Page 412 - Sustainable Cities and Communities Design Handbook

Business Ventures and Financial Sector Chapter j 19 385

3. Joint Ventureda company concluded between two or more partners to
share the profits or losses of one or more businesses being performed by
one of the partners. Local equity participation must be at least 51%.
4. Public Joint Stockdany company whose capital is divided into equal
value negotiable shares and a partner therein is only liable to the extent of
his share in the capital.
5. Private Joint Stockdnot less than three founder members may incorpo-
rate. Shares are not offered for public subscription. The founder members
will fully subscribe to the capital (not less than 2 million AED).
6. Limited Liability CompanydAn LLC can be formed by a minimum of 2
and a maximum of 50 persons whose liability is limited to their shares.
Most companies with expatriate partners have opted for this LLC, because
this is the only option that will give maximum legal ownership, i.e., 49% to
the expatriates for a trading license; 51% UAE nationals participation is the
general requirement (normal share holding pattern is: local sponsor, 51%;
foreign shareholder, 49%). There is no minimum capital requirement for
establishing a company. The foreign equity capital cannot exceed 49%, but
the profit and loss distribution can be mutually agreed. The management of
an LLC may be performed by foreign and national partners or third parties.
The formation of a company takes approximately 1e2 weeks from the date
of receipt of all the documents.
7. Share Partnershipsda company formed by general partners who are
jointly liable to the extent of all their assets for the company liabilities and
participating partners who are liable only to the extent of their shares in the
capital.
Foreign direct investments (FDIs) are encouraged through branches and
representative offices of foreign companies and 100% foreign ownership is
permitted in the FTZs. Partnerships etc. are generally open only to UAE
nationals.
As mentioned before, LLCs are more commonly used by the foreign
investors and the following documents are required for LLC:
l certificate of capital contribution from a bank;
l auditor’s certificate for shares of all kinds;
l all other items requested in the application form.
There are five steps to set up an LLC:
1. Approval of the company name and activity from the relevant office of
Economic Development, Municipality and Chamber of Commerce;
2. Articles of Association must be notarized according to the requirements of
each emirate(s);