22nd February 2017
"How can I own the business 100%?" This is one of the most common questions from foreign investors looking to setup in Abu Dhabi. Good News! It is possible to set up an entity in Abu Dhabi, outside of the various free zones, and own it 100%. The structure is called a Foreign Branch.
What is a Foreign Branch?
A foreign company can setup a wholly-owned branch in Abu Dhabi. It isn't a separate legal entity. It is considered part of the overseas parent company. Therefore, the parent company takes on full liability for the branch's activities in Abu Dhabi. The name will also match that of the parent company.
What activities can a Foreign Branch engage in?
A Foreign Branch is restricted to providing the same services as those of its parent company. It is also possible to engage in the activity of 'Representation Office'. This means, the branch has a commercial presence and purely markets the services/products of the parent company but doesn't transact in any way.
What activities is a Foreign Branch restricted from providing?
Trading (buying and selling goods)
Restaurants and catering
Haj and Omra services
Labour supply (recruitment and manpower services)
Disabled shelters and rehabilitation centres
Care and community centres
Social services and activities
Printing and publishing
What is a Service Agent?
To open a foreign branch, it is necessary for the parent company to appoint a Service Agent. The Service Agent must be either a UAE National or a company owned 100% by UAE Nationals. The Service Agent does not have any ownership of the Foreign Branch and it can't participate in its management. The Service Agent facilitates the parent company being able to setup the Foreign Branch in Abu Dhabi. The Service Agent assists with government liaison, including obtaining the trade license, permits and visas. The Service Agent is remunerated with a fixed annual fee. The Service Agent is not entitled to any of the profits. Gateway Group can act as a Service Agent in Abu Dhabi. There are many benefits of engaging Gateway Group as your Service Agent in Abu Dhabi.
What Documents will be required to set up a Foreign Branch?
The parent company will need to supply corporate documents confirming the following information:
Date of Incorporation
Activities for which it is registered
The documents will need to be notarised in the home country. They will also need to be stamped at the UAE Embassy in the home, or closest, country. The documents will also need to be stamped by the Ministry of Foreign Affairs in the home country.
How to setup a Foreign Branch in Abu Dhabi
In addition to applying for a trade license via the Department of Economic Development, it will be necessary for the Foreign Branch to be registered with the Ministry of Economy. For a complete overview of establishing a foreign branch in Abu Dhabi, please CLICK HERE.
Ministry of Economy Registration
All Foreign Branches will need to apply for a pre-approval with the Ministry of Economy during their incorporation. Upon obtaining the Trade License, the Foreign Branch has just 30 days in which complete the registration with the Ministry of Economy, which involves arranging an annually renewable Bank Guarantee, to the value of AED50,000, via a local bank; and, paying the registration fee of AED10,000. The Ministry of Economy registration is renewable annually. Failure to either complete the initial registration within 30 days of obtaining the Trade License, or the annual renewal on time, will result in fines of AED1,000 monthly up to a maximum of AED10,000. At the time of renewal, it will be necessary for the Foreign Branch to submit audited annual accounts in Arabic.
How Gateway Group can help you to register a Foreign Branch office in Abu Dhabi
We have a proven track record for speedy, hassle free setups. We use our on-the-ground experience to manage the entire Foreign Branch registration process for you, including provision of a local service agent. Once registered, we can also support you with organising visas and Emirates IDs for your employees to ensure that your team is living and working in the UAE legally. To get started with registering your Foreign Branch in Abu Dhabi or Dubai, engage Gateway to take care of the process for you, email us Info@GatewayToAbuDhabi.com
Written by Jenny Hunt, Founding Partner & CEO
Gateway Group Of Companies, Abu Dhabi & Dubai, UAE
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