Branch Office in Mainland

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Overview

The branch office of a foreign company can be 100% owned by the parent company. The branch office in UAE doesn’t have a unique legal identity as that of its parent company. So, the name of the branch office will be similar, if not identical, to that of parent company. The branch is an extension of the parent company headquartered outside the United Arab Emirates and must have a trade license for the business activities carried out in the UAE.

Since the ownership of the branch office in UAE belongs to the parent company, the branch should also be registered as a company with the same name. The purpose of a branch office of a foreign company is to promote the products and services of the parent company, so it is essential that the branch office carries out the same business activity – or part of it – as that of the parent company.

Some business activities are not allowed to be carried out by the branch office of a foreign company in the United Arab Emirates. For more details, please get in touch with us.

Formation Process

Appoint a Local Service Agent

You first need to appoint a Local Service Agent (otherwise called a National Service Agent). The Local Service Agent coordinates with Government agencies and department and liaises on your behalf to secure all the necessary approvals. The Local Service Agent can be an Emirati (which is the term for a UAE national), or a company in the UAE that is 100% owned by Emiratis.

Trade Name

You also need to decide on your trade name. It may happen that the name of your company has already been registered by another business entity in the UAE. In that case, you can think of affixing the term Middle East after your company’s name so that your branch office has more or less the same name as your company, yet identifies it as your branch office in UAE.

Submit the Application

You then need to submit an application to the Ministry of Economy. This should be as detailed as possible, containing the address of your company’s head office or global headquarters, the business(es) it is into, the nature of the commercial activity your branch office in the United Arab Emirates will be engaged in, as well as the name and credentials of your General Manager.

Approval from Ministry of Economy

Depending on where your branch office is proposed to be located, the Ministry of Economy will issue an approval letter for the Department of Economic Development in the emirate. In other words, if you plan to establish your branch office in Dubai, then the approval letter will be for the Department of Economic Development of the Emirate of Dubai. If, however, you plan to open your branch office in Abu Dhabi, the approval letter will be for the Abu Dhabi Department of Economic Development (ADDED).

It is indeed possible to open branch offices in multiple emirates at the same time.

Submit Lease Agreement and Audit Report

Once the approval letter has been issued, you – or the Local Service Agent to be precise – need to submit another application to the Department of Economic Development. Apart from the MoE approval, you will need to submit a lease agreement* for your proposed branch office, plus an UAE auditor’s statement confirming that your company has been in existence for at least two years and financial statements for the past two years.

*The lease agreement document is called Ejari in Dubai and Tawtheeq in Abu Dhabi.

Final Approval

If everything is in order, the Department of Economic Development issues you a Commercial License that has a validity of one year. This Business License needs to be renewed every year.

You can subsequently proceed to opening a bank account in the UAE. This is not as easy as it sounds, because strict anti-money laundering regulations make the process difficult. The bank may need to see how your company – the parent company – is structured in its country of origin, and if the company documents are in a foreign language, they will need to be translated and attested for legal use. The details of those holding more than a 5% stake in your company will also have to be submitted.

 

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