Opening a subsidiary company in the United Arab Emirates can be a wonderful idea for the business. This will not only help the business to expand but will also help in getting labour with technical expertise. UAE is considered as the gateway to the Middle East and a subsidiary company in the jurisdiction will allow the business to avail the benefits given by the government at a local level.
With a subsidiary company, the business can be its own boss but it will still have the goodwill and the financial backing of the parent company. Many people have the notion that a Branch company and a Subsidiary company are one and the same. This is a wrong notion and cannot be further away from the truth.
Let us understand the differences between a Branch office and a Subsidiary company
Branch Office vs. Subsidiary Company
One of the major difference between a branch company and a subsidiary company is that a branch company can be considered as an extended part of the parent company. It is set up in a different jurisdiction and only an office is setup to oversee the work of the company. Complete control of the parent company is present in a branch office.
A subsidiary company can be considered as a separate legal entity it will still have some backing of the parent company but it can take decisions for its own as the parent company will not be having full control of the subsidiary company. The management of the company will have the rights to conduct business activities as mentioned to them while obtaining the various business licenses. .
There are two locations in general where a company can setup the subsidiary companies which are the following:
- Free Zone
A company must first conduct a thorough research regarding the needs and requirements o the company and accordingly decide where it wants to setup a subsidiary company.
Benefits of Setting up a Subsidiary in the UAE
Setting up a subsidiary can be a very logical and beneficial decision. The management of the company needs to understand the needs and requirements of the company and also understand the current business environment. If the future plans coincide and it seems feasible and profitable to setup a subsidiary business then the parent company should go ahead.
Some of the benefits of setting up a subsidiary company are as follow:
- The company can understand new markets and demands
- The company is able to gather new and better technologies
- Allows more and more people to know about the company
- Assists in the expansion of the company to new markets
- Allows to access better labour with technical skills
Documents required for setting up a Subsidiary office in UAE
There are four main documents which are required to be attested by the UAE Embassy in the home country. The attestation of the Ministry of Foreign Affairs of the UAE is also required. The four documents required are as follows:
- Certification of Incorporation/Memorandum of Association/ Article of Association
- A resolution by the Board stating the formation of the Subsidiary
- A good standing certificate from the parent company
- A power of attorney which favours the General Manager and provides him the rights to open, operate or manage a bank account on behalf of the parent company.
Along with these 4 documents there are a number of additional documents which may be required for setting up a subsidiary. These are:
- Application form for Trade name Reservation
- A copy of the Passport of the Directors, Investors and Manager
- Accounts of the parent company for the last 2 years
- A statement of the company which states the Objectives, the Plans and any major Business activities
- Any agreements made with the local authorities
- Government approvals (if required)
These are some of the documents which are necessary in order to setup a subsidiary in the UAE. Setting this up can be a little complicated and will require services such as Accounting and Auditing so that the businesses are properly conducted.
Need for Accounting and Auditing
Setting up a subsidiary is a very lucrative and profitable option for a company but it is also very much necessary to avail such services which will help in the easy and error free continuance of the business activities. This is why the company management should avail Auditing and Accounting services from professional and reliable sources. With proper Accounting and Auditing a subsidiary company will be able to make the most of the business environment and will also be profitable. There are also many other services which will help a company on its business journey.
If you are looking for such services in the United Arab Emirates then you must have a look at all the services which are provided by JAXA Chartered Accountants. JAXA is one of the most reputed Chartered Accountancy firm in the United Arab Emirates and aims to provide the best services possible to a company. For more details about the services provided by the company, feel free to Contact Us. We will be happy to assist you.