Offshore company formation refers to setting up a company outside the jurisdiction of the residence of its incorporators or a company that can only operate outside its country/jurisdiction of formation. An offshore company is a 100% independent legal entity, however, at least one shareholder is required to start an offshore company in UAE. The liability of partners in an offshore company is limited to their contribution to the capital. The United Arab Emirates is one of the best countries in the world for offshore company formation, thanks to the economic freedom and ease of doing business in the country.
Setting Up Offshore Company Formation?
Setting up an offshore company is relatively easier in UAE than many other parts of the world. Investors can benefit from a number of services and incentives offered by UAE government to set up their offshore business without any hassle.
Before getting started with an offshore company formation in UAE, investors and shareholders must become aware of some important things that can help them set a strong foundation for their offshore business.
Here are the things to know ahead of starting your own offshore business in UAE:
- Understanding all possible advantages of setting up a Dubai offshore company
- Becoming familiar with all the possible restrictions
- Comparing the potential of business opportunities in different emirates to decide where to set up an offshore business in a specific niche. Dubai, Ras Al Khaimah and Ajman are the ideal places to start an offshore business company in UAE.
- Understanding all the procedures, required documents and legal obligations for setting up an offshore company.
Apart from understanding all the basic requirements for opening an offshore company, investors must also decide which type of offshore company they should start in UAE. Following are the types of offshore companies in UAE:
- International Business Company (IBCs are the most popular type of offshore companies in UAE)
- Private Foundation
- Captive (Re)Insurance Companies
- Offshore Corporation (A more general offshore company type)
- Offshore LLC (Offshore limited liability company)
The basic procedures for setting up an offshore company remain the same for any type of offshore company, however, the offshore company formation procedure and cost for setting up a specific offshore company varies for each of the above-mentioned types.
Offshore Company Requirements and Procedure
The requirements for offshore company formation in UAE are quite simple. Apart from getting all the documents ready for offshore company registration UAE, investors must also complete all the procedures according to the offshore company laws in the country.
Following documents are required to be submitted to the registrar of offshore companies to complete the formal requirements of the application process:
- Signed application for registration of an offshore company
- Residence address
- Bank Reference Letter or bank statement of last 4 months
- Offshore business name suggestion
- Personal profile of the applicant
- Passport copy of the director(s), shareholder(s) and the appointed secretary
Corporate offshore company registration is a bit different and shareholders need to submit following attested documents:
- Board Resolution
- Memorandum of Association
- Passport copy of Shareholder/Directors
- License Certificate of Incorporation of the Parent Company
It is important to note that physical presence for signing documents is required at the time of completing the process of offshore company registration in some of the jurisdictions. However, physical presence is mandatory to open a bank account for the offshore company in UAE.
Offshore Company Formation Cost
The offshore company formation cost varies in different states of UAE. Dubai and Ras Al Khaimah are the preferred choices amongst investors, Ajman is also a major attraction to set up an offshore business, thanks to the business opportunities offered in a number of important sectors. The set up cost of an offshore company also varies according to the structure and type of offshore company to be established.
The starting cost of an offshore company formation in Ajman is AED 6,500. Inventors can start their offshore company in Ras Al Khaimah from an initial cost of AED 8,000. In Dubai, setting up an offshore company is costlier than the aforementioned two emirates. Investors can start an offshore company from AED 18,000 in Jebel Ali Free Zone, which is the oldest free zone in the country.
Offshore Bank Accounts
Opening a bank account is a legal requirement regardless of the type of company you are opening in UAE. Investors must know that there are two types of commercial banks in UAE including the locally incorporated banks and branches of foreign banks. The Central Bank of United Arab Emirates regulates all the activities of the commercial banks.
Investors need these documents to apply for opening a bank account for their offshore company in UAE:
- Company Registration Certificate
- Trade License
- Certificate(s) of shareholder(s)
- Company’s Memorandum of Association
- Company’s Board Resolution
The opening of a bank account takes between 2-4 weeks and a minimum balance needs to be maintained in the account, which can vary depending on the type of company and selected bank’s own policy. Most Banks in UAE generally require a minimum amount of AED 100,000 and above in order to maintain an offshore company’s account.
Offshore Business Benefits in UAE
Offshore business set up in UAE can open new avenues of growth for any new or already established business. UAE is one of the fastest growing economies in the world, which is why opening an offshore company in UAE can be an excellent decision for the long-term. Here is the list of benefits investors can avail by opening an offshore company in UAE:
- 100% ownership of the business for foreign investors for opening an offshore company in a free trade zone
- Exemptions from taxes
- Restriction-free movement of external capital
- Confidentiality of records and the names and information of shareholders is not saved in the public records
- Permission to buy UAE properties being a non-resident
- Limitless business opportunities in all major sectors
- Low operational costs
Offshore company formation in UAE is a major decision and investors should understand all the legal requirements and procedures beforehand to set up their offshore company in an effective manner and give a head start to their offshore business in UAE. Seeking professional help to set up an offshore company holds great significance and IBG Consulting advisors ensure that the investors completely understand the process, legal procedures and rules and regulations to make an informed decision to set up their offshore company in the UAE.