How do I choose the business activity and legal form for my Dubai LLC

إن تأسيس شركة ذات مسؤولية محدودة في دبي يخضع للقانون التجاري الفيدرالي الإماراتي (المرسوم بقانون اتحادي رقم 2 لسنة 2015 وتعديلاته) واللوائح التي تصدرها دائرة التنمية الاقتصادية بدبي، وهو ما يحدد الإطار القانوني والاختصاص القضائي لإتمام العملية من الترخيص حتى فتح الحساب البنكي.

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HOW DO I CHOOSE THE BUSINESS ACTIVITY AND LEGAL FORM FOR MY DUBAI LLC?

You must first identify an activity that is permitted under the DED's activity list and then select the limited liability company structure, which is the most common form for foreign investors seeking 100 % ownership in mainland Dubai after the recent amendments allowing full foreign ownership in many sectors. The activity determines the licensing authority, any additional approvals needed from sector-specific regulators, and the minimum capital requirement, if any. The legal form dictates liability sharing, governance rules, and the scope of permissible activities under the UAE Federal Commercial Companies Law.

The DED maintains a classified list of over 2,000 activities, each assigned a code and description. To confirm eligibility, you consult the DED's "Economic Activities Classification" (available on the DED portal) and verify whether the activity falls under the "industrial," "commercial," or "professional" category. Certain activities-such as oil and gas exploration, banking, or insurance-require additional federal licences and are excluded from the standard LLC route. Once the activity is confirmed, you select the LLC form, which under Federal Decree-Law No. 2 of 2015 Article 21 provides that shareholders' liability is limited to their share capital, and the company may have between two and fifty shareholders. The law also stipulates that the Memorandum of Association must specify the company's purpose, capital, and management structure.

When evaluating the activity, consider the following practical points:

• Sector-specific approvals - Activities in healthcare, education, or media may need pre-approval from the Dubai Health Authority, Knowledge and Human Development Authority, or Dubai Media City respectively.
• Free-zone vs mainland - If the activity is listed on the DED's "Positive List" for 100 % foreign ownership, you can proceed with a mainland LLC; otherwise, a local service agent or UAE national partner may be required.
• Capital flexibility - Although the law does not impose a statutory minimum, many banks and free-zone authorities expect a demonstrable paid-up capital that reflects the scale of operations; a nominal AED 1,000 is often sufficient for licensing but may not satisfy banking due-diligence.
• Future expansion - Choose an activity code that allows ancillary services; you can later add related activities via an amendment without changing the core licence.

WHAT STEPS ARE REQUIRED TO RESERVE A TRADE NAME AND OBTAIN INITIAL APPROVAL?

After deciding on the activity and legal form, you must reserve a trade name that complies with DED naming conventions and obtain an initial approval certificate, which confirms that the proposed activity and ownership structure are permissible. The trade name must not contain offensive language, religious references, or abbreviations of governmental entities, and it must end with the legal form suffix "LLC." The reservation is valid for 60 days and can be renewed once.

The process begins by submitting an online application through the DED's e-services portal, attaching a copy of the shareholders' passports and Emirates IDs (if applicable), and paying the name reservation fee, which is currently AED 620. The DED reviews the application within one to two business days. If the name is available, you receive a provisional reservation certificate. Simultaneously, you file for initial approval by submitting the proposed activity details, shareholder information, and a draft of the Memorandum of Association. The DED issues the initial approval certificate within three to five working days, provided no external approvals are required. This certificate is a prerequisite for drafting the notarised Memorandum of Association and proceeding to the lease agreement for a physical office space.

Additional considerations:

• Name similarity checks - The DED system cross-references existing trademarks; a name too similar to a registered brand may be rejected even if it is not identical.
• Language requirements - While the trade name can be in English, the Arabic translation must be provided and must not violate public order or morals.
• Renewal strategy - If you anticipate delays in securing office space, consider renewing the reservation before the 60-day expiry to avoid losing the name.
• Fee structure - Besides the reservation fee, a service charge of AED 50 may apply for expedited processing (within 24 hours).

HOW DO I DRAFT AND NOTARISE THE MEMORANDUM OF ASSOCIATION?

The Memorandum of Association (MOA) is the constitutional document of the LLC; it must be prepared in Arabic, notarised by a UAE notary public, and submitted to the DED as part of the licence application. The MOA must include the company's name, legal form, registered office address, business activity, share capital amount and distribution among shareholders, management structure, and provisions for profit distribution and dissolution.

Under Federal Decree-Law No. 2 of 2015 Article 22, the MOA must be signed by all shareholders or their legal representatives in the presence of a notary public. The notary verifies the identity of the signatories, ensures that the document complies with the law, and affixes the official seal. The notarisation fee is typically AED 300 per signature, plus a modest administrative charge. After notarisation, you must obtain a certified true copy of the MOA for submission to the DED; the notary can provide this upon request. The Arabic text of the MOA prevails over any translation, as stipulated by the UAE legislative hierarchy.

To ensure robustness, consider the following best practices:

• Clear capital clause - Specify whether the share capital is fully paid-up at incorporation or subject to future calls; this affects bank account opening and visa eligibility.
• Management provisions - Detail whether the company will be managed by a board of managers, a sole manager, or a committee; include voting thresholds for key decisions.
• Profit distribution - Outline the percentage of profits to be distributed annually and any reserves to be retained for reinvestment or contingencies.
• Dispute resolution - Include a clause referring disputes to the Dubai Courts or, alternatively, to arbitration under the DIFC-LCIA Rules, specifying language and seat.
• Future amendments - State the procedure for amending the MOA (e.g., super-majority vote, notarised amendment) to avoid procedural hurdles later.

WHAT ARE THE REQUIREMENTS FOR SECURING OFFICE SPACE AND OBTAINING THE TRADE LICENCE?

A mainland Dubai LLC must have a physical office that meets the DED's minimum size requirements-generally at least 200 square feet for most commercial activities-and must be located within a permitted zone. The office lease agreement (Ejari) is a mandatory document for the trade licence application, and the premises must be ready for use before the licence is issued.

Once you have the initial approval certificate and the notarised MOA, you submit the Ejari contract, a copy of the MOA, the shareholders' passport copies, and the relevant fee payment receipt to the DED. The DED conducts a brief inspection of the premises to verify compliance with health, safety, and zoning regulations. The trade licence fee varies by activity and ranges from AED 10,000 to AED 50,000 annually, with an additional issuance fee of approximately AED 1,200. The licence is usually issued within five to ten working days after submission, provided all documents are in order. The licence authorises the company to conduct the specified activity and to sponsor employees for residence visas.

Further nuances to consider:

• Ejari registration - The lease must be registered through the Ejari system; the registration number is required on the licence application.
• Location flexibility - Certain activities (e.g., consulting, IT services) may permit a virtual office or co-working space, provided the DED grants a "flexi-desk" approval.
• Fit-out approvals - If you undertake interior fit-out, you may need a separate permit from Dubai Municipality; ensure the contractor is licensed and the work complies with civil defence standards.
• Licence validity - The commercial licence is typically valid for one year; renewal requires updated Ejari, proof of continued activity, and payment of renewal fees.
• Penalties for non-compliance - Operating without a valid licence or with mismatched activity can result in fines up to AED 50,000, suspension of visa quotas, or even cancellation of the licence.

HOW DO I OPEN A CORPORATE BANK ACCOUNT IN DUBAI?

After receiving the trade licence, you must open a corporate bank account to facilitate capital deposition, transaction processing, and payroll services. Banks in Dubai require a complete set of company documents, including the trade licence, MOA, shareholders' passports, Emirates IDs, proof of address, and a board resolution authorising the account opening.

The process typically begins with scheduling a meeting with a relationship manager at a chosen bank. You submit the required documents, and the bank conducts due diligence in accordance with the UAE Central Bank's Anti-Money Laundering (AML) regulations (Federal Decree-Law No. 20 of 2018 on AML). The bank may request a minimum initial deposit, which varies from AED 5,000 to AED 50,000 depending on the institution and the company's risk profile. Account activation usually takes between three and ten business days. Fees include an account opening charge (often waived for new customers), an annual maintenance fee (AED 500-AED 1,500), and transaction fees as per the bank's tariff.

To streamline the account opening, consider these tips:

• Bank selection - Local banks (Emirates NBD, Mashreq) often have faster processing for SMEs, while international banks (HSBC, Citibank) may offer multi-currency facilities advantageous for trade.
• Document preparation - Provide a certified true copy of the trade licence and MOA; some banks request a recent utility bill or tenancy contract as proof of address.
• Board resolution - Draft a resolution specifying authorised signatories, spending limits, and whether the account can be used for foreign currency transactions.
• AML screening - Be prepared to explain the source of initial capital and the nature of expected transactions; banks may ask for a business plan or projected cash-flow statement.
• Online banking - Enroll in the bank's corporate portal early to facilitate payroll, vendor payments, and reconciliation with accounting software.

WHAT ARE THE VISA AND EMPLOYMENT OBLIGATIONS FOR AN LLC IN DUBAI?

An LLC must obtain employment visas for its managers and employees, which are sponsored through the company's trade licence. The number of visas permissible is linked to the office space size, generally allowing one visa per 100 square feet of leased area, subject to DED approval.

The visa application process involves securing an entry permit from the General Directorate of Residency and Foreigners Affairs (GDRFA), followed by a medical fitness test, Emirates ID registration, and labour contract approval from the Ministry of Human Resources and Emiratisation (MOHRE). The total cost per visa ranges from AED 4,000 to AED 7,000, including government fees, medical charges, and service centre fees. The employer must also provide health insurance coverage meeting the minimum standards set by the Dubai Health Authority.

Under Federal Decree-Law No. 8 of 1980 (Labour Law), as amended, the employer is obliged to provide a written employment contract, timely wage payment, end-of-service gratuity, and annual leave entitlements. Non-compliance can result in fines of up to AED 50,000 per violation and potential suspension of the company's visa quota.

Additional practical points:

• Visa quota calculation - Measure the usable floor area (excluding walls, columns, and permanent fixtures) to determine the exact number of visas you may apply for.
• Dependent visas - After securing an employee's residence visa, you can sponsor spouse, children, and parents; each dependent adds to the overall cost and requires separate medical and Emirates ID procedures.
• Labour contract registration - Contracts must be submitted to MOHRE within 14 days of entry; they must specify salary, job title, working hours, and termination notice period.
• Wage protection system (WPS) - Salaries must be paid through WPS-compliant banks; failure to do so triggers fines and restrictions on visa renewals.
• End-of-service gratuity - Calculated as 21 days' basic wage for each of the first five years of service, and 30 days' basic wage for each subsequent year, subject to a maximum of two years' wages.

FREQUENTLY ASKED QUESTIONS

What is the minimum share capital required for a Dubai LLC?
Federal Decree-Law No. 2 of 2015 does not prescribe a minimum share capital for LLCs; however, certain activities may impose a capital threshold set by the relevant regulator. The DED typically accepts a nominal capital of AED 1,000 for most commercial licences, but you should verify any activity-specific requirements.

Can a foreign national own 100 % of a Dubai LLC?
Yes. Recent amendments to Federal Decree-Law No. 2 of 2015 allow full foreign ownership in many sectors listed under the DED's "Positive List." For activities not on the list, a local service agent or UAE national partner may still be required.

How long does it take to obtain a trade licence after submitting all documents?
The DED aims to issue the trade licence within five to ten working days after receipt of a complete application package, including the initial approval certificate, notarised MOA, Ejari contract, and payment receipts. Delays may occur if external approvals are needed for regulated activities.

What are the ongoing compliance obligations for a Dubai LLC?
The company must renew its trade licence annually, maintain a valid office lease (Ejari), file annual financial statements with the DED if required, renew employee visas and labour contracts, and comply with VAT registration if taxable supplies exceed AED 375,000 per annum (Federal Decree-Law No. 8 of 2017 on VAT).

Is it necessary to appoint a local auditor for an LLC?
Only LLCs that exceed certain thresholds-such as total assets above AED 50 million or annual revenue above AED 100 million-are required to appoint an external auditor and submit audited financial statements to the DED. Smaller entities may submit unaudited statements, but they must still maintain proper accounting records.

Can I change the business activity after the licence is issued?
Yes. You may apply for an activity amendment through the DED's e-services portal, submitting a request letter, updated MOA if needed, and paying the amendment fee (typically AED 1,000-AED 2,000). The DED reviews the request and issues an amended licence if the new activity is permissible under the existing licence category and location.

Contact Nour Attorneys for a consultation.

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