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Be skeptical when dealing with LLC co in UAE

Before starting your commercial project in UAE, Abu Dhabi, Dubai It is important to know the types of corporates & commercial and legal forms available in Dubai, Abu Dhabi in all UAE.

As defined by the UAE the corporation Law No. 2 of 2015, which aims to keep abreast the local and international economic developments and support the policy of diversification and economic openness of the UAE to maintain continuous and balanced growth In all economic sectors.

The UAE Corporate Law strengthens the modern legislative system in the United Arab Emirates, stimulates businessmen and protects their investments and reflects the qualitative shift witnessed by the UAE in terms of regional and global competitiveness in line with the best laws and standards applied worldwide.

 The requirements and conditions for issuance of commercial licenses for a corporation in Dubai and Abu Dhabi are different according to the nature of the project’s work and its legal form. In the following lines, we present the different types of corporates that can be established according to the law of corporation in the United Arab Emirates Dubai, Abu Dhabi

The UAE Commercial corporates Law No. 2 of 2015 abolished two of the legal forms of commercial companies that can be registered in the United Arab Emirates (the joint venture company and the shareholding company) and made commercial companies in the United Arab Emirates limited to Company Solidarity, public joint stock company, a private joint stock company and a limited liability company. Any company in the UAE that does not adopt any of these legal forms will be null and void. The contracting parties on behalf of these companies will be personally and jointly liable for any and all obligations arising out of such contract,

Most of the companies that were licensed during the year 2015 are limited liability companies, accounting for 69.7% of the total companies, with 23.3% of the total. In other words, 93% of 2015 were concentrated in these two types of licenses so we will discuss in detail in our article the Company Limited Liability, how it is established and dissolved.


       Limited liability Corporation.


Limited Liability Company (LLC) is the most common form corporates in Dubai, Abu Dhabi. Limited Liability Company can be formed by a minimum of 2 and a maximum of 50 shareholders whose liability is limited to their shares in the businesses the corporation must have 51% participation from a UAE national while the rest 49% can remain with the investor. Capital. At present, the minimum capital requirement for LLC corporate formation UAE is 300,000 thousand dirhams which can be in cash or in kind. It is also important to note that the capital must be divided into equal shares with the value of each not being less than thousand dirhams. Furthermore, as stipulated in the Companies Law, LLC can engage in any kind of business activity except to activities relating to banking, money investing on behalf of others and insurance

Forming a LLC corporation in Dubai gives foreign investors a host of advantages, thus making LLC the most popular of the legal forms of entry to Dubai & Abu Dhabi. Though the foreign equity of the corporate cannot exceed 49 %, but the profit and the losses incurred in the operations are shared in a ratio that is different than that of the share capital ratios, and the day to day activities can easily be undertaken by the foreign venture without the interference of the local UAE partner.

The formation of an LLC offers the entrepreneurs access to the wider UAE economy along with the Dubai and Abu Dhabi market, and is 100 % tax-free. Also The investor in Dubai, Abu Dhabi, UAE gets the investor visa under which he enjoys the investor’s status in UAE  along with his family and has the option to commence branches , can manage the business without the day-to-day interference from the UAE local partner, The assets and capital created will be in the name of the company and not in the name of the local national partner, also Easy to open global /local corporate bank accounts and avail credit facilities, And ask the partner only to the extent of his share in the capital, meaning that partners bear responsibility only to the extent of their financial contribution to the corporate capital. The corporate creditors are entitled to file a complaint against the company itself, not against its partners individually or as partners in their entitlements. Partners in limited liability corporates in Dubai or Dubai or any UAE’s Emirate are not liable for the debts of the company if it exceeds the value of their share in the capital. This article has been endorsed in the courts.

This principle causes problems for its creditors where they cannot get their rights because this company ask the partner only to the extent of his share in the capital and not in his personal capacityt, which leads to wasting the rights of creditors However, this rule is excluded if the partner has acted fraudulently or negligently at the expense of the company or its creditors, the liability is not divided in accordance with the provisions of the above paragraph. The partner may also be personally liable towards creditors, who can claim individual partners to take responsibility for the corporation debts and not only be responsible for their share of corporate. In this case, creditors can try to impose insurance on the personal funds of the partner, separately from the company, so before a lawsuit is filed against a limited liability corporate in Dubai, Abu Dhabi, the legal adviser must conduct a research about the company’s activities and its partners and transactions to determine how to deal with the issue. The burden of proof rests with the creditors to provide evidence of the company’s actions with any fraud or misconduct by the manager or partners.

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