, a Representative Office should share the same name as its parent company. However, challenges may arise if the name is already registered in the UAE or does not comply with naming regulations, such as avoiding names related to religion, countries, or cities.
To address potential naming conflicts, you could consider appending ‘Middle East’ to your parent company’s name. For other naming issues, a company formation expert can assist in finding a suitable alternative.
Once your trade name is settled, the Local Service Agent will submit a detailed application to the Ministry of Economy on your behalf. This application should outline your parent company’s business activities and the address of its global headquarters if it operates internationally.
Given that certain business activities are restricted in the UAE, having a business setup specialist can be invaluable. They can guide you in choosing a Local Service Agent and navigating the process.
Upon receiving your application, the Ministry of Economy reviews it and issues an Approval Letter to the Department of Economic Development in the chosen emirate for your Representative Office. Additionally, you or your Local Service Agent must submit a lease agreement for the proposed commercial space and audited financial statements of your parent company for the past two years, duly attested by a UAE auditor.
Once approved, the Department of Economic Development will issue a Business License, allowing you to open a bank account. Due to stringent anti-money laundering regulations, the bank might request further documentation, such as your company’s structure and details of shareholders holding more than a 5% stake. If documents are in a foreign language, they will require translation and legal attestation.
Why Choose a Company Formation Specialist for Setting Up a Representative Office?
We are a team of seasoned business setup specialists with extensive experience in company formation. Our expertise ensures a seamless process at every step, expediting the acquisition of your Business License for your Representative Office in the UAE. Our dedicated consultants will guide you through the requirements, including a refundable deposit of AED 50,000 with the Ministry of Economy, and the annual renewal of the Business License.
Our commitment extends to providing comprehensive support to help you operate your Representative Office effectively in the UAE. Collaborating closely with our legal team and a panel of auditors, we strive to deliver an experience that meets international standards when establishing a Representative Office in the UAE.
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