Setting up a holding company in Dubai, UAE
August 31, 2021
UAE offers a number of business setup options for foreign investors to establish their presence in the country. But, if they are specifically looking for a business structure where they can incorporate and hold the investment in subsidiary business entities, holding company in Dubai, UAE is the ideal option.
What is a holding company in Dubai, UAE?
As mentioned above, holding companies are legal entities that are incorporated with the motive to incorporate and hold the investment or other assets in subsidiary business entities. In other words, a holding company acts as a parent company that owns and controls the outstanding shares of its subsidiary companies and manages their legal liabilities.
Dubai Company Act allows a foreign investor to register a holding company in Dubai and other UAE Emirates and provides a holding company license by listing business activity as “activities of holding companies”. It is important to note that a holding company in UAE
- can’t carry out business activities such as manufacturing of goods, delivering services
- Should have a supervisory structure (director or board of directors) to supervise operations of subsidiaries
- can’t be involved in active management, strategy development and planning within subsidiaries can open corporate bank account
- must appoint a director in every subsidiary (with the help of shareholders)
- must ensure that the subsidiary (ies) have the necessary resources to carry out their operations
- sets certain restrictions on the risk a subsidiary can take (foreign exchange, other market or industry risks)
- can’t sponsor resident and employment visa(s) if it’s an offshore holding company
- will be considered responsible for the subsidiaries’ obligations and debts in the limits of its contribution to each business
- controls the flow of money to and from subsidiaries
- takes up negotiation, terms of arrangements and contracts of the subsidiaries
Types of holding companies in Dubai, UAE
Broadly, there are two types of holding companies in Dubai:
- The Onshore holding company
- The Free Zone holding company
For a foreign investor to incorporate an onshore holding company in Dubai, he/she must have a local partner who will own 51% shares of the company. To avoid this scenario and have 100% ownership of the company, foreign investor(s) can incorporate a holding company in Dubai Free Zones.
Registering a holding company in Dubai, UAE
The key things to consider before registering a holding company in Dubai, UAE1- Selecting the right location and jurisdiction
To start a holding company in UAE, it is very important to select the right location and jurisdiction. UAE offers a number of options for entrepreneurs to choose from. Based on their business plan, products/services, target audience etc. entrepreneurs can study these options and decide the location and jurisdiction.2. Other registration requirements
Though there are no official requirements for starting a holding company in Dubai, UAE but still, following documents should be prepared and ready to face legal problems, if any:
- Shareholder resolution document(s)
- Certificate representing the share capital and shareholding pattern for the holding company
- Passport copies and photographs of the directors
- Business plan and details of subsidiary entities
To avoid the errors in application and expedite the registration process, it is advisable to contact Company Formation Specialists during the registration phase.
Advantages of setting up a holding company in UAE
- UAE residency- easily obtain UAE residency after purchasing property through holding company
- Huge tax savings- 0% tax on corporate profits, capital gains and dividends
- Business ownership- 100% foreign ownership is allowed in Free Zones
- Anonymity and risk mitigation- since assets are held by holding company and not the individual, it helps maintain the anonymity in investments, reduce personal risk exposure and take flexible decisions
- Human resource management- a holding company employ as many foreign nationals as possible and strategically deploy them into subsidiary companies to best utilise their skills
- Accessibility of funds- since a holding company can open a corporate bank account in UAE, it helps it to access the funds from any part of the world with the internet banking services
- Business growth- with the help of holding company+subsidiaries structure, an entrepreneur can move route funds, maintain focus on both innovation and revenue generation simultaneously
- Streamlined management- since a holding company is only concerned with management of its subsidiary companies, it allows better control and quick decision making
How MBG can help setup a holding company in Dubai, UAE
If you have the assistance of the right company formation partner, incorporating a holding company in Dubai, UAE will not be a daunting task.
MBG’s services related to Business Setup in UAE not only help you to select the right jurisdiction, advise through the registration process, assist with visa formalities, PRO services etc. but also help post company formation with legal, accounting, taxation related services. For more information about our services related to Business Setup in UAE, you can contact us:
Whatsapp: +91 88601-90008,
Email: [email protected]