Procedures for establishing a joint stock company in Dubai

Procedures for establishing a joint stock company in Dubai. Partnership-based businesses have become the most powerful and stable in the business community, so the term joint stock companies arose, and the concept of joint stock companies quickly developed to take several legal forms with different facilities and benefits that allow everyone to catch up with the aggressive investment, Learn about the types and details of procedures for establishing a joint stock company in the Emirates.

 

Procedures for establishing a joint stock company in Dubai

Joint stock company

The meaning of a joint stock company is that it is a huge commercial entity owned by more than one person, and the capital is divided into shares of equal value, provided that these shares are tradable.

Note that in this legal form of companies of all types, the responsibility of the partners is limited to the limits of their financial share only, and it is managed by members of the board of directors consisting of 3-11 members, including an elected president.

 

Types of joint stock companies and their most important features

According to what is stated in the UAE Companies Law regarding the procedures for establishing a joint-stock company, it is necessary to specify the type of company. There are three types of joint-stock companies, which differ from each other in some details as follows:

  • Public joint stock company 

Public joint stock companies consist of at least five shareholders, provided that the company’s capital is not less than thirty million dirhams, provided that 30-70% of the shares are subscribed. Public joint stock companies are characterized by

  • Management and ownership are independent of each other. It is not a requirement for the shareholder to be a member of the board of directors
  • It is considered one of the most stable companies, as the company’s position is not affected by the circulation of ownership of shares between people or founders
  • The financial responsibility of shareholders is limited to the value of their shares only, which protects their private property in all circumstances

 

  • Private joint stock company

Private joint stock companies consist of a number of shareholders of not less than two and not more than two hundred shareholders who are related by blood relationship. One person may establish a private joint stock company under the name “Single Person Private Joint Stock Company”, in which the capital is divided into shares of equal value but not transferable. For public subscription, all laws of public joint stock companies apply to it, and it is characterized by:

  • The laws of public joint stock companies are followed, except for public subscriptions, and the shareholder’s financial responsibility is limited to his share in the company only.
  • It can be transformed into a public joint stock company two years after its establishment, provided that the average annual net profit is not less than 10% of the capital value.
  • You can start work immediately after completing the procedures for establishing a private joint stock company without reaching the minimum subscription, unlike public joint stock companies.

 

  • Closed joint stock company 

The term “procedures for establishing a closed joint stock company” raises a kind of confusion regarding the differences between the types of closed and open joint stock companies. Perhaps the clearest difference between both types lies in the validity of the company’s shares. What is meant by the word “closed” is that the company is not listed on the stock market, and the possibility of trading shares is limited to the founders. Only, whose number does not exceed 50 shareholders.

One of the most important features of the establishment of closed Dubai companies is that they are not subject to the oversight and review restrictions of joint-stock companies, which somewhat restrict the independence of the founders. Therefore, closed joint-stock companies are considered more independent compared to public ones.

 

The difference between a public and private joint stock company in the UAE:

Although the joint-stock company system has become clearer in recent years, choosing the legal status of the joint-stock company is still an obstacle for investors due to the many superficial differences between the three types, as previously explained. Here, in brief points, are the differences between public and private joint-stock companies in the Emirates, as they are the two most common types. :

  • Number of shareholders: The number of shareholders in public joint stock companies starts from five individuals and there is no maximum, while the number of shareholders in private companies ranges between 3-200 shareholders only.
  • Minimum capital: The capital in public joint stock companies is not less than 30 million dirhams, while a private joint stock company can be established with a capital starting from 5 million dirhams.
  • General Meeting: The law requires public joint stock companies to hold a legal general meeting under the supervision of the General Assembly to discuss the company’s budget, while private joint stock companies are not subject to this procedure.
  • General taxes: The total percentage of general taxes imposed on the net profits of public joint stock companies is higher compared to private companies, as it starts from 9% of the net profit.

These differences may help you understand the nature of joint stock companies in the UAE market. For more clarity, follow the characteristics of joint stock companies in general.

 

Establishing a joint stock company in Dubai

Whether you intend to establish a public, private, or closed joint stock company, all of the following documents must be provided before starting the procedures for establishing a joint stock company in Dubai: < /span>

  • A trade name reservation certificate from the competent authority, certifying that the trade name is not confused with the name of another company.
  • A copy of the ID card for national shareholders, and a copy of the passport for foreign shareholders.
  • A pledge from the founders to complete all procedures for establishing the company in accordance with the provisions of UAE legislation.
  • CV of the founders and signature sample, and a statement of the professional history and past achievements of all board members.
  • Approval of the members of the Board of Directors, and authorization from the shareholders to approve the members of the Board of Directors.
  • A written acknowledgment from the members of the Board of Directors accepting appointment to the position of the Board of Directors and carrying out the tasks assigned to them.
  • 4 copies of the articles of incorporation, including all conditions for participation and trading in the company’s shares, and it must bear the signature of all shareholders.
  • The company’s bylaws document, which specifies how tasks are accomplished, the powers of employees, and all legal regulations.
  • Two copies of the economic feasibility of the project according to the study and analysis of the local market, and a statement of how to implement the company’s plans.
  • Initial approval obtained from the local authority responsible for the company’s activity.
  • Other security and governmental approvals are also determined depending on the company’s activities.
  • A certified copy of the court notary of the office space contract designated for the company’s management.
  • Local service agent contract for free zone companies, in case of trade on the mainland.

 

Characteristics of joint stock companies

Joint stock companies in Dubai have several distinctive characteristics, which make them the first investment of capital. These characteristics are summarized in:

  • Legal form: The procedures for establishing a joint stock company in Dubai may be the most complex, but its legal position guarantees it many advantages, such as flexibility of trading, management, and others.
  • Legal personality: Once the steps for establishing a company in Dubai are completed, the company becomes a legal entity independent of the shareholders, and all assets and contracts are registered in the name of the company and not the shareholders.
  • Capital: The large size of joint-stock companies’ capital allows them to practice many activities freely, not to mention the actual value of the capital is fixed in the case of trading shares among shareholders.
  • Limited Liability: Board members and shareholders are responsible for the company’s debts only to the extent of their equity shares. Also, in the event of bankruptcy or withdrawal of one of the shareholders, this does not affect the company.
  • Management and incorporation. Here, the Emirates regulates the procedures for establishing a joint stock company into two types to choose the type of company incorporation based on which many details are determined, as explained in the following paragraph.

 

Establishing joint stock companies in the Emirates

Before deciding on the proceduresestablishing a joint stock company in Dubai, you must first determine the location of the company, as the location entails choosing the type of company in terms of the style of establishment and management You may be confused because the types of joint stock companies have previously been explained, whether public, private or closed, but what we mean here relates to the types of companies depending on their location and powers within the country.

In general, there are two types of companies within the Emirates: Internal companies (with their headquarters located inside the country) and external companies (with their headquarters outside the Emirates), but in the case of joint stock companies, it is not possible to register an external joint stock company, as the company’s headquarters and management center must be entirely located within the Emirates, so the investor must choose one of the two types. Interior companies in the UAE:

  • Offshore companies 

What is meant by offshore companies is companies that are established within the UAE, and that have the right to access inside and outside the UAE without restrictions. This type of company can own a local office in any emirate within the country and enhance its local presence, but the presence of an Emirati shareholder who owns at least 51% of the company’s shares.

 

  • Free zone companies 

Within the framework of allowing foreign ownership, the state has allocated several free zones that allow foreign investors to establish their own companies with a 100% ownership rate without the need for the presence of a sponsor or a citizen partner, provided that this company’s dealings are limited to the free zone in which it was established, and it is not entitled to deal with mainland companies. Within the country except through a registered local service agent.

When it comes to the procedures for establishing a joint stock company, the procedures do not differ much between both types, but there are other differences that clarify the advantages of both types.

 

Advantages of establishing a joint stock company in Dubai

Dubai has been known over the past decades as a safe haven for investors from various countries of the world, and the UAE has only provided everything that entrepreneurs aspire to to facilitate their investments and simplify the steps of establishing a company in Dubai for foreigners or citizens. The following are the most important advantages of establishing Dubai joint-stock companies on land. the main:

  • A broader scope of business, as there are thousands of local and international companies that you can deal with and expand your services without restrictions, whether inside or outside the Emirates.
  • Ease of contracting with government agencies, which guarantees you huge commercial projects and proposals and huge profits, not to mention the trust and strategic position that the company obtains as a result of these projects.
  • You can strengthen your presence throughout the country, by establishing other branches of your company, ensuring market dominance and a long-term future inside and outside the Emirates as well.

As for establishing free zone companies, they have another set of advantages, even if they are somewhat limited, but they are also friendly to the business environment:

  • The first and most important advantage of working in free zones is the lower taxes compared to mainland companies.
  • Opening a company in Dubai for foreigners allows them to own 100% without the need for a national sponsor.
  • In terms of investment, your mere presence in the UAE market provides you with hundreds of opportunities.

Mainland companies may be criticized for the high rate of taxes and fees due, but they provide greater opportunities for investment inside and outside the country, while free zone companies are unique in having lower costs in exchange for limited activities in accordance with the policies of the region in which the company is located. In all cases, the conditions and procedures for establishing a joint stock company do not differ. Dubai, they both have almost the same list of conditions.

 

Conditions for establishing a public joint stock company in the UAE:

Establishing a public joint stock company in Dubai requires meeting several conditions:

  • The number of shareholders must not be less than five individuals.
  • Election of members of the Board of Directors, which consists of 3-12 members
  • Preparing the founders’ agreement, articles of incorporation, and the company’s articles of association.
  • The procedures for establishing a joint stock company also include providing a due diligence survey.
  • Drafting the public offering prospectus, and the subscription invitation accompanied by the business plan and feasibility study, to offer 70% of the company’s shares for public subscription.
  • Providing the minimum capital, which starts from 30 million dirhams, and varies depending on the company’s activity, reaching 40 million dirhams for banking companies.

 

Conditions for establishing a private shareholding in the Emirates:

The conditions for establishing private Dubai companies do not differ much from public shareholding, but rather have fewer and simpler conditions than the previous ones:

  • The number of shareholders must not be less than two and not more than 200 shareholders, with the exception of a one-person company that can be established and managed by one legal person.
  • Electing members of the Board of Directors according to the number of shareholders, provided that it does not exceed 11 members.
  • Providing the minimum capital for the private joint-stock company to be five million dirhams.
  • Determine the nominal value of the company’s shares from 1-100 dirhams.
  • Drafting the articles of incorporation and providing a feasibility study and a clear business plan for the company.

 

Procedures for establishing a joint stock company in Dubai?

Once the previous requirements are met, all that remains is for you to begin the procedures for establishing a joint stock company:

  • Obtaining final approval from the Department of Economic Development in the emirate where the company is based.
  • Fill out an application to register a joint stock company, attaching all the aforementioned documents according to the company’s specialization.
  • Your application will be considered within 10 days from the date of submission for a response of approval or rejection.
  • After your application is approved, you must pay the due fees, and then fill out the application to obtain the license.
  • If the application is not accepted, the response will be accompanied by the reasons for rejection, and you can solve the problem and resend your application.

The joint stock company may be established within one week or it may take a few months. The matter depends on the required documents and documents. Once this long list of requirements mentioned above is met and the conditions are met, you can obtain the permit and begin your work immediately.

Through HAM Company, you can establish your company within a few days, regardless of its type, because we have a specialized team with the highest levels of competence and experience in the field of establishing companies, and are always aware of all developments in UAE law, whether at the local or international level, and we can help you in fulfilling all conditions and procedures. Obtaining the permit within days.

All we need to start work is knowing your vision for the company, and the activities you would like to engage in. The research team will immediately begin analyzing the market and exploring the best investment opportunities at the present time according to your vision, and develop an initial plan, and upon approval you will receive a feasibility study at the highest level of accuracy and professionalism. In addition to the articles of incorporation and all required documents, contact us now to start working on your plan.

 

The cost of establishing a company in Dubai:

The cost of establishing a company in Dubai is limited to a few parts, including the following:

  • Registering the trade name and obtaining the trade license, and the cost depends on the category of activities to be practiced.
  • Open a new bank account in the name of the company and deposit the minimum capital of the joint stock company as required.
  • Drafting and documenting the articles of incorporation.
  • The cost of providing the company’s website.
  • Obtaining all required security and government approvals.
  • Market research, feasibility study and auditors’ reports.
  • Work permits and residence visas for new employees.

We cannot determine the actual value of the company’s founding stage, except after learning about the nature of the activity and the appropriate legal form of the company.

 

Is there a minimum capital for a joint-stock company?

Indeed, the procedures for establishing a joint stock company require providing a minimum capital, which varies depending on its type in terms of whether it is a public, private, or closed joint stock company.

The minimum capital for a public joint-stock company is 30 million dirhams, while the capital of private joint-stock companies is reduced to 5 million dirhams, while no minimum limit has been set for establishing closed companies.

 

What are the powers of the Board of Directors in a joint stock company?

According to the articles of Chapter Four of the model articles of association for joint-stock companies, the tasks and powers of the Board of Directors must be specified in the company’s founding documents, and these powers have been clarified in the following articles:

  • The Board of Directors is elected and appointed for a term of only 3 years, and the same member may be reappointed again based on shareholder support.
  • The member, in his personal capacity, must own a number of shares whose financial value is not less than one hundred thousand dirhams.
  • The Board of Directors sets regulations relating to administrative and financial affairs, personnel affairs, their tasks and the limits of their dealings
  • The Council also organizes a special list of the tasks assigned to it and meetings, and the responsibility and competence of each member
  • The Board of Directors must hold a meeting at the company center for all members to discuss the line of work within the company
  • The Board of Directors has the right to appoint the company’s director, deputy director, and authorized agents, and determine the powers of each of them
  • Board members do not have any personal obligation regarding the company’s transactions, profits or debts
  • The Chairman of the Board of Directors and all members are responsible towards the company and competitors for any violation of the law and regulations
  • An annual bonus is paid to the Board of Directors from the annual net profit according to the percentage stipulated in the appointment contract.

 

What is the difference between a joint-stock company and a joint-stock company?

Joint partnership companies are a company consisting of two or more partners who are jointly responsible in all their properties for the company’s obligations. All partners must be citizens of the state, and each partner in it acquires the status of a merchant, so the bankruptcy of the company leads to the bankruptcy of all partners.

Not to mention the difference in procedures for establishing a joint-stock company from a joint-stock company, there are several fundamental differences between joint-stock companies and joint-stock companies, which are:

  • Liability of partners: The responsibility of partners in joint stock companies was limited and limited to the share owned by the shareholder in the shares, while liability in the second type is joint, meaning that the partner is responsible for all of his personal funds for the company’s obligations.
  • Nationality of partners: General partnership companies require that all partners be citizens only, unlike joint stock companies, which allow foreigners to own 100%.
  • Legal personality: All partners in joint-liability companies acquire the status of a merchant, and the bankruptcy of the company leads to their bankruptcy. Unlike joint-stock companies, the bankruptcy or success of the company has no relation to the special status of shareholders.
  • Capital: One of the joint partners may not relinquish his share in the company except after the approval of all partners, but in joint stock companies all shareholders can trade their shares without administrative approval.

 

What is the difference between a joint stock company and a limited liability company?

Limited liability companies are very similar to joint stock companies, and we can say that they are the smaller type of joint stock companies, as the most important differences between both types are as follows:

  • Number of partners: The number of partners is limited to between 2-50 shareholders only, and one person, provided that he is a citizen of the country, can establish a limited liability company.
  • Distribution of profits and losses: In limited liability companies, profits are not required to be distributed according to the partner’s share, but rather they are distributed according to the proportions agreed upon in the articles of incorporation.
  • The cost of establishing a company in Dubai of this type is considered less expensive than joint-stock companies, as the minimum capital for limited liability companies is only five hundred thousand dirhams.

 

How to convert a limited liability company to a joint stock company?

Limited liability companies may transform into a public or private joint stock company if the following conditions are met:

  • The company must have at least two financial years.
  • All partners agree to the transfer decision.
  • Appointing a financial and legal consultant to prepare the transformation plan, study the company’s evaluation, and structure the stock offering process, as it is required that no less than 30% of the company’s shares be offered for public subscription.
  • The company’s net profit during the previous two years should not be less than 10% of the total capital.
  • Obtaining the approval of the local authority and competent bodies, and then starting the public offering phase
  • After closing the IPO phase, the company’s founding assembly will be held and registered with the Authority.

The possibility of converting to joint stock companies is not limited to limited liability companies only, but all companies can amend the legal form to become a public joint stock company.

 

How to convert the company into a public joint stock?

Any company can request to convert to a public shareholding after two years have passed since its founding and all necessary conditions have been met depending on the activity practiced by the company, and then follow the following procedures:

  • Approval of all partners on the decision to transform the legal form of the company.
  • Drafting a new incorporation contract for the company in light of the conditions and procedures for establishing a joint stock company.
  • The General Assembly approved the company’s amended articles of association and the new feasibility study.
  • Obtaining the approval of the committee formed by the Ministry of Economy and the Securities and Commodities Authority.
  • A statement from the auditors of the company’s capital, reserves, and annual net profits.
  • Evaluation of the company’s in-kind shares in accordance with the provisions of the laws for establishing a joint stock company in Dubai.
  • Announcing the transformation decision in two local newspapers, one of them in Arabic, for 5 days in a row.
  • If there is no objection to the conversion decision, the company will be converted into a public shareholding to open the door for public subscription.
  • After the end of the public offering phase, the company legally becomes a public shareholding company and has the right to practice its activities in light of the new work system.

 

Why invest in Dubai?

Dubai is the premier financial and investment hub for the Middle East, Africa, and South Asia as well, providing the best regulatory and judicial frameworks for establishing companies and supporting investment, as well as the world of endless digital services and facilities it provides to investors from all sides, such as:

  • Distinctive infrastructure, which provides investors with all public services and facilities of the highest quality.
  • Investment diversification: The trade and investment sector is no longer limited to the oil industry only, but rather its scope has expanded to include various industries and services.
  • Tax system: The UAE is unique in developing one of the best tax systems in the world, which guarantees the investor to pay the lowest percentage of taxes due or complete exemption.
  • High purchasing power. The UAE is ranked first as the best country in the Middle East in terms of high standard of living and purchasing power, as well as the growth of the tourism sector, as more than 15 million tourists visit it annually.

Not to mention the privileges it provides to investors once they obtain initial approval to establish their businesses within the country, and the high technical and advisory level, where you can easily access cadres and consultants for managing and establishing companies and take advice from those with experience.

 

×

WhatsApp Chat

 

×