How to set up a business in Sharjah

Sharjah is one of the seven emirates of the United Arab of Emirates (UAE). Now, before we proceed with details of business setup in Sharjah or company formation in Sharjah, let’s understand why Sharjah should be your next business destination.

Sharjah is the 3rd most populous city of the UAE after Dubai and Abu Dhabi. It is a center for culture and industry and it alone contributes 7.4% of the GDP of the UAE. Being the only emirate that overlooks the Persian Gulf and Gulf of Oman on either sides, with coastal towns of Kalba and Khor Fakkan, it further helps in transport of commercial goods and cargo. Sharjah shares legal, political, military and economic functions with other emirates of the UAE within a federal framework. Sharjah is also known as a health city by WHO due to its stringent policies regarding the consumption of alcohol. It is also regarded as the cultural capital of the UAE, and was named World Book Capital for 2019. It is home to a diverse collection of businesses in all sectors.

• Sharjah is one of the fastest-growing economies in the UAE and therefore, businesses flourish easily.
  • In 2014, its GDP reached around AED113.89 billion.
  • Sharjah has 19 industrial areas that contribute to more than 48 per cent of the UAE's gross industrial output
• There is a huge presence of international banks and modern communication system
• Sharjah is a tax haven. Companies are not levied to any type of taxes
• 100% exemption for import, export, and commercial levies
• 100% repatriation of profits and capital for foreign companies with complete ownership of business being allowed
• Warehousing facility for businesses to store goods freely up to 2 months
• It offers lucrative governmental incentives for investors of every industry.
  • In 2020, the government of Sharjah announced an exemption from contractual dues for three months, and economic facilities from fees to investors dealing in the planning and survey department.
  • Also, it has provided 50% rental reduction for three months for tourism and hospitality industry.
  • For special approvals for several activities in every industry, check here.
• Availability of multiple entry visa options for entrepreneurs
• Sharjah offers elaborate infrastructure activities\

Business Jurisdictions for setting up a business in Sharjah:

The first step towards deciding where to setup business in Sharjah begins by determining the exact nature of the commercial activities that you plan to incorporate within your business. Based on this, you can choose the jurisdiction available in Sharjah that suits you best.

• Business setup in Sharjah Mainland: The biggest perk of setting up a business in Sharjah mainland is that you get the flexibility of doing business anywhere across the UAE. Sharjah mainland also does not levy any corporate taxes or personal taxes and put limitations on the employment visa.

In June 2021, to encourage foreign direct investment, Sharjah Economic Development Department (SEDD announced the full foreign ownership policy for the onshore or mainland companies. With this policy, foreign investors or companies will own 100 percent of commercial and industrial companies and practice activities in the Emirate of Sharjah.

This decision includes no requirements of a specific capital or any additional fees for foreign investors, while allowing branches of foreign companies to conduct their business in the Emirate without the need for an agent of a foreign company.

• Business setup in Sharjah Free Zone: Setting up your company in Sharjah free zones comes with its own set of advantages. Firstly, it offers 100% ownership, a world-class infrastructure, free trade barriers, and tax exemptions, and foreign duties. The free zones in Sharjah enable business owners to efficiently utilize the strong infrastructure and the strategic location with easy access to warehouses, cargo airports, and seaports, providing a viable arena for all kinds of businesses. There are various free trade zones present in Sharjah that include some popular ones like Sharjah Airport International Free zone and Hamairah Free Trade Zone.

Types of Business Structures that can be established:

Deciding the type of business structure begins with determining the exact nature of the commercial activities that you plan to incorporate within your business. Following are the types of business structures available for you in Sharjah:

• Limited Liability Company (LLC): A limited liability company is one where the number of partners may not exceed the limit of fifty members and should at least be 2. Every partner is liable to only the extent of the share in the capital. In all such setups, a local Emirati is required with at least 51% of the shareholding of the total paid-up capital, if it is situated in the mainland, and does not fall in the categories as mentioned by the FDI law
• Partnership Company: a partnership company, as the name suggests, is a company formed by two or more companies that are jointly liable to all the shares for the company’s liabilities. All the partners should be UAE nationals.
• Local Services Agent License or Business Partnership License: An individual entity in such a form of partnership is owned by one person with a person to practice economic activities, whether business or professional. All the financial obligations of the establishment are borne by the owner and therefore, all financial liabilities extend to him.
• Foreign Company Branch: As the name suggests, this company is an extension of a business based on a different company in some other nationality. An application needs to be submitted by the owners of the business and concerned parties for preliminary license approval for having a branch of a foreign company in the UAE.
• Local Company Branch: this suggests that a branch of the company could be based in a different emirate. E.g.: you could have a company office in Abu Dhabi and one branch office in Sharjah as well. An application needs to be submitted by the concerned parties for a license to establish a branch of a company from another Emirate.
• GCC Company Branch: this is the branch of a company based in a GCC country other than the UAE. An application needs to be submitted by concerned parties for a license to establish such an enterprise.
• Public and Private Shareholding Companies: A public shareholding company has share capitals divided into equally-valued tradable shares. Every partner in the company has limited liability to their share capitals. A private shareholding company is subject to an entire set of rules about Public Joint Stock Companies. Also, every member who signs the memorandum and articles of association of such a company with intention of undertaking its liabilities is considered a founding member of the company. They are not licensed unless there are at least 10 founders to the company.

Business Licenses in Sharjah: To commence any type of business in Sharjah, you require a business license in Sharjah. The trade license that you require depends upon the type of business that you plan to set up and the jurisdiction. There are three types of business licenses in Sharjah. These are:

• Commercial or General Trading License: this license helps you to distribute, consolidate, store, warehouse, import, and export specified goods. The Sharjah Economic Development Department (SEDD) is the authorized agency for issuing this type of license.
• Service License: this allows the holder to carry out services specified in the license issued by the governing body of Sharjah. Those applying for this type of license must have requisite qualifications substantiating the claim.
• Manufacturing or Industrial License: this type of license allows entrepreneurs to assemble; process, redesigning and repackaging locally made and imported products. Approvals from the Ministry of Labor, Ministry of Economy and Commerce, and other departments applicable are required for this type of license. All of these approvals have to be attached with the applications to be submitted.

• Business type: Initially, you have to decide the type of business that you are planning to set up, accordingly, the jurisdiction needs to be decided as well. This is crucial to ensure the ownership of the company that follows
• Company registration with DED: after choosing the structure and local sponsor, it is important to register the company with DED also; the application can to the website of Sharjah Chambers of Commerce for the company registration process.
• Application for respective license: application for the license depending upon the business type you are opting for follows next. The three types of license being: trade, professional and industrial license.
• Trade name registration: After registration of the license, you need to register the trade name of the company. The name should be unique to the public and distinctive from all other businesses of a similar type. Municipality approval: this is required after all the above procedures have been completed
• Drafting of Memorandum of Association (MoA): To draft this, the applicant needs to provide all the relevant information required. Once this is completed, notarization has to be done in the respective notary.
• Lease Agreement: the lease agreement according to the government of Sharjah requires companies to hire local employees and have a physical office space in Sharjah.
• Payment for license fee: once you have opted for a particular license, you have to pay the license fee. Along with this, approval for the name board is required for the company. This completes the entire procedure of company registration in Sharjah.

• Ownership: Except for a set of economic activities of strategic nature (applicable for mainland), both mainland and free zones allow 100% foreign ownership.
• Capital Requirement: the minimum capital requirement for every company in Sharjah is different.
• Foreign Directors: a LLC can freely appoint foreign Managers and Directors. The applicant needs to make sure that the Directors suffice the requirements for company registration in Sharjah.

The following documents are required for company registration in Sharjah:

• Application form for company registration and formation in Sharjah
• Copy of the business plan
• Notarized and attested Memorandum of Association (MOA) and Articles of Association (AOA)
• Copy of passport of all partners and business managers
• Original bank reference letters and licenses of company, or partner’s company (as applicable)
• Power of Attorney
• Board resolution in cases of a foreign company
• Lease agreement
• Feasibility report of the project of the company as planned
• Bank statements of three months of the parent company

How MBG can help in business/company formation in Sharjah?

At MBG, we offer advisory services related to business setup in UAE that are customizable to your needs. We understand your business idea well and with the help of our business setup consultants in Sharjah and rich industry knowledge, we map and process your requirements of the business as per your needs. We help you with the entire process of company formation in Sharjah, right from advising you, guiding you, through the entire legal and company setup process, along wcith complimentary business setup services in Sharjah that are included post-company formation in Sharjah.

We help you with licensing, registration, finding local Emirati, PRO services in Sharjah, obtaining an office, along the consultations required at different steps throughout the process.