Branch Company Formation UAE
The Companies Law, in article (313) allows a foreign company to exercise its main activity in the UAE by opening a branch or a representative office. The difference between the two is that the foreign company which opens a branch in the UAE may exercise freely the activities for which it is licensed whereas a representative office may practice only promotional business for the products and services provided by the parent company. Unlike a foreign branch a representative office cannot conduct business operation or market directly its product.
In order to engage a foreign branch to conduct its operation in UAE it should obtain a license from the Ministry of Economy & Planning prior to obtain the license from the concerned authority in the respective Emirate. Foreign companies licensed to operate in UAE may not start their activities before being inscribed in the Ministry’s Register of foreign services.
An agent should be a UAE national. A service agent is not an empowered agent who can bind his principal as explained in the definition of the term “agent” in the Commercial Companies Law. A service agent is not responsible to undertake any financial obligations concerning the activities of the company’s branch or office within the UAE or abroad. He should not interfere in the matters related to the company’s management or activities. His duties towards the company and others are confined to providing such services as required by the principal. These services usually include obtaining of entry/residence permits, acquiring of the necessary licenses or facilitating the processing of its transactions with the government authorities.
The service agent is remunerated in lump sum for the services rendered to the foreign company, which sum shall be the subject of an agreement between him and the company. Foreign company’s branch or representative offices are required to submit a bank guarantee of AED 50,000 favoring the ministry being part of the license processing procedure. The license of the foreign company’s branch/representative office shall be cancelled if it is not renewed within two years after the expiry date and the fee due to the ministry shall be deducted from the guarantee