| The
UAE Company Law defines a company as "a contract in accordance
with which two or more persons participate in an economic project
by providing a share of the funds or effort required and to
share the profits or losses resulting from such project". An
economic project is defined as "any commercial, financial, industrial,
agricultural, real estate or such like economic activity".
This
definition is similar to that adopted for companies in the
UAE Civil Code. A business established by an individual
could not be considered as a company in accordance with the
aforementioned definition in the Company Law. The conduct
of business through individual establishments owned either
by a UAE national, or by an expatriate, is quite common in
the UAE. Foreign individuals establishing a business presence
would be required to have a national sponsor. Thus, the provisions
of the Company Law will not be applicable to such individual
establishments. However, such establishments have to register
in the Commercial Register and acquire the requisite Municipality
licence in the Emirate where business is being conducted.
Companies
incorporated in the UAE have to take the form of one of seven
types.
1.
General Partnership
2.
Simple Limited Partnership
3.
Joint Participation (Venture)
4.
Public Joint Stock
5.
Private Joint Stock
6.
Limited Liability
7.
Partnership Limited with Shares
The
above types of companies may also be classified into two distinct
groups and a third group which is a combination of the first
two:
1.
Personal Companies: which are normally established when
there is a strong personal relationship and trust between
the members, namely:
1.1
General Partnership
1.2 Simple Limited Partnership
1.3 Joint Participation (Venture)
2.
Capital Companies: incorporated by shareholders to participate
in the capital of the company, with the personal relationship
between the members being of less importance:
2.1
Public Joint Stock
2.2 Private Joint Stock
3.
Combination of Personal and Capital: in which, as the
description signifies, both the personal relationship and the
capital provided is of importance:
3.1
Limited Liability
3.2 Partnership Limited with Shares.
This
classification has some relevance in the registration procedures
for the different groups as will be later detailed.
In
addition to the provisions stipulated for these types of companies,
the Company Law provides for the registration of branches
and offices of foreign companies.
For
further information on UAE Company Law and
Practice, it is recommended that the full text be referred to. Click on
the link to obtain a copy. For specific legal advise, please contact Gulf
Legal Services Ltd or other reputable Law Firm.
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