Dubai is well known as an attractive destination for entrepreneurs and investors from all around the globe. It’s a market that favors business owners and uses a wide range of regulations, relaxed immigration rules, and favorable tax incentives to draw business-savvy investors to the region. From business setup in Dubai to visa applications, Dubai’s Department of Economic Development has worked for years to establish the UAE as a mainstay in global trade.
Holding companies are an excellent way for investors and business owners to manage investments in other businesses and physical property while affording protection from risks and liabilities. Typically, holding companies are used by larger corporations, but single investors and first-time business owners can take advantage of them, too!
And if you’re looking to purchase commercial or residential property, holding companies are a fantastic solution to protect your assets. Below, we’ll dive deeper into holding company licenses, how to secure them, and what to expect in terms of cost.
The Advantages of Opening a Holding Company in Dubai
Operating a holding company in Dubai has a host of benefits for investors. These advantages include:
1. No Share Capital Requirements
Depending on the jurisdiction you choose for your business, you won’t be required to provide share capital.
2. Efficient Asset Management
Holding companies are a great way to maintain your investments, whether in other companies or physical real estate. And you’ll be able to do so without worrying about financial liabilities that can make investing a stressful experience.
3. Legal Structure
Forming a holding company is an excellent choice if your companies need definitive legal structures.
Holding companies allow investors to maintain anonymity.
5. Risk Mitigation
A holding company allows you to reduce the inherent risks associated with forming a business.
6. Multiple Ventures
By using a holding company, you’ll be more easily able to conduct multiple financial ventures simultaneously while managing them from one single entity.
Human resource management tends to be more accessible when organized by a single entity.
Various Types of Holding Companies in Dubai
During company formation in Dubai, you can choose between different business jurisdictions. Each of these jurisdictions carries with them its own regulations and rules, and depending on your goals, it may be beneficial to choose one over another.
1. Opening a Free Zone Company in Dubai
Dubai is home to a large number of Free Zones or independent business jurisdictions designed to handle specific business activities. It’s an excellent option for investors determined to maintain 100% control of their company.
2. Opening a Mainland Holding Company in Dubai
While Free Zones allow businesses to choose their operational structure, holding companies in Dubai Mainland offer their own benefits. And though subject to changes, most Mainland companies will need to secure the sponsorship of a UAE national. This sponsor is required to own a majority share, while investors, at max, can hold 49%.
Requirements for Holding Companies in the UAE
Operating a business in the UAE can be a highly lucrative endeavor, but it does come with a host of responsibilities. Investors are expected to have a working knowledge of these rules and regulations.
• Appoint management board for handling subsidiary companies
• Appoint directors for each subsidiary group
• Holding companies are restricted from directly performing activities for subsidiaries
• Holding companies are not permitted to produce products or services
• That particular company must perform all subsidiary activities
As a result of these requirements and ever-changing regulations, many businesses choose to hire third-party business setup consultants to handle the day-to-day operations of their investments. Consultant experts like MSZ Consultancy have years of experience helping foreign investors, entrepreneurs, and businesses make the most of their finances while streamlining the entire process.
The Steps Involved in Forming a Holding Company in Dubai
So, you’ve decided to form your own holding company in the UAE. That’s fantastic! The journey of business formation requires a ton of research and insight. As such, you’ll need to perform the necessary due diligence to ensure your business’s success. This includes:
1. Choose a Company Name
Your business name says a lot about what you have to offer, so you’ll want to choose wisely! You’ll want to submit a trade name request to the DED, ensuring that another entity has not previously used your chosen name. It also may not include profanity or disrespectful content. Applications that ignore these rules will be summarily denied.
2. Choose Your Location
Submit your application to the managing authority of the jurisdiction you’ve chosen. This may be one of the many Free Zones in Dubai’s Mainland jurisdiction.
3. Pick Management
You’ll need to appoint a management board to dictate your organization’s policies. This board will also be required to supervise the activities of any additional subsidiary companies.
4. Appoint Directors
Directors must be appointed for every subsidiary business, where they will oversee the finances and activities undertaken by this company.
5. Business Consultants
If managing holding companies and their subsidiaries are too high of a workload for you and your staff, hiring outside consultancy experts, like MSZ Consultancy, can significantly streamline your business responsibilities.
The Cost of Starting a Holding Company in Dubai
With any business venture, there are inherent costs. But having a well-researched idea of the expenses will allow you to manage finances more conservatively. Below, we’ve listed rough estimates of business setup costs in Dubai:
• Name approval costs: AED 600
• Initial approval costs: AED 120
• Memorandum of Association Drafting: AED 1,500
• Office Spaces
• Activity Fees: AED 15,000
• Licensing Fees: AED 10,000
Forming a Holding Company in Dubai? MSZ Consultancy Can Help!
From company formation in Dubai to managing visa renewal applications, MSZ Consultancy has years of experience assisting investors and entrepreneurs of all types. For foreign investors, navigating the ins and outs of business in another country can be daunting. But with the help of professional business consultants, you’ll be able to manage the day-to-day operations, maximize your profits, and protect potential losses more easily.
Are you interested in applying for a visa? We can help! Are you seeking the assistance of PRO services to handle Government interfacing? We do that, too!
It doesn’t matter whether you’re a single investor or part of an established company; MSZ Consultancy and their team of consultant experts are ready to help.
Give us a call today at +971 52 544 1248 for a free consultation, and let our agents help you make the most of your investments in the UAE!