Business

Detailed guide about setting up a holding company in Dubai

Do you want to keep losses under control and shield your business from lawsuits? If so, you ought to obtain a Dubai holding company licence. You can minimize liabilities such as loans, accumulated bills, income taxes, and more by using this licence to operate several companies.

Setting up a holding company in Dubai can be difficult, but Prospr’s business consultant can help you by offering advice that will make the process go more smoothly. Nonetheless, there is a need to comprehend the holding company’s requirements and other requirements. Let’s start by covering everything you need to know about holding companies in Dubai.

What does mean by a holding company?

This company is a business entity that owns one or more subsidiaries. Although it retains administrative control over all its businesses, it does not oversee the day-to-day activities of its subsidiary companies. “Umbrella company” and “parent company” are also frequently used to refer to holding companies.

The most significant benefit of setting up a holding company is protection against most losses incurred by other companies. Let’s imagine that a holding company owns companies A and B. Now, if Company A has outstanding debts as liabilities and files for bankruptcy, neither Company B nor a Holding Company will be responsible for settling these debts.

Benefits of setting up a holding company in Dubai

The foundation of a holding company in Dubai has the following benefits.

Efficiency in taxes

As a holding company, you need to pay 9% corporation tax and 5% VAT; however, the corporate tax rate is comparatively lower. By creating this kind of company in Dubai, you thereby save tax money.

Protection from Liability

A holding company in Dubai offers protection from liabilities, another reason why many business people set one up. The holding company is unaffected if subsidiaries have liabilities and debts.

Minimal Risk

This creates a low-risk legal entity for your business because it will not be exposed to the liabilities and hazards of your subsidiary.

Location Strategy

Dubai has many business options due to its advantageous location, which connects it to Europe, Asia, Africa, and the Middle East. A holding company enables you to run localized businesses without taking on excessive liabilities when you intend to grow your business in other locations.

Multicultural labour force

International expats who remain in these nations to advance their businesses and careers call Dubai home. You now have the chance to engage a highly qualified and talented team to support your business operation when you create a holding company in Dubai.

Government Support

If you are a foreigner and want to open a new company in Dubai, the Government will provide support. This implies that you can maximise various incentives that allow you to develop rapidly.

Adaptability

If you open a holding company in Dubai, you can quickly shift to another jurisdiction to take advantage of tax or other benefits.

Setup is simple

The entire process of setting up a holding company in Dubai is quick and easy.

Choice of financing

Once you establish this company, you can open a corporate bank account and apply for a loan to invest and purchase other assets.

Types of holding companies in Dubai

Here are three typical holding companies you can set up in Dubai.

1. LLC

The most common legal company structure for small and medium-sized firms is a limited liability company. You must meet the AED 150,000 minimum capital requirements to open an LLC in Dubai.

2. Company in the Free Zone

The United Arab Emirates is home to about forty free zones. For businesspersons, each free zone provides unique benefits. You can now receive tax and duty exemptions if you form a holding company in a free zone.

3. Company offshore

Outside of the United Arab Emirates, you can create a holding company. This kind of holding company in Dubai is what you should choose if you wish to maintain complete control over your foreign assets.

Requirements for holding companies in Dubai

You need to abide by the Dubai government’s laws and rules if you wish to open a company there. In addition, you need to fulfil requirements. Let’s investigate the requirements for holding companies in Dubai:

Set Up A Management Board.

The first thing you need to do is set up a management board that will monitor the activities of subsidiaries and is responsible for creating policies to organize and administer all the subsidiaries. The board must also put the required procedures in place to mitigate risk for the subsidiaries.

The shareholder board will vote on the most crucial issues after it is created. For instance, when a decision needs to be made on a merger, acquisition, or sale of a subsidiary, the board members vote before making a choice. To guarantee financial stability, the board monitors the actions and output of all subsidiaries.

Director Designation

Appointing directors for each subsidiary is the next thing to do.

Verification of Capital

A holding company guarantees that each subsidiary has access to the necessary funds to sustain its business operations.

How to setup a holding company in Dubai?

Before delving into this company’s entire setup, it is essential to understand that a holding company cannot generate goods or services. Its range of operation is constrained. In addition to other intellectual property, this company may possess assets, patents, and subsidiary companies. It is not permitted to participate directly in subsidiaries’ ongoing business operations.

You need to start the company formation process by filling out the Article of Incorporation and then choosing agents who oversee the management of the holding company and its subsidiaries, whether you want to set up a holding company on the mainland or in a free zone.

Here is how to set up a holding company in Dubai:

  • It would help if you obeyed rules and restrictions when selecting a business name.
  • Select the area and legal system.
  • Obtain a state agency’s articles of incorporation.
  • Obtain all licenses and permits necessary.
  • You need to hold an organizational meeting after establishing bylaws, selecting directors, and creating a management board.
  • It would help if you elected leadership when you issue shares.
  • Purchasing stock in other companies is the final step.

Cost for setting up a holding company in Dubai

AED 12,500 is the starting fee for establishing a holding company in Dubai. I’m sure you’re curious about where to use this money. Here is a cost breakdown estimate for your comprehension.

  • The fee for approving a business name is AED 600
  • The original approval fee was AED 120
  • The memo of association (MoA) was drafted for AED 1500
  • Workspace rental
  • AED 15,000 plus activity fees
  • AED 10,000 for the licence

Why choose Prospr when setting up a holding company?

Although we have walked you through each process step, you will need help to complete the company formation process as an expat. You will have assistance from our business consultants throughout the entire company establishment process. We have years of experience setting up a company in Dubai. As a result, we can assist you in setting up a company as quickly as possible in the Free Zone or mainland.

Schedule a consultation right now.

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