| On this Page:
- Ras Al Khaimah Introduction
- Ras Al Khaimah Limited Liability
Company
- Ras Al Khaimah Branches and Representative
Office of Foreign Commercial Companies
- Ras Al Khaimah Joint Venture
Company
- Ras Al Khaimah Public and Private
Shareholding companies
- Ras Al Khaimah Public Joint
Stock Company
- Ras Al Khaimah Private Joint
Stock Company
- Ras Al Khaimah Free Zone
Company
- Ras Al Khaimah Free Zone
Establishment
- Ras Al Khaimah International
Business Company
Ras Al Khaimah Introduction
Under the UAE law, nationals must have at least
51% shareholding in joint or foreign ventures
established outside free zones. Foreign companies
or individuals wanting to do business in the UAE
must at least have a sponsor or service agent
and obtain a trade license. The RAK Investment
Authority may choose to partner with investors
on request and where the project meets the overall
objectives of the emirate. There are several ways
of establishing a business presence in the UAE,
most of which have varying degrees of compulsory
local participation. The most commonly used methods
by which foreign businesses establish a presence
in the UAE are:
- Appointing a commercial agent
- Incorporating a limited liability company
in the UAE
- Establishing a branch or representative office
of a foreign company
- Establishing a professional partnership or
professional sole proprietorship
- Incorporating an international business company
in one of the free zones.
Generally a foreign business operating in the
private sector can supply products to its customers
directly in the UAE and therefore does not need
to appoint an agent. However this method of operation
may not be appropriate where no client base has
been established or a potentially high volume
of business is to be conducted. In addition, foreign
companies may be required to appoint a commercial
agent in order to tender for projects in the UAE
(examples include government projects such as
oil and gas supply services).
The UAE Agency Law provides that only UAE nationals
or 100% UAE-owned companies may be registered
as commercial agents. Registered agency agreements
must be formally notarised before being registered
with the Federal Ministry of Economy & Commerce.
Registered commercial agents are given substantial
protection under the UAE Agency Law, including
the exclusive right to market and sell a specified
product in at least one Emirate. Where the principal
or another agent sells such products in the same
Emirate, the registered agent will be entitled
to commission payable on these transactions regardless
of whether the registered agent contributed to
them.
It is possible to enter into an agency agreement
that is not capable of registration with the Federal
Ministry of Economy & Commerce. The UAE Agency
Law does not apply to unregistered agency agreements
and therefore the difficulties associated with
exclusivity and terminating registered commercial
agents generally should not arise. However the
practical protection afforded to unregistered
commercial agents varies from emirate to emirate.
Strictly speaking, a foreign business that supplies
products to its agent pursuant to an unregistered
agreement may be precluded from enforcing payment
for such products through the courts. However,
claims can be heard under the provisions of the
UAE Civil Code. It is nonetheless advisable to
insist on a guaranteed method of payment or alternatively
enter into a separate side agreement with the
agent that details the required method of payment.
In all cases, commercial agency agreements should
be carefully drafted and it is advisable to seek
competent legal advice before entering into one.
Companies wishing to operate in Ras Al Khaimah
must obtain a suitable license, renewable annually,
from RAK Investment Authority and enter into a
pro-forma lease agreement for land. Long-term
leasing of land is possible with 25 years renewable
to similar periods. Various corporate documents
similar to those required for the setting up of
LLCs or branch offices must be also submitted.
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Ras Al Khaimah Limited Liability Company
Foreign investors can conduct business through
Limited Liability companies in Ras Al Khaimah
under the UAE Commercial Companies Law.
An LLC can be incorporated with a minimum of
two and a maximum of fifty shareholders provided
a UAE national holds not less than 51% of the
shares. Whilst a foreign partner's equity in the
company may not exceed 49%, profit and loss distribution
can be prescribed to favour the minority shareholder
in ratios of up to 90/10 in Ras Al Khaimah. Foreign
ownership of up to 70% may soon be possible under
proposed legislative amendments.
Responsibility for the management of an LLC can
be vested in the foreign or national partners
or a third party. It is possible to enter into
various side agreements with the UAE national
partner to protect and define the interests of
the minority partner, particularly in situations
where in reality the minority partner provides
all the capital in the company.
Whilst it is necessary to show that capital has
been deposited in a UAE Bank in order to establish
an LLC, the capital may be released once the company
has been registered with the Ras Al Khaimah Chamber
of Commerce.
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Ras Al Khaimah Branches and Representative
Office of Foreign Commercial Companies
A foreign company can establish a branch or representative
office in the UAE. The registration of a branch/representative
office of the foreign company does not constitute
the establishment of a new company or separate
legal entity. Consequently, the foreign company
will be fully responsible for the liabilities
of its branch/representative office. A representative
office theoretically is limited to gathering information
and marketing the activities of its parent company
and is issued with a professional (i.e. non-trade)
licence. By contrast, a branch office is a fully-fledged
business, permitted to perform contracts or conduct
other activities in the name of its parent company.
Such activities must be specified on the branch
office trade licence and must be related to the
objects of the parent company.
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Ras Al Khaimah Joint Venture Company
A joint venture is a contractual agreement between
a foreign party and a local party licensed to
engage in the desired activity. The local equity
participation in the joint venture must be at
least 51%, but the profit and loss distribution
can be prescribed. There is no need to license
the joint venture or publish the agreement. The
foreign partner deals with third parties under
the name of the local partner who - unless the
agreement is publicised - bears all liability.
In practice, joint ventures are seen as offering
a suitable structure for companies working together
on specific projects.
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Ras Al Khaimah Public and Private Shareholding
Companies
Professional partnerships may be formed between
two or more individuals carrying out non-commercial
or professional/artisan activities. An individual
can also conduct such activities through a professional
licence issued in his or her own name. These types
of businesses may be 100% foreign-owned but are
generally required to appoint a UAE national agent
similar to those required by branch and representative
offices. Individuals conducting business under
a professional partnership or a sole professional
proprietorship are liable to the full extent of
their assets for the liabilities of the business.
Examples of professional partnerships or sole
professional proprietorships include those rendering
legal advice, auditing and accounting services,
civil engineering, architectural consultancies
and services, managerial and economic consultancy,
educational services, medical services, technical
and other similar services.
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Ras Al Khaimah Public Joint Stock Company
As per the draft Federal Corporate Law, a public
joint stock company must have a minimum capital
of AED15 million (USD4.08 million) and the number
of its shareholders must not be below 10. It must
be licensed by the Ministry of Economy and Commerce
and must be approved by the Central Bank if it
covers banking or investment activities. Founders
of the company must subscribe at least 20% of
its capital and a maximum of 45%. A single shareholder
must not subscribe more than 10% of the capital.
The board of directors must not be fewer than
five and not over nine and must have a term of
three years in office. Each member must control
a minimum AED100,000 (USD27,250) of its shares
and is not allowed to hold that post in more than
three companies in the country at a time.
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Ras Al Kaimah Private Joint Stock Company
Shareholders of a Private Joint Stock Company
must not be fewer than three and must subscribe
to its full capital of at least AED2 million (USD545,000).
A private joint stock company is not allowed to
put up its shares for public subscription.
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Ras Al Khaimah Free Zone Company
A Free Zone Company (FZCO) is a limited liability
company incorporated with RAK Investment Authority,
by more than one shareholder with a distinct legal
entity and independent financial liability. The
Capital requirement for setting up FZCO with RAK
Investment Authority Free Zone is AED250,000.
RAK Free Zone companies must obtain one of the
following types of licences: a Commercial Licence;
an Industrial Licence; a Consulting and Services
Licence; a General Trading licence. See Ras Al
Khaimah Tax
Efficient Regimes and Sectors for more details
about licence requirements in the RAK Free Trade
Zone.
The following annual licence fees are applicable
for RAK Free Zone companies:
- Commercial Licence AED3,650
- Industrial Licence AED5,000
- Consultancy/Services Licence AED7,500
- General Trading Licence AED15,000
There is also a AED7,000 registration fee and
an annual service fee of AED1,200 for RAK Free
Zone companies.
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Ras Al Khaimah Free Zone Establishment
A Free Zone Establishment (FZE) is 100% owned
by either a person or a corporate body. It enjoys
the status of a separate legal entity. The Capital
requirement for setting up a FZE with RAK Investment
Authority Free Zone is AED150,000.
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Ras Al Khaimah International Business Company
The RAKIA international business company regime
is established by the RAK Offshore Regulations,
2006. For RAKIA Offshore companies there are no
restrictions on the number of shareholders or
directors, and they are under no obligation to
hold an annual meeting or to file audited accounts.
The only information displayed on the register
is the name of the company and the date of incorporation,
thus a high degree of confidentiality is in place.
RAKIA offshore companies cannot conduct business
locally except with those supplying accounting,
audit, legal and banking services, and staff cannot
be employed locally.
Incorporation typically takes one day and costs
USD950 regardless of share capital or type. Annual
registration costs USD680.
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