Once a business has reached a certain degree of maturity, it is common for the owners to expand it on foreign markets. However, in order to make that transition easier, it best to operate under a liaison office.
Foreign companies wanting to have an established presence in Dubai without undertaking separate commercial activities can opt for branch offices or liaison offices, also known as representative offices. While the branch office is allowed to carry out the same activities as the parent company, the representative office will only act as a communication channel between the parent company and its partners or customers in Dubai.
Foreign companies are required to appoint a local agent when opening a liaison office in Dubai.
Below, our company formation consultants in Dubai explain the procedure related to opening a representative office. We can help you set up such a structure which can later be transformed into a subsidiary or branch office in Dubai.
The liaison office is recognized by the Dubai Company Act as a business form whose core activities are completed for non-commercial purposes.
The main activities of a Dubai liaison office are:
The essential aspect to consider when opening a representative office in Dubai is that it cannot engage in any commercial activity which is why it is recommended for the foreign company to transform it into another type of structure if it decides to operate in the Emirate.
We can also help foreign investors who want to open a company in Dubai and thus start operating directly as a commercial entity.
The requirements related to establishing a Dubai liaison office are nearly the same as when opening a branch office. The first thing to consider when deciding to open a liaison office is to appoint a local agent who completes the registration procedure with the Dubai Trade Register. This is actually a mandatory requirement for company registration in Dubai, no matter the type of structure chosen.
Among the requirements which need to be fulfilled when opening a representative office in Dubai is depositing a guarantee of 10,000 AED with a local bank. The guarantee will be returned once the office ends its activities in Dubai.
It is necessary to have an address registered with the Department of Economic Development when opening a representative office.
There are no licensing requirements when it comes to opening a liaison office in Dubai.
Our Dubai company formation specialists can help you if you want to change the business form of your company in the Emirate.
If you are interested in opening a representative office in Dubai, this video presents the steps and requirements to do so:
Once appointed the local agent, the representative office registration procedure can begin. The first step is to submit an application with the Dubai Department of Economic Development (DED), which is the equivalent of European commercial registers and obtain a business name for the liaison office. The second step is to file an application with the Ministry of Economy for the settlement of the liaison office. Once the Ministry of Economy allows the registration of the representative office, the local agent must return to the DED and submit several documents.
The documents the local agent must file with the DED and the Ministry of Economy are related to the parent company. These are:
The notarized agreement between the foreign company and the local agent together with the agent’s identification documents must also be submitted. It must also be taken into consideration that a liaison office may have up to four employees.
Even if it does not allow a foreign company to undertake any commercial activity in Dubai, the liaison office has various benefits. Among these, we can mention the following:
The representative office can be set up in approximately 10 working days after all the documents are submitted with the authorities.
If you need more information on the benefits of representative offices, our local advisors are at your disposal with full information.
At a certain point, the representatives or managers of foreign companies opening liaison offices in Dubai will need to consider whether they will keep the office running, change it into another business form or simply close it. The non-commercial activities of a foreign company operating through a representative office can be turned into commercial ones by setting a branch office once the parent company has decided that the Dubai market suits its objectives.
When having to choose between opening a representative office and a branch office, our agents recommend you select the branch office thanks to the performant economy of Dubai which:
If you need assistance in drafting the documents required to open a representative office, do not hesitate to contact our company registration agents in Dubai.