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Dubai’s speedy rise as a global hub for businesses and new entrepreneurs continues steadily attracting people from all corners of the world who wish to partake in the economy.
And with all the noise about starting one’s own company or business, you may have also been confused as to what company or business niche you should venture into. As such, starting a civil company in Dubai can be a great decision for you.
Dubai’s meteoric rise as the UAE’s business hotspot continues, it is continually attracting business enthusiasts from all over the world, and entrepreneurs interested in starting a civil company aren’t far behind either.
If you are one of those people, then we have brought together a perfect blog on how you can step up and set up your own civil company in the throbbing business heart of the UAE.
A civil company can be defined as a civil establishment that operates as a partnership among two or more professionals to provide their services. These partners can be accountants, doctors, engineers, or any other profession recognised by the Emirates authorities.
The key thing about starting a civil company is that it empowers professionals in a particular field to serve people with their expertise without requiring them to put in a large amount of capital as an investment.
Unlike limited liability companies (LLCs), civil companies have no minimum capital requirement. The nationals of any country can form the civil company but their license is to be supported by the LSA, if the owner or the shareholders of the company are of any other company other than GCC or UAE.
With a solid technical background or someone with expertise in a particular profession, starting a civil company can be an ideal decision. Civil companies are great for:
Foreign investors can participate in a civil company through a partnership agreement with a UAE national sponsor. This allows them to gain a foothold in the Dubai market and leverage the local partner’s expertise.
If you are unable to get hold of a local sponsor (someone with country’s nationality), a local service agent (LSA) can act as a crucial facilitator for the company.
UAE nationals looking to establish a family-run business can benefit from the flexible structure of a civil company. This perfectly works for the family side of the equation as well as the business aspect of it, especially since there isn’t a large sum of investment that is required.
If you are an entrepreneur seeking a simpler and potentially more cost-effective business setup process compared to LLCs, you might find the model of civil companies suitable.
With Dubai providing one of the hottest (pun intended) spots for conducting business, there are also a few businesses that are easier to set up, and a civil company is one of them. There are also other benefits to this, like:
Compared to LLCs, setting up a civil company typically involves fewer formalities and less paperwork. The overall documents involved in getting the green light to start a civil company are a fully furnished application form, a trade name, documents like passports for foreign partners, a notarized agreement with a local service agent (LSA), a partnership agreement, and a few others.
This allows for greater flexibility, especially for businesses with lower initial investment needs. This also ensures that the business model is quite cost-effective and requires minimal capital investment.
Partners can establish profit-sharing arrangements based on their individual contributions to the company. And not only that, but all the profits made by your civil company can be repatriated without any restrictions, giving you an edge over other businesses, right?
In any business, it is essential to plan out everything before you begin. In the context of a civil company, it is important to also consider and learn a few things before you actually begin with the entire process.
A legally binding partnership agreement outlining the rights, responsibilities, and profit-sharing arrangements between the partners is one of the most crucial things in a partnership model of business. A legal facilitator is one of the most vital entities on your initial journey. Firms like CDA can be your biggest support during the initial setup process.
From the get-go, clearly define the business activities your civil company will undertake. This helps the authorities understand the operations of your company better. This might also make acquiring approvals quicker.
Now that we have gotten the initial things done, you can get started with setting up your company properly. This may include:
Apply for getting the initial approval from the DED. This will involve submitting a completed application form, a feasibility study (if required), and a copy of the proposed trade name. Make sure you decide the trade name early on and have all the necessary accompanying documents ready for this.
Once initial approval is granted, you need to get started with drafting and notarizing the MoA. The MoA outlines the company’s name, objectives, share capital (if any), and management structure. This will probably require all the partners to be on board at the time.
Without a trade license, there is no trade about to happen, so apply for the appropriate trade license from the DED, depending on the type of services you are providing via your company. You may require a specific license type depending on your business activities.
It goes without saying, but an office space is crucial to begin operations. You can get started by obtaining a tenancy contract attested by the Dubai Land Department.
Finally, you need to register your company with the Commercial Register Department of the DED. This involves submitting the MoA, trade license, tenancy contract, and passport copies of all partners.
If you plan on bringing in overseas talent, then you need to obtain the necessary work visas through the concerned authorities. Compared to a Limited Liability Company (LLC), a civil company allows you to hire more foreign talent as well.
The total cost of setting up a civil company can vary depending on several factors, including business activities, office space, visa processing, and more. However, here’s a general breakdown of some key expenses:
Initial approval, trade license fees, and company registration fees can range from AED 3,000 to AED 10,000, depending on the complexity of your business activities and chosen license type.
You can’t skip this one; engaging a lawyer or business setup consultant can streamline the process and ensure compliance with regulations from the start. This may approximately range from AED 5,000 to AED 15,000.
Depending on the number of overseas talents you wish to employ and their nationalities, the costs associated with obtaining work visas may vary. It also depends on the type of visa and the profession.
Rental costs for office space can vary significantly in Dubai, depending on location and size. Virtual office solutions can be a cost-effective option in the initial stages, with prices starting around AED 5,000 per year.
Dubai’s business-friendly environment and supportive infrastructure make it an attractive location for establishing a civil company. While foreign ownership limitations exist, the partnership route can present a viable option for entrepreneurs seeking to tap into the Dubai market.
By carefully considering the legalities, associated costs, and long-term strategies, you can navigate the setup process and embark on a rewarding entrepreneurial journey in Dubai.
Every business setup needs a guide or support, especially in a place like Dubai where the business market seems cutthroat. CDA can be your perfect guide to navigate the Dubai market, especially in the initial stages of starting your civil company.
As one of the partners, there might always be a strategy that requires planning, a legal facet that requires a check, or an aspect that requires approval. As such, do you split your focus to attend to all issues at once, or do you delegate it to professionals?
At CDA, we do just that: take care of your key business pillars while you do the actual business. Give us a consultation call if this is what you’re looking for.
Learn more about our business setup services here.
