Offshore Company Formation in Dubai
Offshore companies in the UAE are distinct from UAE Free Zone companies, representing legal business entities established with the purpose of operating outside their registered jurisdiction or the location of ultimate ownership.
In the UAE, only three cities —Ajman Free Zone, Ras Al Khaimah, and Jebel Ali Free Zone—have the authority to facilitate the formation of offshore companies. Each of these jurisdictions offers unique features and advantages for businesses looking to establish offshore entities.
Advantages of Establishing an Offshore Company in Dubai:
There are several advantages for foreign investors looking to establish offshore companies in the Emirate of Dubai. These advantages include:
- Flexible Capitalization: The capital required to establish an offshore company (offshore) can be of any value desired by the investor and can be divided into any category.
- Minimal Number of Shareholders and Directors: Offshore companies allow for the creation of a company with a minimal number of shareholders and directors.
- Full Payment of Shares: The entire value of the shares must be paid upon allocation, and there are no provisions for shares held by others or different classes of shares. Additionally, there is no requirement to deposit the capital in a bank.
- 100% Foreign Ownership: Foreigners are allowed 100% ownership of offshore companies, with a complete exemption from fees and taxes upon establishing an offshore company in Dubai.
- Banking Facilities: Offshore companies can open bank accounts with banks in Dubai.
- Designated Registered Office: The main office of the offshore company is located in the free zone within the United Arab Emirates.
- No Need to Visit Authorities: Investors do not need to visit authorities to establish the company, although document authentication is required by an approved agent’s office.
- Financial Document Requests: Financial statements that have been audited may be requested if there is any doubt.
Basic Conditions for Establishing Offshore Companies in Dubai
According to the regulations issued by the Free Zone Authority governing the operations of offshore companies, the following conditions apply:
- Any individual or group can submit a registered site application to obtain a certificate to establish an offshore company in Dubai with limited liability.
- The investor can establish an offshore company to engage in legitimate activities, except for those activities that violate the conditions specified in the regulations.
- Each offshore company must have its own administrative structure and only one type of equally valued shares.
- The company must obtain licenses to engage in its activities through the relevant authorities.
- Offshore companies are not allowed to engage in banking or insurance activities or any other activities prohibited by the competent authorities from time to time.
- The company must issue audited financial statements, deposited with the Companies Registrar.
- The company must have a registered office in the free zone and have a legal representative approved by the zone authorities.
- The application to establish an offshore company in Dubai must be signed by the founders, providing details such as the chosen name, registered office address, business nature, share capital value, full names of founders and board members, and any other information required by the registrar.
License Requirements and Categories for Establishing Offshore Companies in Dubai Free Zone
It is essential to comply with the necessary licenses to start establishing an offshore company in Dubai. The following are the types of licenses that can be issued for establishing an offshore company in the free zone:
- Industrial License: For small industrial activities.
- Logistics License: Specifically for logistics services.
- General Trading and Trading License: For importing, exporting, storing, and distributing specified product categories, and selling them in the UAE markets through local distributors.
- Service License: For services specified in the license within the Dubai South Free Zone and other locations within the borders of the UAE.
- Education License: Used for social, training, and educational services, as well as educational consultancy services.
What are the powers of offshore companies?
- An offshore company possesses rights and privileges similar to those of a natural person. The authority of an offshore company is not limited by any provisions stated in its memorandum and articles of association. It is also not restricted by the activities undertaken by its members.
- An offshore company is not permitted to engage in business with residents of the country. It is prohibited from owning any interest in real estate in the United Arab Emirates, except for lease contracts specified in the regulations or upon approval from the competent authorities.
- After completing the stages of establishing an offshore company in Dubai, it is not allowed to conduct any banking activities. Furthermore, it cannot engage in insurance or reinsurance activities and cannot act as an insurance agent or broker.
- The offshore company is not allowed to undertake any other activities prohibited by regulations set by the authorities or by law. It is important not to treat offshore companies as if they are conducting business with residents of the UAE.
- If an offshore company wishes to conduct business or any other activities in free zones or other areas within the UAE, it must comply with the regulations and obtain the necessary approvals.
Offshore Company Setup in Dubai: Step-by-step Process -
- Choose a Business Structure : Selecting the right business structure is crucial for an offshore company in Dubai. Options include Offshore Foundation, Offshore Trust, Limited Liability Company (LLC), and International Business Company (IBC). Each structure serves distinct purposes, influencing management approaches and paperwork requirements based on the business’s objectives.
- Submit Required Documents: Once the business structure is chosen, the submission of necessary documents follows. This typically includes a certified passport copy, bank references or statements, proof of address through a utility bill, CV, and three proposed company names.
- Open an Offshore Bank Account: To streamline incorporation and business transactions, it is essential to open an offshore bank account. Opting for an affordable, swift, and secure financial solution with advanced security measures is crucial when establishing an offshore company in Dubai. This bank account serves as a fundamental tool for conducting financial operations seamlessly.
- Document Submission: Submitting the required documents is a critical step in the process. It involves presenting the gathered paperwork to the relevant authorities in the jurisdiction of residence. Given that different jurisdictions may have specific requirements, careful attention to these variations is necessary to ensure a smooth and successful offshore company registration in Dubai.
Dubai Offshore Company Registration Procedure -
When establishing an offshore company in Dubai, the registrar has the authority to reject the registration of offshore companies if there are any reasons to believe that the application is not valid.
If the registrar decides to reject the registration of the offshore company, they are not obligated to provide any reasons for the rejection. The decision is final and not subject to review or appeal.
If the registrar approves the establishment of an offshore company, the registration of the company’s Memorandum of Association takes place. The registrar performs the following steps during the registration of the Memorandum of Association for the offshore company:
- Issuing a registration certificate for the offshore company.
- Assigning a unique registration number for the offshore company, which will be recorded for identification purposes.
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Required Documents for Establishing an Offshore Company in Dubai
When establishing an offshore company in Dubai, certain documents are required for individuals or companies. Here is a breakdown of the necessary documents:
Documents Required for Individuals
- Copy of the passport for all shareholders.
- Proof of residence – a utility bill indicating the name and address, valid for a maximum of 90 days.
- Completed application form according to the guidelines.
- Bank reference letter.
- Commercial profile of the shareholders.
- Proposed name for the offshore company.
- Proposed activities for the offshore company.
Documents Required for Companies
If you are establishing an offshore company in Dubai as a corporate entity, the required documents differ from those for individual shareholders. The documents required for companies include:
- Authenticated Certificate of Registration of the company from the UAE Embassy/Consulate in the home country.
- Authenticated Certificate of Good Standing for the company.
- Memorandum of Association and Articles of Association for the company.
- Board resolution issued by the company’s Board of Directors.
All these documents need to be notarized and authenticated as per the legal requirements.
FAQs
Is it permissible to establish an offshore company legally?
Certainly. As long as your business is incorporated in accordance with the latest regulations in the UAE, it is entirely legal to establish and operate an offshore company in Dubai.
Can an offshore company rent office space in the UAE?
No, offshore companies are not allowed to occupy physical premises within the country.
Is it possible for an offshore company in Dubai to open a bank account in the UAE?
Yes, indeed. One of the significant advantages of owning an offshore company is the ability to access various banking facilities in the UAE.
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