Practicing any business activity, whether it is a trading or professional activity, should be through a judicial person, which requires choosing one of the legal forms or status for the firm which intends to practice such activity. Subsequently, compliance with the above is a substantial requirement for the competent parties and authorities in order to issue licenses to practice various activities, and engage in the trading and legal transactions relating thereto. Therefore, choosing the right legal form of the establishment is subject to many considerations to be studied so as the firm may conduct its business in the way for which it has been established, and also to be able to maintain the continuity which it derives from the stability of its legal status. Among the considerations which should be observed in choosing the legal form of the firm are the following:
Compliance with the laws and legislation regulating the civil and commercial dealings and observing their provisions and rules, as there are certain types of trading companies which are not allowed to practice specific types of activities. For instance, limited liability companies are not allowed to practice the activity of insurance and money exchange. Also, there are certain activities which are not to be practiced except in certain legal forms; for example, firms specialized in legal consultancy and accounting services cannot function except through professional licences/companies.
The volume of the invested capital which should be employed for practicing the activity, which depends either on the personal ability of the investor in providing the required capital, or his ability to legally raise funds from different financing sources. For projects the execution of which requires provision of huge funds, it is advisable to choose public shareholding company in order to ensure availability of the required capital.
Scope of the firmâ€™s activities and whether it is planning to practice its activities on the local, regional or international level.
Nationality of the investor- A UAE national may practice most types of the business activities through a sole proprietorship or any of the legal forms of companies through entering into partnerships with others. But, if the investor is not a local, then he needs, in most cases, to have a local partner in order to be able to practice certain business activities, except for the special cases where the law does not dictate such requirement.
Trade Licences: Are the licences under which the natural or juridical person is licensed to practise any trade activity through buying and selling of goods. These licences are given to (for example) wholesale or retail trade enterprises, financial consulting offices, banks, insurance companies, contractors, hotels, transport and storing establishments.
Industrial Licences: Are the licences under which the natural or juridical person is licensed to practise any investment activity the object of which is to discover natural resources or to transform raw materials in terms of its structure or appearance into manufactured or semi-manufactured products, or to transform the semi-manufactured products into fully manufactured products by using mechanical power, and segregate the products, filling, assembling or packing them.
Professional Licences: Are the licenses under which the natural or juridical person is licensed to practise any profession in which he depends on his physical or mental efforts rather than depending on a cash capital. This licence is given to practise some professions such as auditing, legal, consultancy services and studies, business, medical and educational services as well as other personal services.
Licensing procedure for business projects involve the following:
A. Selection of the Legal Form
Suitable for the business project as per the type of business activity which will be practised, the amount of invested capital and other important considerations already referred to in this section in the light of which the firmâ€™s deed is prepared, signed by the concerned parties and attested by the Notary Public.
B. Obtaining Special Approval
This applies to certain activities which require obtaining special approvals from some competent authorities. If the required activity is conducting ordinary business, procedure of licensing may be started without the need for obtaining any such special approval.
C. Submission of Licence Application
The applicant, whether an individual or representative of a company under incorporation, shall submit to the Department of Economic Development the application duly filled in with all the particulars indicated in the required forms. The necessary documents should also be attached to the application as per the legal form to be assumed by the firm. The procedure in the Department involves a lot of measures which may be summarized as follows:
Receipt of the application, checking of the same, initial approval, preparation of business site, technical inspection, checking and fees payment. The applicant shall then be given two sealed copies of the licence, one to be used for inscription in the Commercial Register and the other for registration with the Dubai Chamber of Commerce & Industry.
Articles 2 & 5 of Federal Law No. (5) of 1975 concerning the Commercial Register stipulate that every merchant, branch manager, managers of commercial companies and the agents of foreign companies must inscribe their companies in the Commercial Register in accordance with the terms and conditions determined by the law. Here is a statement of the types of activities which must be inscribed in the Register and those which are not subject to this inscription.
A. Firms which must be Inscribed in the Commercial Register
These are the companies which practise business activities such as agricultural works, fishing, discovery of natural resources, industry related activities, activities related to electricity production, gas and water, construction, building and contracting activities, wholesale and retail traders, supermarkets, department stores, trade related services, machines and equipment hiring, hotels, showrooms, transport, storage and communication, finance, insurance and real estate.
B. Firms not subject to Inscription in the Commercial Register
These are the firms which practise professional activities such as services, legal consultants, accountants, engineering, architectural and technical consultants, administrative & economic services and consultations, other services such as photocopying, translation, shorthand, advertising, companies management, secretarial, exhibition organizers, public cleaning services, social services, education and social welfare, medical and health services, veterinary services, cultural and recreational services as well as personal and domestic services.