This article aims to provide guidelines on how to set up a branch office in Abu Dhabi.
The objective of a branch office in Abu Dhabi is to promote and market products or services of the parent company, transact and enter into agreements in the parent company’s name. Under the Commercial Companies Act, No 8 of 1984 and Ministerial Decision Number 69 of 1989, a branch office is not a separate entity from the parent company. A branch office is not permitted to do any business activities which the parent company does not perform.
Foreign Branch Office in Abu Dhabi
It is essential to keep in mind that a foreign branch office is not a separate legal entity; therefore, the foreign parent company is liable for any tax from revenue generated in Abu Dhabi to their home jurisdiction. As a foreign branch office, you will need to deposit a refundable bank guarantee of AED 50,000 for the duration of your business trade license. This must be paid to the Ministry of Economy (MOE).
A foreign branch office will need a UAE Local Service Agent (LSA). The LSA has no equity participation or liability to the business, nor can the person participate in its management. If you do not know how to get an LSA, a local business consultancy firm can help you obtain one. Our consultants work with several LSA services providers and can get one that suits your needs.
How to Get a License for Branch Office in Abu Dhabi
The process to get a license for a branch office in Abu Dhabi is relatively straightforward. You must have all the necessary documents in order. The process follows these key steps:
- Attest or notarize all existing parent company documents. Whether you are setting up a branch of a local or international company, ensure that all the documents such as license, certificate of incorporation, memorandum of association, certificate of good standing are fully attested or notarized. If they are overseas, you will need to get them attested by the UAE Ministry of Foreign affairs. (You can hire a PRO services company in Dubai to get these documents attested)
- Appoint a Local Service Agent (LSA) – The parent company must appoint a local service agent. The LSA will be needed for things such as creating a file at the Labour and Immigration departments so you can sponsor staff under the license.
- The parent company must issue a board resolution calling to create the branch office in Abu Dhabi and give Power of Attorney to the branch manager. If produced overseas, the letter must be attested or notarised by local and UAE authorities.
- For overseas companies, you will need to obtain approval from the UAE Ministry of Economy (MOE). The MOE approves all foreign branch offices. They will require attested documents from the parent company.
- Apply for a license from the Abu Dhabi Department of Economic Development (ADED). The MOE will issue the initial approval letter to ADED. Additional documents to submit to ADED include a copy of a lease in Abu Dhabi known as Tawtheeq and copies of the documents submitted to MOE.
- ADED subsequently issues a commercial license with a validity of one year. You will need to renew this license every year and ensure that the parent company license stays valid during the period.
- Open a local bank account: Once the commercial license is issued, you can apply for a local corporate bank account to commence trade. Banks will need ultimate beneficiary information on the parent company. All foreign documents will need to be attested and legalized for use in Abu Dhabi.
Expertise Expedites the Process
While it is possible to go through the entire process of company formation on your own. But it can prove to be cumbersome if you are not familiar with how documents should be presented to the relevant authorities. If time is of the essence, it is often more cost-effective to hire the services of seasoned professionals who can facilitate the set-up of your branch office in Abu Dhabi. Give us a call to see how we can get your branch office started as soon as possible!