An introduction to stock options for the tech entrepreneur or startup employee dubai
Founders have to choose the right location and form of the company, structure a company and its ownership, employ people, enter into contractual arrangements with customers and suppliers, resolve disputes, and so on. Understanding of the UAE legal framework may considerably help entrepreneurs to make right decisions and future-proof their start-ups. The UAE legal system is the backbone to rules and regulations that need to be followed by entrepreneurs while setting up a business.
It also follows the principles set out by the Islamic Sharia Law, which governs such aspects of life for Muslims, as personal matters and morality. Notwithstanding the importance of Sharia Law, it is important to note that its application in the UAE is limited to:. Being a federation composed of seven member emirates, the UAE has federal and local legislation. Federal laws and regulations are applicable to the country as a whole across all the emirates while local laws and regulations govern matters not covered by the federal legislation within an individual emirate.
Major sectors, such as immigration and labour relations, are governed at the federal level, however, licensing of businesses is largely governed at the local level by relevant local authorities. The legal framework for commercial activities in the UAE is established on a federal level, with each emirate exercising a tailored set of rules and regulations within its respective territory.
Commercial companies operating in the UAE are required to establish a formal legal presence and be licensed. Some licenses require prior approval from certain ministries and other authorities, such as the ones for banks and financial services providers, or law firms, or pharmaceutical products manufacturers.
Commercial licenses are specific to the proposed activity and location of the business, never being generic. For example, a licensing permit issued for a business venture in Dubai does not by default permit the business to be conducted in the emirate of Abu Dhabi. Therefore, selection of the location for a new business entity is one of the key considerations for start-ups in the UAE as it determines which legal authority to turn to for registration procedures.
Entrepreneurs may decide to opt for a mainland company, free zone entity or an offshore company depending on the location of a target audience and company needs. They are typically used for trade within the local UAE market. The Federal Law No. The law also sets out requirements for companies regarding shareholders, directors, minimum capital levels and incorporation procedures. An important consideration when establishing a mainland company is that it should have one or more UAE partners holding at least 51 percent of the share capital of the company.
Moreover, certain classes of activities, for example, real estate brokerage, can be exercised exclusively by UAE nationals. Due to the requirement of local participants, maximum foreign equity participation for mainland companies is 49 percent. However, agreements can be tailored so that the majority of profits go to the expat partner.
Another consideration to keep in mind - mandatory existence of a physical office in the mainland. Free zone establishments do not require to have a UAE national as its partner, and this is one of the advantages of setting up a business in a free zone. Introduced to attract foreign investments, free zone companies can be percent owned by a foreign investor.
Hence for complete ownership, expat business owners may look to the free zones as base locations. Trading, distributorship, warehousing, manufacturing and many other activities may be performed in these zones, and there is no duty for import and export of goods into and from the free zone except for exports into mainland UAE. A regulatory authority exists in each free zone, which governs and administers the companies located there according to the free zone regulations.
Typically, free zones are industry focused and are tailored to particular industries and, therefore, only authorise specific types of activities. The entity established in the free zone can only operate its activity within the free zone it is registered. An offshore company may be a solution if you do not need to set up a physical office, there is no requirement to issue residency visas, and all activities of the business are outside of the UAE.
Offshore companies should operate their business from abroad and are not permitted to conduct business within the UAE. However, they can interact with local banks and set their local legal representatives. Here are some key legal documents, essential for every company formed in the UAE:. Considered to be the most important legal documents of any company, they establish the objectives of the company, its name, location, structure of capital and management, the duties and responsibilities of key members of the organisation along with detailed descriptions of how they can be amended and so on.
Usually, these documents include memorandum of association, shareholders agreement, board resolutions, and other company bylaws. Advanced search Language tools: Chart of Accounts Explanation - AccountingCoach. Dotdash is among the fastest-growing publishers online. The Goldman Sachs Group, Inc. Take an interactive tour of how the technology works and start to envision its potential for redefining the.
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