Ensure Proper Due Diligence Prior to Setting up a Business in the UAE
Setting up a business in the United Arab Emirates is an exciting opportunity for all and can lead to huge returns. When bright-eyed investors or entrepreneurs come to the UAE seeking such opportunities, they sometimes forget about the legal hurdles that exist here, which may not exist in their home countries.
It is important to understand policy in regards to starting a business in the UAE. What does this mean? This means that once fundamental policies are clearly understood, then entrepreneurs or investors will be able to set up an establishment with ease, which is extremely important in a market which quite often lacks transparency.
A relevant situation arose recently when a businessman, Yousuf, looking to expand his operations to Dubai was setting up a local LLC company. As per UAE regulations, the name of a local LLC company should contain the activity of the business within the name, and this is generally a well-known practice.
From a policy perspective, the reason for this regulation is so that companies adhere to their license designation. For example, if you are trading, then your name should include the word trading. This is a logical policy as it prevents people from masking their activities or acting outside of their remit.
Yousuf, however, was somewhat disturbed by this policy and did not want the activity in the name of the business. This added another dimension to the problem, as the chosen name was not something easy to recognize nor was it reflective of the activity.
Yousuf attempted the process by himself but was unable to overcome the first hurdle. The lack of flexibility meant that he was unable to move forward without approvalsfrom the relevant authorities. Finally, Yousuf contacted a legal adviser who specializes in helping foreign companies set up subsidiaries in the UAE. Yousuf’s story illustrates how important it is to get legal advisers involved at the beginning stages of making business decisions.
The overarching principle here is to get legal advisers involved in this important, life changing process from the very beginning.