Dubai, one of the seven emirates that make up the United Arab Emirates (UAE), has emerged as a global business hub in recent years. But, there are certain legal aspects that need to be considered before setting up an offshore business in Dubai. In this article, we will discuss the legal framework surrounding Dubai offshore company formation and how it can benefit businesses.
Offshore jurisdictions and regulatory authorities:
Dubai has designated jurisdictions for offshore company formation, primarily Jebel Ali Free Zone (JAFZA) and Ras Al Khaimah International Corporate Centre (RAK ICC). These jurisdictions operate under distinct regulations set by their respective authorities. Investors must adhere to the rules outlined by these governing bodies to maintain compliance.
Business activities and restrictions:
Offshore companies in Dubai are mainly used for international trade, holding assets, or consultancy services. However, they are not permitted to conduct business within the UAE mainland. Engaging in restricted activities, such as banking, insurance, and financial services, requires additional licensing and approvals from relevant authorities.
Ownership and shareholding structure:
One of the advantages of offshore companies in Dubai is 100% foreign ownership. Unlike mainland businesses, offshore entities do not require a local sponsor. Shareholders and directors must be appointed, and their details are recorded in company documents, though confidentiality is maintained as per offshore regulations.
Compliance and reporting requirements:
Although offshore businesses enjoy minimal regulatory obligations, they must comply with certain requirements. These include:
- Submitting an annual financial statement (depending on jurisdiction)
- Renewing company registration each year
- Maintaining accurate corporate records
Banking and financial regulations:
Opening a corporate bank account is a good step for offshore companies. Banks in Dubai follow strict due diligence procedures, requiring company documentation, shareholder details, and proof of business activities. Adhering to international anti-money laundering (AML) and Know Your Customer (KYC) regulations is mandatory.
Intellectual property and legal protection:
Dubai’s offshore jurisdictions offer legal protection for trademarks, patents, and copyrights. Registering intellectual property ensures business assets are safeguarded from unauthorised use. By understanding these legal aspects, investors can ensure compliance and increase the benefits of Dubai offshore company formation while avoiding legal complications.