Features of an Establishment (otherwise known as a ‘Sole Proprietorship’)
An Establishment is formed pursuant to the UAE Federal Law No. 18 of 1993 on Commercial Transactions. It can only be formed by one individual (whether local or expatriate) to carry on business in the owner’s name (which must be suffixed by the letters ‘Est’. The Establishment does not need to be capitalized. The owner is, however, personally liable for any debts or losses of the Establishment.
An Establishment owned by an expatriate can only carry on professional or consultancy-related activities and must appoint a UAE national, or company wholly-owned by UAE nationals, as its Local Services Agent. The Local Services Agent is appointed pursuant to a Local Services Agreement and provides “local services” (such as facilitating the issuance of residency visas and work permits for your employees, and handling the renewal of the trade licence each year) in return for an annual services fee. The Local Service Agent does not assume any financial or legal liability for the Establishment.
An Establishment owned by an Emirati may carry on commercial or trading activities. Given its unlimited nature, however, a limited liability company is often the preferred vehicle for carrying on such activities today.
Summary of registration and licensing formalities
An application must be made to the Dubai Department of Economic Development (DED) to seek initial approval to the commercial/trading activity to be carried out in the owner’s name.
The Local Service Agreement must be signed by the individual owner and the Local Services Agent (in English and Arabic) before a Dubai court notary public. The owner must, by this time, have taken a lease of suitable commercial premises from which to carry on his business, and obtained an Ejari certificate (official lease terms) to submit to the DED to complete the application.
As there is only one individual owner, the formation process is straight-forward. It should take approximately 1 to 2 weeks for an Establishment to be formed provided the Ejari is in place.