Steps to Set up a Subsidiary Office in the UAE

The companies looking to create their presence in a new market will prefer setting up a subsidiary company. This company is legally independent and has minimal interference from its parent companies in the company’s workings. The parent company can amass various resources which can e utilised later on by the parent company. This can significantly increase the profits of the company.

There is a number of advantages of setting up a subsidiary company. We have already mentioned the benefits of a subsidiary company in a previously published article. In this article, we will be talking about the steps required to be fulfilled in order to set up a subsidiary company.

Steps to Setup a Subsidiary Company

There are many steps that need to be conducted to set up a subsidiary company in the UAE. The Steps are as follows:

1. Choose the Jurisdiction for your Business

The management of the company should conduct research as to where should be the subsidiary company be established. There are three options that are available to the administration, which is as follows: Mainland, Free zone, Offshore. The management must look at all the needs and wants of the business before taking any decision. Choosing a jurisdiction can be a very important decision for the company and will shape the future of the industry.

2. Identify a Suitable Local Service Agent

The next step is to identify a local service agent. This agent will liaise between the company and the government of the jurisdiction. It will also act as the mediator between the company and the various government authorities. The local service agent is appointed for an annual duration, and the contract can be renewed every year. Therefore, it is unnecessary for the company to keep the same agent every year and change according to the contract.

There is no requirement of a local agent in the free zone or offshore jurisdiction as the manager or the director of the authorised person who will be conducting the business activities.

3. Identify and Reserve a Trading name.

The next step is to get the name of the company approved. The management has to take care that the name has not been already taken or is offensive to the people of the jurisdiction. In order to get the name approved, the management should approach the Department of Economic Development (DED).

4. Attest the Documents from the UAE Government Authorities

All the essential documents of the company must be attested by the Embassy of the United Arab Emirates. They should also be counter attested by the Ministry of foreign affairs in the UAE. These documents include the following:

1. The Certificate of Incorporation (CI) or Memorandum of Association (MoA) or Article of Association (AoA)
2. A resolution by the Board stating  the formation of the Subsidiary
3. A good standing certificate from the parent company
4. A power of attorney which favours the General Manager and provides him with the rights to open, operate or manage a bank account on behalf of the parent company.

5. Obtain the necessary licenses from these government authorities

After submitting all the attested documents and the additional documents to the concerned government authority, the company will obtain a business license, allowing the company to conduct business in the jurisdiction. This is a significant step as no business activity can be performed without a business license. In such a case, the business will be liable to fines and punishment from the side of the government.

6. Complete the required Administrative Prerequisites

Once the business is operational, it should apply for the necessary prerequisites such as a residence visa, a corporate bank account, etc. and start conducting the business in the jurisdiction.

The company’s management should not forget that while conducting the business, it has to take care of the inner workings of the business and also has to understand the implication of its decision on the company. To make such decisions in a better fashion, the management should take help from reputed and reliable firms which will provide all kinds of help to the business.

The two main functions which should be adequately performed to ensure the existence and development of the company are Accounting and Auditing. These two are the functions that will help in both maintaining the existence of the business and will also help in developing the future of the business.

If you are looking for assistance with such services in the UAE, then you must have a look at the services provided by the JAXA Chartered Accountants. For more details on the services, feel free to Contact Us. We will be happy to help.