Opening a new branch of your company in the UAE is an excellent way to expand your existing operations into foreign markets. Companies from the UK, Australia, and beyond seek to establish a branch office in the UAE to trade effectively in the local market and throughout the greater MENA region.
We’ve compiled a list of key features to help you better understand what you need to know about establishing a new branch of your company in the UAE.
A branch office is a location, other than the main office (parent company), where a business is conducted. Most branch offices may consist of smaller divisions of different aspects of the company such as accounting, marketing, and human resources. The most common structure for foriegn companies to expand to the UAE and retain 100% foreign ownership is through establishing a branch office. Under the law a branch office is an extension of the parent company, and not a separate legal entity. Therefore, the parent company holds responsibility for any liabilities of the branch office.
According to Article 314 of the Commercial Companies Law, foreign companies are permitted to establish wholly owned branches in the UAE. However, these offices are limited in the activities they may conduct within the UAE. For example, while a branch office has the ability to provide goods and services, they are only permitted to provide the same goods and services as the parent company.
Additionally, UAE Commercial Companies Law (CCL) requires a branch office to have a National Service Agent (NSA) to comply with CCL. Creation Business Consultants can provide a NSA in order to satisfy this requirement and assist with completing the trade license formalities and issuance.
Also known as or referred to as the Local Service Agent (LSA), a National Service Agent must be appointed to open up a branch company in mainland UAE and it is recommended to select a corporate NSA. Creation Business Consultants’ NSA is an exclusively UAE owned Limited Liability Company (LLC). Fully managed and controlled by CBC, the NSA provides companies with greater protection and confidence using a corporate rather than an individual NSA.
The responsibilities of the NSA to the company are limited to administrative functions such as applying and receiving the license, approvals and permits, labour, immigration and visas (etc.). They do not require any responsibility or financial obligations in connection with the business or activity of the branch. Additionally, the NSA does not own any equity nor participate in the management of the branch office. In return, the NSA will receive a sponsor fee which is to be agreed between the management and the National Service Agent.
Appointing and engaging a NSA consists of drafting a written agreement that must be signed by both parties before a notary public in the respective Emirates. As there is no fixed format for the agreement, the terms and conditions of the agreement should be clearly outlined whilst complying with UAE Commercial Companies Law.
Aside from obtaining approvals from government departments, opening a branch company in the UAE requires several applications to be completed. Once the branch application is approved by the emirate where the branch is to be established, such as Dubai, Abu Dhabi or Ras Al-Khaimah (etc.), the next required step is to obtain the approval of the federal government.
Unlike other business structures, share capital is typically not required to set up a branch company. Generally, the parent company pays the standard fees, application fees, and government fees and deposits for the branch incorporation. As such, a branch office provides a cost-effective option to establish a presence in the UAE.
When you partner with the professionals at Creation Business Consultants, we’ll help your company navigate all of the nuances and red tape associated with setting up a branch of your company in the UAE. From assisting with the applications and approvals to completing your corporate documentation, our team of experts will also help your branch select the ideal location to conduct your expansion within the UAE.
Contact a member of our team to learn more.
Creation ensures clients receive a seamless, cost effective and proficient entry to the GCC market. We provide clients with the foundations and best practices empowering them to build and control a successful business.
We continuously strive to exceed client’s expectations whilst making certain they are protected from undue risk at all times. Creation Business Consultants is the preferred and truly trusted business partners for the GCC.