Steps to setup a Subsidiary Office in the UAE
20

Aug 2021

The companies which are 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 workings of the company. The parent company can amass various resources which can e utilized 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 advantages 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 a number of steps that need to be conducted in order 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 management 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 business.

  1. 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. It is not necessary for the company to keep the same agent every year and can be changed according to the contract.

There is not a 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.

  1. 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).

  1. Attest the Documents from the UAE Government Authorities

All the important documents of the company must be attested by the Embassy of the United Arab Emirates and 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 the rights to open, operate or manage a bank account on behalf of the parent company.
  1. Obtain the necessary licenses from these government authorities

After submitting all the attested documents along with the additional documents to the concerned government authority, the company will obtain a business license which will allow the company to conduct business in the jurisdiction. This is a very important 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.

  1. Complete the required administrative pre requisites

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

The management of the company should not forget that while conducting the businesses, 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 take 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 properly 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.