Benefits of Private Shareholding Company Formation in Dubai

08Dec, 21

Benefits of Private Shareholding Company Formation in Dubai

Dubai, the vibrant economic hub of the Middle East, has become a magnet for entrepreneurs and investors worldwide. One of the famous business structures that have been gaining traction is the Private Shareholding Company. This versatile entity offers many benefits to those looking to establish their business presence in Dubai. In this blog, we will delve into the advantages of opting for a Private Shareholding Company in Dubai, comparing it with a Shareholding Company in Bahrain, and emphasizing the many perks of opening a company in this thriving emirate.

What is a  "Private Shareholding Company Formation"?

The term "private shareholding company" can refer to one of two types of Company:

  • The Company's shares are owned by a relatively small number of holders who do not trade the stock openly, and the Company's shares are owned by a relatively small number of people who do not trade the stock openly.

  • A private shareholding corporation in the United Arab Emirates must have at least three members. In the United Arab Emirates, the public cannot buy shares in a private shareholding business.

  • A group of three or more people forms a private shareholding business.

  • Unlike a public shareholding organization, a private shareholding business cannot solicit subscriptions from the general public.

  • The Chairman and the majority of the Directors of a private shareholding company must be UAE nationals.

Benefits of Private Shareholding Company Formation in Dubai

Setting up a Private Shareholding holding company in Dubai has many benefits, some of which are listed below:

Flexibility in Ownership Structure: 

One of the significant advantages of establishing a Private Shareholding Company in Dubai is its flexibility in terms of ownership structure. Shareholders can enjoy greater autonomy in determining the share distribution, allowing customization to suit the business's specific needs. This starkly contrasts a Shareholding Company in Bahrain, where certain ownership restrictions may apply.

Tax Advantages: 

Dubai is renowned for its tax-friendly environment. Private Shareholding Companies benefit from exemption in corporate tax on profits, capital gains, and personal income. This presents a remarkable advantage over many other jurisdictions, including Bahrain. The absence of taxes means more revenue can be reinvested in the business for growth and expansion.

Economic Stability: 

Dubai's economy is known for its resilience and stability. It offers a secure and predictable business environment, which is crucial for investors. This stability is further fortified by the UAE's strong currency, the Dirham, and its peg to the US Dollar.

World-Class Infrastructure: 

Dubai boasts world-class infrastructure, making it easier for businesses to thrive. The city offers state-of-the-art facilities, transportation, and communication networks that facilitate smooth operations.

Strategic Location:

At the crossroads of Europe, Asia, and Africa, Dubai is a strategic gateway for businesses. Its location allows easy access to a vast consumer base, substantially benefiting companies looking to expand internationally.

Business-Friendly Legal Framework: 

Dubai's legal framework is designed to attract foreign investors. The emirate has various free zones, each tailored to specific industries, providing incentives such as 100% foreign ownership, customs privileges, and simplified import/export procedures.

Access to Global Markets: 

Dubai is a significant business hub in the Middle East and a crucial link to global markets. With its modern ports and world-class logistics, companies can quickly access European, Asia, and African markets.

Protection of Intellectual Property: 

The UAE has robust laws safeguarding trademarks, patents, and copyrights. This protection is a significant draw for companies involved in research and development or innovative industries.

Banking and Financial Services: 

Dubai offers a mature banking and financial sector with many international banks and financial institutions. Setting up a Private Shareholding Company in Dubai provides easy access to various financial services.

Attractive Lifestyle: 

Dubai's lifestyle, with its high standard of living and cultural diversity, attracts top talent worldwide. This makes it easier for businesses to recruit and retain skilled employees.

What Documentation is Necessary to Form a Private Shareholding Company Formation?

Documents that are necessary to form a Private Shareholding Company Formation are given below:

  • Founder's Agreement with Application for Registration and Licensing of a Business Activity by the Government

  • Approval of Private Shareholding by the UAE Securities and Commodities Authority

  • Private Shareholding

  • Resolution from the Ministry of Economy

  • Certificate of Auditors Due Diligence Survey

  • For the Project Notary, two copies of the Feasibility Study are required.

  • Four copies of the Memorandum and Articles of Association have been publically authenticated.

  • Photocopies of the Contract for office space and the Registered Plot Number.

  • Appointed Board of Managers and Directors' Written Acceptance of Appointment

  • Original documents that include the directors' names, dates and places of birth, occupations, and a sample signature.

Capital Requirements for a Private Shareholding Company Formation

These are the Capital Requirements for a Private Shareholding Company:

  • Each partner must make a minimum investment of AED 5,000,000 in the company.

  • The nominal value of the issued shares has been fully paid up.

  • There has been a gap of at least two fiscal years.

  • For the two years preceding the application for conversion, the corporation had net earnings distributable to shareholders with an average value of not less than 10% of the capital.

  • A resolution of the extraordinary assembly for the company's conversion must be approved by a majority of shareholders representing at least three-quarters of the company's capital.

Dubai's Requirements for Starting a Private Shareholding Company Formation

To form your own Private Shareholding Company, you must first research and follow the conditions listed below to ensure that your business runs well:

Approval

Before forming a private shareholding corporation, you must first obtain Ministry of Economy approval.

Activities in the Commercial and Industrial Sections

Any commercial or industrial enterprise can incorporate a Private Joint-Stock Company. Professional activities are not permitted under this legislative framework.

Nationality

Partners of any nationality can own a private shareholding organisation under DED business legislation.

Ownership

GCC nationals can own up to 100% of a Private Shareholding Company (Private Joint-Stock Company), but UAE nationals must possess at least 51%.

Relevance of Name

The company's business activities should be reflected in the trade name.

The Partner's Name

The trade name must include one or more of the partners' names and the words "Private Shareholding Company."

Management has been Appointed.

According to DED business legislation, a private partnership corporation must have designated management.

Acknowledgement

The names of the companies in which each member of the Board of Directors serves as Chairman or vice president must be acknowledged in writing by each member of the Board of Directors. The date each of these positions was filled, whether as a member of the Board of Directors or as the Managing Director of the Department. (In the case that the Board of Directors is formed.) Otherwise, it must be filed alongside the Memorandum of Association and the Statute at a later election.)

Evaluation

Regarding capital shares, a house of expertise is needed to assess the quota, which the Ministry is looking at.

Eligibility Criteria for a Private Shareholding Company in the UAE:

  • A non-governmental group owns it.

  • Its stock is held by a smaller number of people who are not permitted to exchange it publicly.

  • A Private Shareholding Company, unlike a Public Shareholding Company, cannot solicit the general public to subscribe to its shares.

  • AED 2 million is the minimum capital necessary to form a private shareholding company in Dubai.

  • Aside from the conditions listed above, all the terms that apply to a public shareholding business also apply to a private company.

  • To establish it, you'll need to create a founders' agreement, a prospectus (or call for public subscription), an overall business plan or feasibility study, an auditor's certificate, a due diligence survey, and a memorandum and articles of association.

Conclusion

Choosing to establish a Private Shareholding Company in Dubai comes with many benefits. From the flexibility in ownership structure to the tax advantages and the strategic location to the business-friendly legal framework, Dubai has emerged as a top choice for entrepreneurs and investors. Compared to Shareholding Companies in Bahrain, the advantages of Dubai are striking. As a business consultant firm in Dubai, we understand the region's unique dynamics. Dhanguard can assist you in navigating the process of company formation, helping you leverage the many benefits of this thriving emirate. Don't miss the opportunity to explore growth and prosperity in one of the world's most dynamic business environments. Our experts will handle the banking, visa, legal, and licensing requirements, leaving you to concentrate on the vision and goals of your firm. If you have any queries on how to start a business in Dubai, feel free to contact us.