Business Setup & Planning - Incorporation


The law permits the establishment of a sole proprietorship for the U.A.E. nationals and nationals of the Gulf Co-operation Council. Foreign investors may appoint a commercial agent to represent their interests in the UAE. instead of establishing a permanent presence. The UAE, Commercial Agencies Law (Federal Law No. 18 of 1981, as amended by Federal Law No. 14 of 1988) regulates and governs the appointment of commercial agents, sales representatives, and distributors in theUAE. The law defines a commercial agency as any arrangement whereby a foreign company is represented by an agent to “distribute, sell, offer, or provide goods or services within the UAE for a commission or profit”. Since the procedure and conditions differ in every case, the following is a list of conditions applied to each case for establishing sole proprietorship :

  • In case the investor is a national individual

In this case, the national individual who wishes to practice a business activity may apply to the Department of Economic Development (on the form specified for such purpose) for obtaining the license to practice the required activity, attach the required documents and complete the procedure as set by the Department.

  • In case the investor is a citizen of one of the Gulf Co-operation Council countries

In accordance with Article 8 of the United Economic Agreement in respect of treating all nationals of the Gulf Co-operation Council countries as nationals of any member state without any discrimination in carrying out business activities in the fields of industry, agriculture, livestock, fisheries and contracting, the beneficiary of such a license in the U.A.E. must be actually conducting the activity for which he is licensed in compliance with the provisions of article (10) of the executive regulations of the Federal Law No. (2) of 1979.

Pursuant to the Federal Law No. 2 of 1989 concerning permitting citizens of the Gulf Co-operation Council countries to conduct the retail and wholesale trade in the country, of which the first article stated that it is permitted to the nationals of the Gulf Co-operation Council states, whether they are natural or juridical persons, to practice retail and wholesale trade in the United Arab Emirates according to the rules and regulations stipulated by a cabinet resolution.

It is conditional for an investor, according to this law, to be a natural person residing in the United Arab Emirates , must practice the required activity by himself and have a license to practice the activity in his country of origin. However, he may not open branches inside the country.

In case the investor is a legal person wishing to conduct retail or wholesale trade according to this law, the investor must be in the form of a company of which the share owned by the U.A.E. nationals is not less than 50% of the capital. As for the ratio of legal shares concerning the activities for which no executive decisions have been issued in the country, the provisions of Article (22) of the Federal Law No. (8) for 1984 concerning commercial companies stated that “observing the commercial activities confined to nationals and prescribed by this law, each company to be established in the country should have one or more nationals whose share is not less than 51% of the capital”.