Minimum two and maximum fifty persons can form a limited liability company. However, U.A.E. National's share in the capital should be minimum 51%; at any given time share of the U.A.E. National partner should not fall below 51%. Partners may be natural persons or a corporate body/company. Each partner shall be responsible only to the extent of his share in the capital for the company’s liabilities.

The Law stipulates that companies engaging in banking, insurance, or financial activities should be run as public shareholding companies. Foreign banks, insurance and financial companies, however, can establish a presence in Dubai by opening a branch or representative office.

Shareholding companies are suitable primarily for large projects or operations, since the minimum capital required is Dh. 10 million (US$ 2.725 million) for a public company, and Dh. 2 million (US$ 0.545 million) for a private shareholding company. The chairman and a majority of directors must be UAE nationals and there is less flexibility of profit distribution than is permissible in the case of limited liability companies.

The Memorandum of Association is a contract between the partners to form a L.L.C. and it contains the following information:

• Name of the company, its objectives and registered office address.
• Name of the partners, their nationalities, place of residence and residential addresses.
• Amount of the share capital, share of each partner, value of each share,
• names of the partners and method of capital contribution by the partners.
• Names of the directors and their nationalities.
• Date of commencement and period of contract.
• Method of profits or losses distribution and share of the partners in the
• profits or losses.
• The procedure to be adopted for sending notices to the partners.

• Liability of partners is limited to the extent of unpaid capital.
• Company attains a corporate entity different from its partners.
• The partners can appoint Director(s) who are authorised by the
• memorandum to carry on the business of the L.L.C. independently without involvement of the U.A.E. national partner.

Any expatriate partner in a Limited Liability Company is eligible for sponsoring spouse and other family members on residence visa if his share in the capital is Dhs. 70,000/- or more, also he should be a director in the company and his salary needs to be stated in the Memorandum of Association (as required by immigration rules).

The company may undertake any business activity permitted by the Department of Economic Development except business of banking, insurance and investment of funds for third parties.

By practice, the department does not permit,
Two different classified business activities under one license e.g. trading and manufacturing need separate licenses.

Or
Two different designated classes of activities under one license, e.g. trading of electronics and Jewellery need separate trade licenses.

Minimum share capital required for a specific trade license is U.A.E. Dhs. 300,000/- . The share capital is divided into shares of Dhs. 1,000/- each.

For emirates other than Dubai capital requirement is Dhs. 150,000/- and Dhs. 1,500,000/- respectively. The share capital is divided into shares of Dhs. 1,500/- each

I Dhs. 300,000/- for Specific Trade License.

Contribution in Cash
I Existing Sole Proprietor or partnership concerns can contribute capital in cash.
Ii New companies have to compulsorily contribute capital in cash only.

Contribution in Kind
I Existing Sole Proprietor or partnership concerns can alternatively contribute
capital in kind viz, by contributing fixed assets and / or stock.
Ii New companies cannot contribute capital in kind.

Notes:

In case of capital contribution in cash, full amount should be deposited in any bank operating in the U.A.E. This amount can be withdrawn only by the director of the company upon submission of proof of the company’s formation.

Kind contribution requires details of contribution in kind and full audited financial

statements.

Dhs. 300,000/- for General Trading License.

• Contribution in Cash
  New companies or existing Sole Proprietorship concerns converting into a Limited Liability Company have to compulsorily contribute capital in cash.
• Contribution in Kind Only existing partnership companies are allowed to contribute capital in kind.

Notes:

In case of capital contribution in cash, full amount should be deposited in
any bank operating in the U.A.E. This amount can be withdrawn only by the director of the company upon submission of proof of the company’s formation.

Kind contribution requires details of contribution in kind and full audited
financial statements.

Cyprus combines a low-tax regime with a network of double tax treaties. It has concluded the highest number of double tax treaties compared to any other offshore jurisdiction, particularly with Central and Eastern European Countries and a number of Middle Eastern countries. Most of the Treaties follow the OECD model and all of them have the impact of reducing or eliminating the normal withholding taxes imposed by the Contracting states on dividends, interest and royalty payments.

This is beneficial for trade with certain Eastern European Countries and Russia because foreign investors investing in Eastern Europe have the opportunity to channel their investments through a country, such as Cyprus, which has a treaty with the investment recipient country allowing for a reduction and in some cases elimination of the withholding taxes.

Conclusions

Cyprus, one of the smallest European low tax jurisdictions, is a suitable place for locating an intermediary company due to the island's combination of tax treaties and low-tax regime. Dividends can flow through the Cyprus company totally tax free and the company can be used to take advantage of the extensive network of double tax treaties.

The shareholders / partners may appoint themselves or other persons as Directors to run and manage the business of the company. Only the directors have the powers to run and manage the day to day operations of the company, the partners are not given any powers to run and manage the company.
Either there will be one Director or Board of Directors appointed to manage the company.

All Powers of Directors are generally stated in the Memorandum of Association including power to open and operate bank accounts and borrow money from banks.
Even a company can be appointed as a Director of the company.

The directors are responsible for the following important matters:

i The directors will manage the day-to-day business operations of the
company as per the powers given in the Memorandum of Association of the company. His actions will be binding upon the company provided he has acted in his capacity as Director of the company and he has not exceeded his powers.

ii Proper books of accounts have to be maintained and audited on a yearly
basis. The directors are responsible for preparation of the balance sheet and the profit and loss account and a report on the activities and the financial position of the company including the proposal on distribution of the profits of the company within three months of the closing date of the financial year. The directors within the following ten days to the approval of the above shall present them to the ministry and the competent authority.

It is said that if creditors file a suit for winding up and the court auditors do not find proper books of accounts and are not able to ascertain why the company is not in a position to pay the creditors, then the company’s partners and directors would be held jointly responsible to the full extent of their fortunes for the company’s liabilities.

iii The directors shall convene the annual general meeting of all the partners
at least once a year within four months following the end of the financial year to conduct the following business:

• Hearing the report of the director and the auditor.
• Discussing and adopting the balance sheet and the profit and loss
  account
• Determining the profits to be distributed
• Re- appointing the directors and fixing their remuneration
• Re- appointing the auditors and fixing their remuneration

iv The phrase “Limited Liability” should be added to the name of the company
in addition to a statement showing the company’s capital. If the directors fail to comply with these requirements they shall be jointly responsible to the full extent of their fortunes for the company’s liabilities.

v A register containing the following information shall be kept at the
registered office:

• The names of the partners, their residence addresses, nationalities and
  professions.
• The number and value of shares owned by each partner.
• Details of share transfers, date of transfers etc.

Directors’ can be remunerated in the following manner (and /or): -

• Monthly salary
• Perks viz. fully furnished accommodation, car and its maintenance, medical benefits for self and family, electricity and water, etc. Leave salary and gratuity.
Fist class return air fare for self and family.

• Management fees based on percentage of sales of the company.

iv The phrase “Limited Liability” should be added to the name of the company
in addition to a statement showing the company’s capital. If the directors fail to comply with these requirements they shall be jointly responsible to the full extent of their fortunes for the company’s liabilities.

v A register containing the following information shall be kept at the
registered office:

• The names of the partners, their residence addresses, nationalities and
  professions.
• The number and value of shares owned by each partner.
• Details of share transfers, date of transfers etc.

Directors’ can be remunerated in the following manner (and /or): -

• Monthly salary
• Perks viz. fully furnished accommodation, car and its maintenance, medical benefits for self and family, electricity and water, etc. Leave salary and gratuity.
Fist class return air fare for self and family.

• Management fees based on percentage of sales of the company.

iv The phrase “Limited Liability” should be added to the name of the company
in addition to a statement showing the company’s capital. If the directors fail to comply with these requirements they shall be jointly responsible to the full extent of their fortunes for the company’s liabilities.

v A register containing the following information shall be kept at the
registered office:

• The names of the partners, their residence addresses, nationalities and
  professions.
• The number and value of shares owned by each partner.
• Details of share transfers, date of transfers etc.

The partners can give loans to the company and they can be paid interest at the commercial rates prevailing in the market. It is advisable to add such a clause in the memorandum of association of the company.

• One time charges to Economic Department Dhs. 3,000/-.
• Part of license fees are based on -
• 5% of the tenancy contract value of expatriate Director's residence
  (located in Dubai or any other Emirate) or AED 1000/- in absence of the Directors residence tenancy contract.
• Dhs. 750/- charged for Director being appointed for unlimited period.
• 10% of the tenancy contract value of office, go down, stores, shop rented by the company.

Note: Expatriate partner's residence is not considered for license fees if he is not a Director in the company. If all partners are U.A.E nationals, their residence, offices, shops, etc. are not considered for license fees.

• Notarization fees - 0.25% of capital OR a sum arrived at by multiplying
the annual salary of each director with the number of years of his appointment as stated in the memorandum of association, which ever is higher; maximum Dhs. 10,000/- only. No further fees for alteration of capital is payable if initially Dhs. 10,000/- have been paid.
• Other miscellaneous fees and Chamber of Commerce fees.

Separate Power of Attorney can be issued by partners to Directors/ others giving all powers to run and manage the company. This Power of Attorney can be given to government departments / third parties who want to know about the powers of the Director’s / others instead of giving them the full Memorandum of Association.

The partners can commence business on receipt of the Certificate of Commercial Registration, provided the partners have obtained a residence visa. The partners shall be jointly liable for all acts and transactions performed on behalf of the company prior to its registration.

The Economic Department will not allow a company to be incorporated if any licence issued in the name of the local partner has expired.

Therefore before submitting the name and objects approval form to the Economic Department the investor has to ensure that all the licences issued in the name of the local partner are valid.

The residential address of the expatriate partners has to be stated in the Memorandum of Association and supported by the tenancy contract copy as 5% tax has to be paid on the per annum rental value.

A complete list of documents required to form a Limited Liability Company is enclosed herewith. Refer Annexure A.

AFTER FORMATION OF THE COMPANY

The company can open branches in Dubai by submitting an application alongwith the original trade licence and other documents.

The company will have to incorporate a new company in other emirates with the required capital and with a new Memorandum of Association stating therein that this new company is a branch of the Dubai Company.

Yes, the staff of H.O. and branch can work at either place as per the current regulations.

Yes, but if the capital of the company is less than Dhs. 300,000/- then it should be raised to Dhs. 300,000/- by an amendment to the Memorandum of Association. The original and the amendment to the Memorandum of Association alongwith other documents have to be filed with the Department of Economic Development, Dubai.

Existing L.L.C. can admit new partner with full capital contribution in cash or kind. If the company opts for kind contribution the following documents are required:

• Sale of shares agreement.
• Audited financial statements
• Statement of capital contributed in kind by all the partners
• Resolution of the partners
• Amendment in the Memorandum of Association of the company

Yes, the following documents are required to transfer shares by one partner to another partner/ person: Sale of shares agreement

• Amendment to Memorandum of Association
• Department of Economic Development will give advertisement in Arabic
• newspaper for 15 days for no objection by any member of the public.