A popular way for foreign companies to retain 100 per cent foreign ownership in the United Arab Emirates (UAE) is to open a branch or representative office. These offices do not have a separate legal identity but are treated as an extension of the foreign company, which remains liable for their activities.
A branch office can engage in commercial activity in the UAE and can earn profits. It is licensed for the purposes set out in its commercial licence but may only engage in activities similar to those carried on by the foreign company in its home jurisdiction.
A representative office is not permitted to earn profits within the UAE and the activities it may undertake in the UAE are limited to marketing and/or promoting its foreign parent company products and services.
Branch and representative offices share many similar features, as both operate under the authority of a commercial registration and licence in the name of the foreign company – and both are required to appoint a local services agent, who must be a UAE national. The process for establishing either a branch or representative office is therefore largely the same1. That process is dealt with below.
In a recent significant move, HH Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai has issued a new licensing law that aims to, amongst other things, organise the conducting of economic activities in the Emirate of Dubai and streamline the licensing process by facilitating coordination between the various government entities in Dubai. For further details on the new law please see the eighth issue of our local law series.