In UAE, a Branch office is an extension of its Parent company and operates under its name. Branches of Foreign Companies established in the UAE were previously restricted to being either Representative Offices offering marketing, promotion and liaison services of the parent company or Consultancies which would offer certain professional activities.
However, Branches were prohibited from carrying on commercial activities such as trading in goods in the UAE or carrying out contracting or maintenance work until 2006. Restrictions on Branches were lifted since the end of 2006, the UAE Government has decided that Foreign Companies can now set up Branches for trading purposes by applying for a Licence from the Ministry of Economy.
HOW CAN I BRING MY FOREIGN BRAND TO UAE?
A UAE business setup is quite easy to do for foreign individuals or companies.
The UAE Commercial Law provides foreign investors two options in relation to their expansion into the UAE. Each of these legal forms gives the company varying amounts of access to function in the local market.
Branch Office: A branch office permits the investor to set up a full-fledged business that is permitted to perform all activities similar to its parent company (depending on activities) as specified in the license at the time of incorporation.
Representative Office: A representative office is strictly restricted to advertising and marketing of services and products that the parent company deals in. The office is not permitted to earn and engage in profit making activities.
ROLE OF LOCAL SERVICE AGENT
However, in order to register a Branch in Dubai, it is still necessary to appoint a service agent, who must be an Emirati national or a 100% owned UAE National company. The Service Agent’s role is limited to administrative matters such as obtaining employee visas, office space, permits for employees, etc.
The Service Agent’s obligations and rights are clearly set out under a Service Agency Agreement which is registered. The Service Agent has no rights to the assets nor profits of the Branch, and the Branch indemnifies him in respect of its liabilities. The Service Agent is normally remunerated for his services by way of a fixed annual fee stipulated in the Agreement.
BENEFITS OF BRANCH COMPANY
1. It can open current and deposit bank accounts;
2. It can sign leases and contracts on its own accord;
3. It can own and register vehicles under its own name;
4. It can have books of accounts and audited accounts carried out on its branch activities separate from the Parent Company.
The establishment of Branches is an extremely profitable way of trading within Dubai without having to resort to setting up an LLC with its 51% UAE National quota or even registering within a Free zone
- Branch License from Department of Economic Development
- NSA Agreement
- Ministry of Economy Certificate
- Bank Guarantee Certificate