How to Purchase a Shelf or Vintage Company in Dubai?
Under UAE law, there are specific benefits to starting a business with an existing company instead of incorporating from scratch. To enable growth by taking advantage of opportunities not available to newly incorporated startups, a company must be actively trading for at least two years. Important factors include obtaining bank loans, receiving all United Arab Emirates tax benefits, and participating in major government contracts and tenders. It is necessary to provide proof of solvency and a profitable trading history. Purchasing the right existing company meets all of those requirements at once. Shelf companies make excellent building blocks for constructing structures.
Business people may look for a faster way to incorporate a company in Dubai from time to time. This is when purchasing an existing shelf or a vintage company may be a better option.We'll explain why, as well as how to get started doing business in Dubai.
What is a Shelf Company?
In the business world, you've probably heard of a shelf, vintage, or off-the-shelf company. However, you should be aware that these are terms that are used interchangeably to refer to the same concept. A shelf company is a ready-made company that has already gone through the relevant incorporation procedure in the jurisdiction but is not active until someone purchases the entity—thus implying that it is available for purchase.
The main advantage of purchasing a shelf company is that you can start operations sooner because you are transferring personal information from the entity that formed the new shelf company to your name. It speeds up the company formation process compared to starting from scratch.
Advantages of Buying a Shelf Company
Here are some of the reasons why you should buy a shelf or a vintage company in Dubai:
Shelf companies are ideal when action must be taken quickly, such as when an arrangement must be closed while all parties are in the same room or when an asset must be transferred immediately. You are not required to go through the name application process. If you are a lawyer, accountant, or another intermediary and the client's preferred company names are rejected, you must return to the client until proper names are approved.
The likelihood that a shelf company will no longer be available when you return to the seller is lower. You also do not have to wait for documents to be prepared. The buyer will be impressed with the efficiency and eager to get down to business right away. Although online incorporations have significantly reduced incorporation time, getting a shelf company is still faster and you do not have to deal with an unfriendly website.
Allows for Easier Access to Capital and Credit
Potential creditors or business resources are more likely to extend credit or lend to a well-established corporation than to a newer corporation. The company will have greater access to credit lines, leases, banking relationships, and investment capital.
Contracts are Available Immediately
Some UAE government bidding processes require your company to have been in operation for a certain amount of time. If a new company wishes to participate in such bids, purchasing a ready-made company becomes advantageous.
When you're asked to come up with names, it's usually difficult. If you can't think of a suitable name, you can choose one from the list that has already been incorporated. If you choose a young shelf company, you will most likely pay the same as if you were forming a new company, i.e., there will be no aged company premium. Alternatively, if the buyer is unconcerned about the name and simply wants a company, as is often the case with a simple holding company, you can select any company from the shelf list.
How to Purchase a Shelf Company in Dubai?
According to our consultants, the key to purchasing a shelf company in Dubai, in general, is to ensure that your due diligence is in order.This is due to the fact that an offshore business is exempt from financial reporting requirements. As a result, evaluating a shelf company for sale is more difficult than in a jurisdiction with a financial reporting requirement.
Let us go over the fundamentals of purchasing an off-the-shelf company in Dubai:-
Evaluate on Jurisdiction
The first step in purchasing a shelf company is to select a shelf company that is either (mainland) or in a free zone. Depending on where you want to conduct your operations and whether you want to serve the Emirati market or the wider region, you should look for a shelf company to set up shop.
The Limited Liability Company, also known as an LLC, is the most common type of corporate entity.
Another characteristic of Dubai companies is that you must apply for a license that covers the activities you intend to carry out in your business. If you want to buy a shelf company in a Free Zone, you must first determine which Free Zone allows your desired business activity. The vast majority of cases do not permit a company's domicile to be transferred from one Free Zone to another.
We think it is better to go ahead and start a new company in Dubai because new company formation is usually refined. However, if you choose to go the shelf company route, we require all of our customers who attain shelf companies to pass a previous test that our team of extensive research specialists needs to perform. Why do we insist on such a high quality standard? This is due to the fact that full compliance is a hallmark of our service, and we want to ensure that, despite the lack of an accounting requirement, you are aware of all potential liabilities. These outcomes, whether financial or otherwise, could be factored into an acquisition in addition to the records found in the list of shelf businesses on the UAE Companies register by checking business names.
Our expert, at Dhanguard, will investigate the entity's context as well as conduct a thorough examination of the shelf company's financial and credit history, so you know everything about the shelf corporation you are about to transfer into your name.
Making the Required Changes
There are some final steps you must accomplish to complete the company registration process before you can begin full trading after purchasing the company. You will need to update your company's Memorandum and Articles of Association to reflect the names of the new shareholders and directors. If you want to change your company's name, this is the time to do so. Then, as previously stated, you'll need to apply for the necessary business activity licenses so that you can operate your business as you see suitable.
Dhanguard can assist you in determining the best option for your business formation. We can analyze your industry and business requirements to recommend the best steps for starting a company. Dhanguard is a platform that will assist you in establishing your business. We facilitate the formation of your company through expert counseling and incubation, from incorporation, registration, and licensing to establishing your office space.
Contact us if you have any questions about a shelf company, starting a new company, or the various services required for business setup.