The process of setting up either a branch office or representative office is relatively the same but both these offices are different in their working.
Difference between the Branch office and Representative office
A branch office can engage in commercial activities and can earn a profit while representative offices are only allowed to market products and services of their parent organization.
Similarities between the Branch office and Representative office
The similarities between both these offices include commercial registration, a license in the name of a foreign company, the requirement of a local service agent, and a similar registration process.
The complete procedure for the formation of both the branch office and the representative office of a foreign company in UAE:
1. Local Service Agent (LSA)
The branch/representative office will require the services of a local service agent (LSA). The LSA is either a UAE national or a company wholly owned by UAE nationals.
Both parties (branch or representative office and LSA) will sign a written agreement for the appointment of LSA. As there is no prescribed form of agreement, they can do so after negotiating.
Note: The LSA has nothing to do with the ownership, management, and operations of the branch/representative office. Instead, it takes a fee for its role in administrative functions that include license, visa, permits, etc.
2. Submit an application in DED for trade name reservation and initial approval
After the appointment of the LSA, submit an application to the Department of Economic Development (DED) of the relevant Emirate for trade name reservation and initial approval of branch or representative office of your company.
3. Approval from the Ministry of Economy (MOE)
After the initial approval from DED, an application will be made to the ministry to get approval from the Ministry of Economy (MOE). This application will include the following details.
- Trade name reservation certificate
- Certificate of incorporation,
- Certificate of good standing,
- Memorandum of association & articles of association and other corporate documents
- Audited accounts of the parent organization of the past two years
- Notarized agreement with the LSA and the LSA’s ID or corporate documents
- Board resolution approving the opening of a branch or representative office, confirming that company accepts responsibilities for liabilities of the established office in UAE, appointing a general manager and granting power of attorney to the GM
- Passport copy of the general manager’s and the power of attorney in favor of GM according to the board’s resolution
Few additional documents will be submitted after the initial approval by MOE
- Application form
- Initial approval by MOE
- Parent company’s incorporation certificate
- Local bank deposit certificate
Then the Ministry of Economy (MOE) will approve the formation of a branch or representative office.
4. Obtaining the Commercial License from DED
The proper approval by the MOE will be issued to the DED of the respected emirate. In the next step, the applicant will be required to submit an application to the Abu Dhabi DED or Dubai DED according to the situation.
Few important additional documents:
- Undertaking from the foreign parent company
- The MOE approval
- A letter from a UAE auditor confirming the financial statements of the company for the past two years before the submission of application
After that, the DED will issue a commercial license to the branch or representative office. This commercial license is valid for 1 year and can be renewed annually.
5. Administrative Tasks
After getting the commercial license, the foreign company will complete different administrative tasks including obtaining visa & labor cards for its employees, lease for office space, and opening bank accounts.
6. Registration with Chamber of Commerce & Industry
- Complete an application
- Provide copies of commercial license,
- Office lease agreement and
- Passport copies
Notarization and translation of documents
All the documents listed above will have to be presented in the foreign ministry of the country where the company is incorporated. There, the authenticity of the documents will be checked.
Another important thing is to translate these documents into the Arabic language by an official translator before presenting them to the authorities in the UAE.
The notarization process takes a lot of time and it should be started as early as possible.
- This article mainly deals with a branch or representative office in Dubai and Abu Dhabi, as they are the most well-known locations for business activities. The procedures and formalities are different from each emirate.
- The timeframe required for the incorporation of the branch/representative office in different emirates would be different.
- Dubai has relaxed its rules a bit. There is a possibility that one can also obtain a four years license on special request if it is accepted
If you are willing to set up a branch or representative office of a foreign company in Dubai and any other emirate of UAE, then we at MSZ Consultancy are here to assist you, as we are specialists in conducting such business activities. Contact us: +971 52 544 1248