Branch vs.

LLC in the UAE

Although some of the procedures for setting up and obtaining a license can be lengthy, obtaining
the appropriate legal advice will greatly facilitate the process and help foreign companies
understand the optimal legal structure for conducting business in the UAE.

Form of Establishment Key Features Advantages/Disadvantages

Branch - Most popular way for foreign Advantages:

companies to retain 100% ownership;
- Legally, the Branch is an extension
of the parent company so it is not a
separate legal entity;
- The most common procedure for a
foreign company;
- 100% ownership and control retained;

- The Branch needs to have a national
service agent. This can be an
individual or a company provided that
the individual is a UAE national or the
company is wholly-owned by UAE
nationals. The national agent does not
acquire any rights in the Branch; it
merely provides services relating to
federal and local government
requirements such as complying with
the immigration requirements on the
Branch’s behalf. National agents will
normally receive a fixed annual fee;
- The Branch must carry out similar
activities to its parent and is not
permitted to import the products of the
parent company.
- National agent deals with governmental
authorities.
Disadvantages:
- Significant amount of red-tape to
register the Branch and obtain the
licence;
- Branch is not a separate legal entity;
- The Company will generally be taxed on
the profits of the Branch;
- Rigorous experience requirements for
the foreign company;
- Lengthier procedural requirements than
the LLC

Limited Liability Company - a form of private limited company; Advantages:

- Must be 51% owned by UAE - A separate legal structure;

nationals;
- Capital requirement which must be
fully paid-up on incorporation is AED
300,000 in Dubai and AED 150,000 in
Abu Dhabi;
- Limited liability;
- Any profits retained within the LLC will
generally not be subject to tax in the
parent company’s home jurisdiction;

- Day-to-day management can be - Does not require foreign company to

conducted by a foreign manager and in have significant experience, except in
fact UAE managers often provide a some sector specific areas.
power of attorney to the foreign
managers to enable them to carry-out Disadvantages:
the day-to-day management of the
business; - Has to be 51% UAE owned (although
profits can be shared in a different way);
- It is possible for the LLC’s
memorandum to provide that the - Up-front cost of capitalising the LLC.
profits of the LLC be shared in a ratio
which is different to the percentage of
shares owned by the shareholders (in
practice, it is often the case that the
UAE national receives a small
percentage of the profits).

- The Commercial Companies Law

permits the use of contractual
arrangements to give the minority
shareholder voting, management and
profit sharing rights.