In Dubai a holding company is any business that owns shares or other assets in other companies. The holding company may be owned by the locals or the foreign investors.
- In UAE, you can form a holding company in all the Emirates.
- As per the Dubai Company Act, foreign investors can register holding companies in different forms.
- However, it is against the law to carry out business activities such as providing services or manufacturing goods in Dubai.
- The owner(s) of a holding company get control of the companies they have invested in.
- The procedure of registration of holding company is the same as for any other business in Dubai. However, if you are a foreigner you will need to appoint a local agent to complete formalities.
Check list for starting a holding company in Dubai
- Firstly, you have to appoint a board which will help in creating a policy for the branch of the company.
- Next, the board must look after the activities provided by its subsidiaries or branch.
- Thirdly, the shareholders of the holding company must appoint a director in every branch.
- Next the holding company must look that the branch has the necessary capital to carry out their day to day activities.
- Further the holding company must provide the limits of the risk a subsidiary can take (the foreign currency, the market, and even the industry risks
- Finally the holding company will make the decisions to the contracts made by the branch.
Types of Holding Companies
There are two categories of the holding companies in Dubai:
- Onshore holding company is an onshore holding company. Here the foreign investor must have a local partner. The partner will own at least 51% of the company.
- Free zone holding company is a holding company in any of the free zones. In a free zone the business can have 100% foreign ownership.
Activities of a Holding Company
The main purpose of creating a holding company is to own shares and control the assets of the branch company. Usually, a holding company will deal in commercial activities. Such a company cannot sell or produce any goods or deliver any services.
Those who want to set up the holding companies in Dubai, will register them with the Department Economic Development.
The functions of holding companies in Dubai
- Firstly, the holding company must have a director or a management board depending on its type.
- Secondly, the company management must set out the rules of the holding company and look after its activity.
- Next the holding companies may also open subsidiaries in Dubai, the management must look after that also.
- The management must see that the holding company has the necessary capital to operate.
- These types of the companies can be set as holding companies in Dubai:
- Limited Liability Companies (LLCs)
- Joint Stock companies
- Partnership firms
- Free zone companies.
Some features of a Holding Company in Dubai
- The holding company is not liable for the subsidiaries’ debts. Therefore, all its assets are protected.
- The holding company will be responsible only for its subsidiaries’ debts in the limit of its contribution to each business. Therefore, the holding company will usually take the form of a LLC in Dubai.
- However, the holding company can see and monitor the cash flow of its subsidiaries.
- It must also make sure that the subsidiaries remain debt free.
- It is also important to note that the holding company has control over several businesses, but each business must keep its assets and operations separate.
Advantages for a Holding Company in Dubai
- There is no corporate tax for the holding company.
- A holding company can also be a good asset protection solution for foreign investors
- A details of a foreign investor in holding company is kept secret.
- There are no share capital requirements for setting up a holding company in Dubai.
- The holding company can be registered very fast in a few weeks.