Sole Establishment - Everything you Need to Know in Dubai, UAE

Are you looking forward to establishing a sole proprietorship in Dubai? Then before anything you should get started with understanding what it takes to open a single ownership company in Dubai. A sole proprietorship is a legal establishment in Dubai with a legal form of license owned by only one person, and the institution's owner must be a natural person as financial disclosure and all obligations are borne by the owner himself.

 

Who are eligible to own a sole proprietorship license? 

 

Individuals of the UAE and Gulf Cooperation Council countries can establish a sole proprietorship to engage in most economic activities, while other nationalities can only engage in professional activities if they produce a residence permit and appoint an Emirati service agent or a local sponsor.  

Let’s take a quick view of the general terms and conditions for the sole proprietorship

• The financial disclosure is personal, and the institution's owner bears all material obligations. 
• The legal age of the establishment's owner must be at least 18 years old.  
• The institution has the authority to appoint one or more managers by departmental laws. 
• Sole proprietorships are not permitted to participate as partners in any licenses. A corporation may not entirely own a sole proprietorship. 
• The sole proprietorship requires no capital. 
• The establishment's trade name must be associated with the type of authorized activity, but the legal form is not required to be mentioned.
• They must pay all applicable taxes on the business's income.
• The sole establisher must obtain an education qualification for consultancy activities.

 

License Issuance procedures and required documents

 

Stage 1: Trade name Reservation and Initial Approval

Documents required:-

• Application form
• The documents of the owner of the institution, the service agent, and the manager shall be submitted if required:  
• Fill out the registration and license form only if the owner is a citizen or GCC  
• Passport copy
• Copy of Emirates ID (for citizens/residents) 
• Unified Number
• Memorandum of Association (MOA) 
• No Objection Certificate (NOC) from the residence sponsor (in case the owner is a foreigner with the residence of an employee in Dubai)  

1. Eligibility check: Determine whether the company is eligible for a Dubai license. Depending on the nature and activity of the business, some businesses require additional approvals or permits.

2. Decide the type of business: The owner must select the best business activity for their company.

3. Register a Trade Name: After deciding on a business activity, the owner must reserve a trade name for the company. This is possible via the Dubai Department of Economic Development (DED) website. - Click Here - (https://eservices.dubaided.gov.ae/) 

4. Apply for Initial Approval: The owner must apply to the DED for preliminary approval. The application contains information about the proposed business activity as well as the trade name. Within a few days, the DED will review the application and provide preliminary approval.

The transaction completion time for initial approval is not specified because it is dependent on Special Committee approval.

5. Notarize the Memorandum of Association (MOA): After receiving preliminary approval, the owner must draft a Memorandum of Association (MOA) and have it notarized by a public notary in Dubai.

6. Obtain a Physical Address: The owner must obtain a physical address in Dubai for their business. This can be accomplished by renting office space, commercial real estate, or a virtual office.

7. Submit the Application: The owner submits the initial approval, MOA, and other required documents to the DED, along with the applicable fees. The DED issues a license if the application is approved.

Follow the link https://invest.dubai.ae to start the procedure of submitting through the approved service centers or the Invest in Dubai platform. And the Initial Approval Fee is 120 AED. Booking the trade name is through the Invest in Dubai platform and can be done before or after the initial approval and at the same time if the required name is available. Because the Trade Name Reservation Fees start at 620AED.

Stage 2: License Issuance and Renewal

 

Documents required:-

• Ejari certificate (certificate of lease contract data issued by RERA) 
• Service agent contract if required (electronic through service centers)
• External approvals by activity

1. License Issuance: The DED issues the owner- a license once the application is approved. This license must be prominently displayed on the business premises.

2. Commercial Registration: Within 30 days of receiving the license, the owner must register their business with the Dubai Chamber of Commerce and Industry (DCCI).

3. Obtain Additional Approvals: Depending on the nature of the business, the owner may need to obtain additional government approvals or permits.

4. Fee payment: Pay the required fees (approximately). License fees for a sole proprietorship of not less than AED 4,000 + market fees of 5% of the rental value + activity fees (if any) + service agent contract fees (if any)

5. Renewal: To keep their business legal, the owner must renew their license on an annual basis. This can be done either online or at the DED. The owner must provide all required documents, pay all required fees, and keep all business details up to date.

6. Amendments: If the business details change, such as ownership or business activity, the owner must apply for an amendment to the DED.

 

Benefits of establishing a Sole Proprietorship

 

A sole proprietorship is an easy and low-cost way to start and run a business. You have complete control over the business as the sole owner and can make quick decisions. Sole proprietorships may be eligible for tax breaks and have fewer compliance requirements than other types of businesses. Some jurisdictions provide sole proprietors with limited liability protection. When the time comes to close the business, it is simple to dissolve without any legal ramifications.

Obtaining initial approval, drafting and notarizing an MOA, obtaining a physical address, submitting the application, and obtaining a license are all steps in the license issuance procedure for a sole proprietorship in Dubai. Once the license is issued, the owner must register their business, obtain any additional approvals required, pay fees, and renew their license on an annual basis.