Business Entities in the UAE Flashcards
What is a Professional License?
For individuals and businesses offering professional services (e.g., consultants, artisans, and craftsmen)
100% foreign ownership is allowed and the owner holds full liability.
What is a Commercial License used for?
For businesses involved in trading and commercial activities
Can be issued to an LLC or a sole proprietorship and requires a local sponsor in mainland businesses.
What activities does an Industrial License cover?
For manufacturing and industrial activities (e.g., factories and production plants)
Requires approvals from relevant authorities for environmental and safety standards.
What is the jurisdiction of a Mainland company?
Regulated by the Department of Economic Development (DED)
Allows trading within the UAE and internationally.
What are the key features of a Free Zone company?
Operates within a designated free zone area
Offers 100% foreign ownership and tax incentives.
What is an Offshore company?
For international business operations
No physical office required in the UAE and cannot conduct business within the UAE market.
Define Sole Proprietorship.
Owned and operated by one individual
Owner has unlimited liability for debts and obligations.
What is a Civil Company?
For professionals such as doctors, engineers, and consultants
Requires a local service agent for foreign investors and has unlimited liability for the partners.
What is the structure of a Limited Liability Company (LLC)?
Most common business entity with 1-50 shareholders
Limited liability and minimum local ownership requirement removed in some sectors.
What is a One Person LLC?
Owned by a single individual with limited liability
Suitable for small businesses or startups.
Describe a Simple Limited Partnership.
Includes one general partner (unlimited liability) and one or more limited partners (limited liability)
General partner manages the business.
What is a Partnership Company?
Two or more partners sharing responsibilities and profits
Unlimited liability for all partners.
What is a Private Share Holding Company?
Minimum capital requirement: AED 5,000,000
Limited liability for shareholders and shares cannot be publicly traded.
What is a Public Joint Stock Company (PJSC)?
Suitable for large-scale projects and public offerings
Minimum capital requirement: AED 30,000,000 and shares can be publicly traded.
What are the advantages of a Sole Proprietorship?
Full control, simple setup
Disadvantage: Unlimited liability.
What is a disadvantage of a Civil Company?
Requires a local service agent
Advantage: Suitable for professionals.
What are two advantages of an LLC?
Limited liability, flexible structure
Disadvantage: Annual auditing required.
What is the main disadvantage of a One Person LLC?
Higher setup costs
Advantage: Full control with limited liability.
What is a disadvantage of a Simple Limited Partnership?
Unlimited liability for general partners
Advantage: Flexible profit sharing.
What are the advantages of a Private Share Holding Company?
Limited liability, capital raising potential
Disadvantage: No public trading of shares.
What is a disadvantage of a Public Joint Stock Company?
Complex regulatory compliance
Advantage: Access to public capital markets.
What is required for a trade name change?
Approval from the Department of Economic Development (DED)
Businesses can request a trade name change.
Can companies switch between different business forms?
Yes, conversion of business form is allowed
Example: LLC to PJSC.
What is necessary for mergers and acquisitions under UAE law?
Proper approvals
Allowed under UAE commercial law.
What recent reform allows for foreign ownership?
100% foreign ownership is permitted in several mainland sectors
Significant change from previous regulations.
What is the role of the Department of Economic Development (DED)?
Regulates mainland businesses
Key government authority in business licensing.
What do Free Zone Authorities oversee?
Regulate free zone entities
Important for businesses operating in free zones.
What does the Ministry of Economy handle?
Federal-level business regulations
Plays a crucial role in economic policy.
What is the function of the Securities and Commodities Authority (SCA)?
Regulates public joint stock companies
Ensures compliance with securities laws.
Fill in the blank: A _______ company cannot conduct business within the UAE market.
Offshore
True or False: A Civil Company has limited liability for partners.
False
Civil Companies have unlimited liability for partners.
