There are a lot of options available to you when it comes to company formation in Dubai. As a result, it is easy for newcomers to get overwhelmed by the number of available options available to them. Additionally, not all the options will be the best fit for them.
For example, if you want to raise a lot of capital to fund your business operations, then a public shareholding company will be the ideal choice for you instead of a Sole Proprietorship. That is why today we are going to look into all the types of company formation in Dubai so that you can make an informed decision when selecting a company structure for your business.
Types of Company Formation in Dubai
Even though there are many types of company structures to choose from in Dubai, we are going to take a look at the six most popular ones. These six company structures are the most popular ones in the city because they take care of the needs of a majority of the types of company formation in Dubai.
This means that, unless you want to start a very unique business with a different focus than the norm, then you can find your ideal company formation in Dubai through these six options.
Here are the six most popular types of company formation in Dubai:
1. Limited Liability Company
Limited Liability Company is the most popular type of legal structure for a company all around the world. This is mainly due to the fact that your personal properties are safeguarded from the operations of your business.
This means that in case of bankruptcy or liquidation of your business, your personal properties will be safe. As a result, many entrepreneurs like to start off their new businesses with the Limited Liability Company structure.
One of the setbacks of Limited Liability Companies is that it is very hard to raise funds to expand your business operations. For example, if you want to take a loan from a bank, you need to have something as collateral. However, since your personal belongings and properties are separate in a Limited Liability Company, you cannot easily get a loan.
2. General Partnership
General partnerships are how most companies start off when they do not want to be restrained by the laws related to a Limited Liability Company. Additionally, a general partnership can have two or more partners.
This is a popular type of company structure because most beginners do not want to embark on a journey in the business world alone. As a result, most of the businesses formed are general partnerships.
A general partnership is dissolved when one of the partners is no longer available for various reasons such as bankruptcy, death, or voluntary withdrawal. However, if the other partners wish to continue the business without the said partner, then the general partnership can continue.
3. Limited Partnership
A limited partnership is the combination of a general partnership and a limited liability company. As a result, it is often known as a limited liability partnership.
As we have mentioned before the personal properties of the partners in the company will be safe in case of any unforeseen disasters in the business. Additionally, it also combines all the factors of a general partnership and limited liability company except for a few.
In a general partnership, the partners can have their name in the company name. However, in a Limited Partnership, the partners cannot have their names in the company name. Additionally, general partnerships allow you to keep your personal properties as collateral when applying for a loan, which cannot be done in a Limited Partnership.
4. Joint Venture
A joint venture in the UAE is also referred to as a ‘Consortium’. Additionally, there must be a UAE national as an owner in the venture. At the same time, only the UAE national can have his or her name on the company name. Other than this, a joint venture is similar to a general partnership regarding the laws and regulations that the company is subjected to.
A joint venture is preferable when you want to start a business with an Emirati. Additionally, the Emirati must own at least 51% of the company. Furthermore, his or her ownership percentage should never go below 51% in the company in case of any future expansion.
5. Public Shareholding Company
A public shareholding company is the best choice if you need a lot of capital to fund your business operations. This is because, when you have a public shareholding company, anyone can invest in your company in exchange for partial ownership of the company.
To clarify, the size of their ownership in the company will be the percentage of their investment to the total investment in the company.
A public shareholding company in the UAE must have at least ten shareholders in the company. Additionally, at least 55% of the shares in the company must be available to the general public.
6. Private Shareholding Company
A private shareholding company is similar to a public shareholding company except for the fact that the shares cannot be sold to the general public through the share market. Instead, you must have other partners who are investing in the business as well.
However, a private shareholding company can be converted into a public shareholding company later in its life.
Lastly, UAE nationals must own at least 51% of the shares in the private shareholding company. The other 49% can be owned by foreigners from anywhere in the world. Additionally, you need at least AED 2 million in share capital to start a private shareholding company.
How can Company Setup Consultants help you?
If you want to start a business in Dubai, but you do not know where to get started then you are in the right place. This is because Company Setup Consultants have started numerous businesses all over the UAE.
As a result, our experts can provide effective advice based on your requirements as well as take care of the company formation process in Dubai for you. Contact us today and hit the ground running.