30 April, 2020
10 Simple Steps to get your Trade License in UAE
For business owners and entrepreneurs, the UAE has demonstrated that it is an ideal business destination to set up your business. Whether your business idea gets established in the UAE (through a market entry strategy) or your existing business requires diversification or growth across the country (through a market expansion strategy) it is definitely important to keep the UAE markets into your strategic consideration.
It therefore, becomes critical to understand the basic steps involved in getting your trade license, which is the basic official document that legally recognizes your business.
10 Steps for getting Trade License:
- Mainland or Freezone?
- Legal Form
- Business Activity
- Local Partner
- Trade Name Reservation
- Initial Approval
- Tenancy Contract
- External Approvals
- Notary Public
- Final Approval and Issuance
Here are the fundamental steps involved in obtaining your trade license.
1. Mainland or Freezone?
Before getting your trade license, it becomes necessary to first decide what jurisdiction will govern your business. In Dubai, there exist over 35 different free zones and special jurisdictions that legally issue trade licenses for businesses. For many business owners, it is a tough decision to make, but one can take a few points into consideration such as business scalability before deciding. To help you in making this decision, please do refer our earlier column here
2. Legal Form
Companies that can establish legally within UAE can be any one of many legal forms, such as sole proprietorship, single-owner LLC, Limited Liability Company, civil company, or branch of a foreign company, and so on. The main criterion behind the determination of legal structure is the ownership pattern of your company. To know more about the legal forms available for setup, please refer our earlier column here
3. Business Activity
Once you determine the jurisdiction and the legal form (based on ownership) it is now critical to list out the core activities that you will be engaging in. These core activities must be listed out as per the exact definition and code as laid out by the license issuing authority. The business activity (or activities) that you choose will also determine the type of trade license you will obtain (professional, commercial, or industrial).
4. Local Partner
Some types of businesses in the UAE require a local partner or a local service agent to be listed in the trade license. The local partner (or service agent) has to be an Emirati individual or an Emirati company, in order to meet the license issuing criteria. Recently, the Dubai Economic Department (license issuing authority for Mainland Dubai) cleared more than 122 business activities for 100% Foreign Direct Ownership. This effectively allows full 100% ownership of your business (without the requirement of a local partner) for those companies involved in the listed activities. However, whether those companies may still require a local service agent remains at the discretion of the Dubai Economic Department.
5. Trade Name Reservation
It is important to reserve your company trade name with the license issuing authority. It is imperative that you complete this process by being prepared with at least 3-5 options in English and Arabic, to avoid any duplication with existing trade names.
6. Initial Approval
Once all the necessary forms are filled out and signed by the concerned parties, it becomes essential to get all documents in order (including legal translations, attestations etc). With all necessary documentation, the license issuing authority will give an initial approval, at a small fee. This means that your trade license is initially approved, and you must follow certain steps (with authenticity) to get your final approved trade license. This job is best done by an expert document clearance and Government relations service provider.
7. Tenancy Contract
All businesses in the UAE must mandatorily be associated with a physical office space. The office space may be a simple desk or could be a large space. Some companies provide business centers that give the required flexibility for co-working spaces, work desks, office spaces, or even an entire floor – to allow startups to get their office space while maintaining the rules laid out by the authorities. The most important document to acquire at this stage is a tenancy contract confirming that your business is associated with the said location.
8. External Approvals
Some business activities require approvals to be obtained by other authorities, such as Dubai Municipality, Security Industry Regulatory Agency (SIRA), etc. These external approvals are not for all businesses, and only for specific activities. The license issuing authority will indicate this during the initial approval stages.
9. Notary Public
Your company memorandum must be notarized, in order to legally establish your entity. If your activity involves the appointment of a local service agent, then the same must also be executed through the notarization process. Engaging with the right Government relations service provider is essential to ensure that you get the least hassles in this stage, especially as it involves the physical presence of all signatories.
10. Final Approval and Issuance
Once all of these are in order, and the commensurate payments paid, the license issuing authority will finally issue the trade license of your company.
The above processes broadly hold good as a skeletal framework and may be subject to slight changes depending on the jurisdiction. For further details on the trade license issuance, do get in touch with us for a consultancy session and to help you get your trade license.