Requirements for Establishing a Holding Company in Dubai

Overview:

Holding companies are those legal entities that come into existence on local or foreign investors’ account. They have ownership shares or assets in other businesses. In the UAE, holding companies can be established across all the Emirates. Under the Dubai Company Act, holding companies registered by foreign investors in the UAE can be done in several legal structures. But a Dubai holding company is not permissible to do the business through offering services or manufacturing product. Its primary advantage is that the owner is able to exercise control over other corporations

Requirements for Establishing a Holding Company in Dubai

All holding companies in Dubai are required to adhere to the provisions of the UAE Company Law. However, holding companies have specific requirements as follows:

• A management board must be appointed to oversee policy development for the organization and its subsidiaries. The board must supervise the activities carried out by its subsidiary or subsidiaries.
• Shareholders must appoint a director for each subsidiary company.
• A holding company should ensure that its subsidiaries have enough capital for their own operation.
  Risk limits, including those in foreign currency, market, or industry-related risks, need to be implemented for the subsidiaries.
• Key decisions regarding contracts and agreements for subsidiaries fall under the holding company.
  
  If you are interested in setting up a holding company in Dubai, our consultants can guide you through the whole registration process, from document preparation to compliance requirement

Types of Holding Companies in Dubai

Setting up a holding company in Dubai provides flexibility with regard to legal entity structures. There are two major types of holding companies in Dubai:

Onshore Holding Company – Foreign investors need to join with a UAE national who will own 51% of the company.
Free Zone Holding Company – It permits 100% foreign ownership and is preferable for foreign investors.

Activities of Holding Companies in Dubai

The primary role of a holding company in Dubai is to own shares and manage the assets of subsidiary businesses. A holding company may be owned by an individual; however, its establishment is usually made by companies that want to gain control over several businesses.

As a holding company, it does not carry out business operations, does not manufacture, and does not offer any products or services. After the Department of Economic Development (DED) registration, a holding company carries out business management in all ways like other legal and financial forms.

Main Roles of Holding Companies

In Dubai, holding companies are subject to the following corporate governance and operation requirements:

• Has to have at least one director or a board of management.
• Responsible for determining internal policies and ensuring regulatory compliance.
• If subsidiaries are formed, the management board is responsible for their supervision.
• Ensures the company and subsidiaries have sufficient capital.

Benefits of Holding Companies in Dubai

The following are the benefits of setting up a holding company in Dubai for foreign investors:

• Dubai has a beneficial tax environment that favors holding companies. The holding companies enjoy the lowest corporate tax rate of 9%.
• Flexible Business Structures – Holding companies can be constituted as:
  – LLCs
  – Joint Stock Companies
  – Partnerships
  – Free Zone Companies
• No Minimum Share Capital for LLCs – Joint Stock Companies, on the other hand, require a minimum share capital of AED 10 million.

How Holding Companies Work in Dubai?

Whichever be their location in Dubai, whether onshore or within a free zone, holding companies work based on certain principles:

Holding companies are not held liable for debts and liabilities arising from their subsidiaries. This offers asset protection.

They control the flow of money within the subsidiary and ensure solvency for each subsidiary.
Assets and activities of each subsidiary should be separated even if operated under the same holding company.

The liability for debts of the subsidiary is restricted to the holding company’s contribution of capital for 
the subsidiary. Most holding companies in Dubai are structured as LLCs due to liability protection.

Arnifi – As Your Trusted Partner

Arnifi simplifies business setup, whether for holding companies or subsidiaries, by taking care of licensing, documentation, and regulatory compliance. Our expert team takes care of smooth visa processing, effective accounting and tax services, and continuous post-establishment support. Whether you opt for a free zone, mainland, or offshore setup, we assist you in navigating legal and tax obligations with ease. Concentrate on business expansion while Arnifi takes care of the rest.

Also Read – UAE Subsidiary or Holding Company | Best Locations to Register