Setting up a Holding company in Dubai: cost, requirements, and setup
Do you want to limit losses and protect your business from liability? In that case, you should get a holding company license in Dubai. With this license, you can own multiple companies and minimize liabilities such as loans, accrued expenses, income taxes, and much more.
Setting up a holding company in Dubai is a complex process but Prospr’s business consultant will provide you guidance to streamline the whole process. However, there is a need to understand the holding company set up and other requirements. So, let’s get started and learn everything you need to know about holding companies in Dubai.
What is a holding company?
It is a business entity that owns one or more subsidiary companies, it has managerial control stakes over all the companies it owns but it won’t control day to day operations of its subsidiaries. Two other common names for a holding company are umbrella company and a parent company.
Now the biggest plus of setting up an umbrella company is to insulate from the most losses faced by other companies. Let’s say an umbrella company owns company A, and company B. Now if company A has outstanding debts as liabilities and it goes bankrupt then neither company B nor a holding company will be responsible to pay off such debts.
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Benefits of setting up a holding company in Dubai
Here are some advantages of holding company formation in Dubai.
Tax-efficiency
As a parent company, you need to pay 5% VAT and 9% corporate tax but this tax rate is relatively lower. Thereby, you save tax money by creating this kind of company in Dubai.
Liability protection
Another reason many businessmen set up a parent company in Dubai is because it offers protection against liabilities. If subsidiaries have debts and liabilities then the parent company remains unaffected.
Low Risk
Since your business won’t be exposed to risks and liabilities of your subsidiary, thereby you basically create a legal entity with low risk.
Strategic Location
Dubai is a land of business opportunities as it’s strategically located to a place where it’s connected to the Middle East, Asia, Africa and Europe. When you have a plan to expand your business in other regions, an umbrella allows you to manage regional companies without facing extreme liabilities.
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Multicultural workforce
Dubai is a home for international expats who stay in these countries to grow their business and careers. Now when you create an umbrella company in Dubai, you will get an opportunity to hire a highly skilled and talented workforce to support your business operation.
Government Support
If a foreigner opens a new company in Dubai, you will get support from the Dubai Government. It means you can make the most of a range of incentives that allow you to grow exponentially.
Flexibility
If you open a holding business in Dubai, you can easily move to another jurisdiction to avail tax or other benefits.
Easy setup
The whole setup process of creating a parent company in Dubai is simple and quick.
Financing option
Once you open this company, you can open a corporate bank account and take loan to invest and own other assets.
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Types of Holding Companies in Dubai
Here are three common types of holding companies you can setup in Dubai.
1-LLC
A limited liability company is the most popular legal company structure for small and medium size businesses. You must have to meet minimum capital requirements of AED 150,000 to open LLC in Dubai.
2-Free Zone company
There are around 40 free zones all over the UAE. Every free zone offers specific benefits to business people. Now if you register a holding company in Free zone, you can avail exemptions from taxes and duties.
Offshore company
You can also create a parent company outside the United Arab Emirates. When you want to keep full hold of you international assets, you can opt for this type of holding company in Dubai.
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Requirements for holding companies in Dubai
If you want to open a company in Dubai, you need to follow laws and regulations set by the Dubai government. Beside that, you need to meet specific requirements. Let’s find out what are these parent companies requirements in Dubai:
Set up a Management Board
The very first thing you need to set up is to create a management board that will oversee activities of subsidiaries and be responsible for creating policies to organize and manage all the subsidiaries. Board also has to implement necessary measures as a risk mitigation strategies for subsidiaries.
Once the shareholder board is established, this board will vote on the most important matters. For example, if a decision has to be made regarding sale of a subsidiary, acquisition or mergers then board members take a decision after voting. The board oversees conduct and performance of all subsidiaries to maintain financial stability.
Director Appointment
The next thing to do is to appoint directors for each subsidiary.
Capital Verification
It is the responsibility of a holding company to ensure that every subsidiary has access to requisite capital to continue its business operation.
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How to Setup a holding company in Dubai
Before we explain the complete setup of this company, you must know that an umbrella company can’t produce products or services. Its operational scope is limited. This company can own assets, patents, subsidiary companies and other intellectual properties. It can’t directly get involved in the active business operations of subsidiaries.
Whether you want to set up a holding company in a free zone or mainland, you need to start the company formation process by filling the Article of Incorporation and then appointing agents that oversee management of both parent company and subsidiaries.
Here is how to setup an umbrella company in Dubai:
- You need to choose a business name by following rules and regulations.
- Choose location and jurisdiction
- File articles of incorporation with state agency
- Get all required permits and license
- You need to hold an organizational meeting after creating bylaws, appointing directors, and establishing a management board.
- Once you issue shares, you need to elect leadership
- The last step is to acquire stock of other companies.
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Why choose Prospr for setting up a parent company in Dubai?
We have explained every step of the process but as an expat, it will be challenging for you to go through all steps of company formation on your own. Our business consultants will facilitate the whole company establishment process for you. We have years of experience in setting up a company in Dubai. Thereby, we can help you set up a company in the Free zone or mainland as swiftly as possible.
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