Setting up a holding company in Dubai may seem complex, but it can be accomplished efficiently with the proper guidance. Minimising liabilities is vital for a secure business environment. From accounts payable and interest payable to income taxes, bills, short-term loans, accrued expenses, and overdrafts, business operations, whether in Dubai or elsewhere, come with numerous financial responsibilities. However, there is a solution! Obtain a Holding Company License in Dubai, UAE, and be able to own and control various assets, including real estate, stocks, or other companies. Shuraa Business is here to assist you in setting up your company in Dubai. Read on to learn more about the process.
What Is a Holding Company?
A holding company is a specialised business entity that possesses assets, such as property and/or one or more subsidiary companies. The primary role of a holding company revolves around the ownership of businesses or assets within a group. It is a tax-efficient organisational approach for companies with diverse assets seeking to limit liability.
Conceptually, a holding company functions as a parent company with a controlling stake, potentially up to 100%, in all its subsidiaries and assets. While it assumes the overall leadership of the group, a holding company typically refrains from direct involvement in its subsidiaries’ day-to-day operations or management.
Benefits of Holding Company in the UAE
The benefits of Setting up Holding a Company in Dubai are similar to those in other jurisdictions but with additional advantages from basing yourself in the United Arab Emirates. Some of the key benefits of opening a holding company in Dubai include:
Tax Efficiency
Despite introducing 5% VAT and 9% corporate tax, Dubai’s tax regime remains relatively low, making it cost-effective to run a holding company.
Loss Protection
Holding entities in Dubai provide robust protection against liabilities, as they are not held accountable for the debts incurred by subsidiaries. In the case of bankruptcy of one subsidiary, others remain unaffected.
Risk Mitigation
Similar to holding companies in other jurisdictions, a Dubai-based holding company aids in risk reduction, ensuring that your business is not exposed to the risks or debts of its subsidiaries.
Strategic Location
Dubai’s strategic position as a significant business hub in the Middle East offers unparalleled connectivity to key markets in Asia, Africa, and Europe, making it an ideal location for expanding regional operations.
Government Support
The Dubai government actively encourages foreign investment, providing a range of incentives and support to facilitate the establishment and growth of companies.
Multicultural Workforce
Dubai boasts a diverse and highly skilled workforce, simplifying the recruitment of talent essential for supporting your business operations.
By capitalising on these unique advantages, opening a holding company in Dubai becomes a strategic and rewarding choice for businesses seeking growth and resilience in a dynamic global market.
Varieties of Setting up Holding a Company in Dubai
Setting up Holding a Company in Dubai includes:
1. Limited Liability Company (LLC):
- Popular among small and medium-sized businesses.
- Minimum capital requirement: AED 150,000*.
2. Free Zone Company:
- Registered in one of Dubai’s free trade zones.
- Benefits from exemptions on specific taxes and regulations.
3. Offshore Company:
- Registered in a jurisdiction outside of the UAE.
- Typically used for holding assets or conducting international business.
Each type caters to different business needs, offering a range of options for companies looking to establish a holding presence in Dubai.
Prerequisites for Holding Companies in Dubai
In addition to adhering to general company law regulations, Dubai-based holding companies must satisfy the following specific requirements:
- Management Board Appointment: Establishing a management board responsible for formulating policies governing the organisation of subsidiaries.
- Supervision of Subsidiary Activities: Overseeing the activities of subsidiaries falls under the purview of the management board.
- Director Appointments for Subsidiaries: Appointing directors for each subsidiary company within the holding structure.
- Capital Verification: Ensuring that subsidiary businesses have access to the requisite capital to sustain their operations.
- Risk Mitigation Strategies: Implementing measures to minimise the risks undertaken by subsidiary companies.
Dubai holding companies can comply with legal and operational standards by fulfilling these requirements.
How to register a Holding Company in Dubai
Holding companies in Dubai have defined limitations on their operational scope. While they are empowered to own assets, subsidiary companies, property, and intellectual property, they are expressly restricted from engaging in active operations. Establishing a Holding company in Dubai involves filing articles of incorporation in your chosen jurisdiction, be it mainland or free zone. Additionally, you must identify the business agents overseeing the management of both the holding and operating companies. Registering a holding company in Dubai are as follows:
1. Choose a business name and confirm its availability in the target jurisdiction.
2. File articles of incorporation with the state agency.
3. Obtain necessary licenses and permits.
4. Create bylaws and hold an organizational meeting.
5. Issue shares or membership interests and elect leadership.
6. Acquire stock or interests of other companies to become the parent company.
Purposes of a Holding Company in Dubai
A holding company in Dubai primarily serves the role of holding shares in subsidiary companies or owning assets. Business owners or shareholders frequently opt to establish holding companies as they offer a strategic avenue to limit liability if any issues arise with their subsidiary companies.
Operational Mechanism of Holding Companies in Dubai
Holding companies in Dubai function through the appointment of a shareholder board. This board determines the ownership structure among its subsidiaries and votes on crucial matters, including decisions related to mergers, acquisitions, and the sale of subsidiaries or assets. Additionally, the board oversees the conduct of subsidiary companies, regularly evaluating their performance and overall financial stability.
Startup Expenses for Establishing a Holding Company in Dubai
Suppose you are a business owner in the UAE with an existing visa. In that case, you have the option to launch your holding company in the Shuraa Business Setup Free Zone using the zero-visa package, entailing a cost of AED 12,500*. However, an extra AED 1,850* per visa allocation is applicable if additional visas are required.
Why Choose Shuraa Business Setup Free Zone for Your Holding Company?
Shuraa Business Setup offers comprehensive assistance throughout Dubai’s entire company formation process. Our seasoned teams are adept at facilitating the swift establishment of your company structure. With our extensive experience establishing holding companies, we can expedite the formation process, allowing your business to be up and running within a few days. This efficiency surpasses the timelines of other free zones or the mainland, where the process could extend up to six months. For business setup in Dubai, you can contact to Shuraa by phone at +971 4 4081900, via WhatsApp at +971 50 7775554, or by emailing [email protected].
