Business Setup in Ajman Mainland

Branch Office vs. Representative Office: A Critical Distinction

While both branch offices and representative offices are extensions of a parent company, their permitted activities and operational scope differ significantly. Understanding this distinction is crucial to ensure legal compliance and avoid operational restrictions.

Step-by-Step Guide: Setting Up a Foreign Company Branch in Ajman

Establishing a branch of a foreign company on the Ajman mainland is a structured process that requires specific approvals and documentation. The process is largely similar to setting up a new mainland company, with additional requirements related to the parent company.

1. Appoint a Local Service Agent (LSA)

A foreign company must appoint a Local Service Agent (LSA) who must be either a UAE national or a company wholly owned by UAE nationals.2 The LSA's role is purely administrative, facilitating the obtention of licenses, permits, and visas in exchange for a fee. The LSA holds no equity or legal liability for the branch's operations.

2. Obtain Initial Approvals

Before proceeding with registration, several key approvals are required. This process is often streamlined by appointing a business setup consultant who can navigate the multiple government bodies involved.

• Ministry of Economy (MOE) Approval: This is a crucial first step for foreign branches. The MOE provides initial approval to proceed with the setup and later requires the branch to register and upload documents to its portal.
• Department of Economic Development (DED) Approval: The DED is the primary authority for issuing the commercial license in Ajman. You will need to submit all required documents to the DED to obtain your license.
• Other Government Approvals: Depending on the business activity, additional approvals may be needed from other government entities such as the Ministry of Justice, the Ministry of Interior, or local municipal departments.

3. Prepare and Attest Required Documents

All documents of the foreign parent company must be attested, legalized, and translated for use in the UAE.

Parent Company Documents:

• Board Resolution from the parent company's board of directors stating the decision to establish a branch in the UAE.
• Certificate of Incorporation.
• Memorandum of Association (MoA).
• A Power of Attorney for the General Manager, giving them the authority to operate and manage the branch's bank accounts.
• Certificate of Good Standing, indicating the company is valid and in good standing in its home country.
• An engagement letter from a locally registered UAE auditor and the parent company's financial statements for the past two years.

Other Documents:

• A copy of the proposed lease for the office space. A physical address is mandatory for a mainland business.
• Passport copy and visa copy (if applicable) of the company's manager and shareholders.
• No Objection Certificate (NOC) from the current sponsor for resident visa holders.
• A refundable bank guarantee of AED 50,000.

4. Register the Trade Name and Obtain a License

After preparing all documents and securing initial approvals, the next steps involve official registration and licensing with the Ajman DED.

1. Trade Name Registration:
   The trade name must comply with UAE naming conventions and must be followed by the business structure acronym (e.g., LLC, PJSC). The name cannot be previously registered or violate public morals.
2. License Application:
   Submit the complete application and all attested documents to the DED.
3. Pay Fees and Get Your License:
   Upon approval, pay the required fees to obtain your trade license from the DED. License costs typically range from AED 12,000 to AED 20,000, depending on the business activity and legal structure.

Process for a UAE Company Branch in Ajman

For a company already established in another UAE emirate, the process of opening a branch in Ajman is more direct. The branch is an extension of the existing local business, allowing it to extend its reach and tap into new markets.

Key documents required for a UAE-based company to open a branch in Ajman include:

• A board resolution from the parent company.
• An authorization letter from the managing director.
• A copy of the parent company's commercial registration certificate and Memorandum of Association (MoA).
• A duly attested lease contract for a physical office space in Ajman mainland.

Benefits of Setting Up a Branch in Ajman Mainland

Establishing a branch in the Ajman mainland offers numerous benefits that make it an attractive proposition for both foreign and local companies.

1. 100% Foreign Ownership:
   Foreign companies can retain full ownership of their branch office by appointing an LSA.
2. Full Commercial Activity:
   Unlike a representative office, a branch office is permitted to conduct full commercial activities, sales, and services.
3. Access to the Local Market:
   A mainland branch has unrestricted access to the entire UAE market, allowing it to engage directly with consumers and other businesses.
4. Cost-Effective:
   Ajman is known for its low-cost business setup, which is ideal for startups and companies seeking to expand without significant capital expenditure.
5. Strategic Location:
   Ajman's strategic location, bordering Sharjah and Umm Al Quwain, provides modern infrastructure and connectivity.