Client Case Studies: Abu Dhabi

PIPELINE CONTRACTOR EYES ABU DHABI OPPORTUNITIES

Background
Long in Dubai’s shadow, Abu Dhabi’s economy is riding the crest of high oil prices, and this has created a wave of opportunities for foreign investors, especially those involved in the oil, gas and associated industries. Our Client, Mark, was hoping to tap into this potential. He is the managing director of a pipeline contracting company with the core of its operations in Asia Pacific and Australia. The company has worked on many important water, gas and petrochemical pipeline projects around the world, but to date had done little work in the Middle East. Healy Consultants has worked closely with Mark and his company over the last year to provide a comprehensive business setup service in Abu Dhabi, and he is now well-placed to win lucrative government tenders.

Mark approached Healy Consultants in June 2006 to explore ways in which we could help him achieve his objectives. With several new multimillion dollar oil and gas-related projects on the drawing board in Abu Dhabi, Mark believed that his company may gain a competitive advantage at the tender process if it had a local subsidiary. Mark’s preferences were that he should have full legal control of the company, and that he would set up a fully-fledged office in Abu Dhabi to serve local clients.

Mark spoke to Aidan Healy, managing director of Healy Consultants, via telephone to discuss the corporate options available to him. Aidan also explained the various legal, tax and accounting implications of setting up a business in Abu Dhabi, and also warned Mark of the multiple challenges (and high costs) of doing so. Mark appeared to be grateful for this important advice at this early stage. Given the nature of the operation Mark was looking to establish, it was clear that an Abu Dhabi limited liability company (LLC) would be the only suitable corporate structure to enable him to undertake projects in Abu Dhabi itself.  An Abu Dhabi LLC would allow Mark to obtain a UAE trade license, rent an Abu Dhabi business premises, open a local bank account and obtain local visas for expatriate employees. However, Aidan made it clear that Mark would require a UAE national to be the majority shareholder in the company.

Engagement Start
The engagement began in earnest when Mark, who is based in Singapore but divides his time between Australia and the Asia Pacific, signed Healy Consultants’ Client Engagement Letter and supplied all Healy Consultants’ required corporate and personal due diligence. These documents were then sent by courier back to our Singapore office. Our Client Engagement Letter contains information on the structure of the new company, including shareholders and directors. Given that the company required by law a UAE national to hold 51% of the shares, Mark chose to use Healy Consultants’ nominee shareholder services. Hassan, a UAE national based in Abu Dhabi, has acted as a reliable and trustworthy nominee to fulfill several of our Clients’ UAE legal requirements, and so we recommended Mark meet him in Abu Dhabi.

Nominee shareholder/sponsor
Although Mark is not a regular visitor to the Middle East, he agreed to coincide a business trip to Saudi Arabia and Dubai in August 2006 with a meeting with Hassan, and Hassan drove to Dubai to meet with Mark in his hotel. Mark was satisfied that Hassan would be a bona fide nominee. Since an Abu Dhabi LLC is also required to lease an office, a member of Healy Consultants staff introduced Mark to a real estate agent in Abu Dhabi, who gave him a guided tour of potential office properties in suitable locations. In the end, Mark agreed to secure an office and small warehouse facility in Mussafah Industrial Area on the outskirts of the city, where many other contractors are based.

Company Incorporation
Healy Consultants’ Dubai-based Incorporation Team then started the incorporation process by approaching the Abu Dhabi Chamber of Commerce. Prior to company registration, every new Abu Dhabi company is required to become a member of the Chamber of Commerce. The Chamber of Commerce membership application was both time consuming and complicated by paperwork. Before our Incorporation Team could submit passport copies and photographs of each company director and shareholder, and a Chamber membership application, they had to obtain a reference letter issued by the Abu Dhabi Municipality (achieved in three days) and a partnership agreement authenticated from the Royal Court in Abu Dhabi (which took one week to obtain). In addition, our client was required to finalise arrangements for renting office space, as a copy of the lease agreement was also necessary at this stage.

With all the documents submitted and two follow up telephone calls to get status updates, our Incorporation Team received notification the Mark’s company had been accepted as a Chamber member, and that the intended company name had been approved, within ten days. The next stage was for our Incorporation Team to submit the new company’s Memorandum of Association to the Abu Dhabi Chamber of Commerce. The Memorandum of Association detailed the structure of the new company formation, including Hassan as the 51% shareholder and Mark as the sole director. Before it could be submitted, the corporate documents were couriered to Mark in Australia for his signature and return to our Singapore office, from where they were forwarded to our UAE team for submission to the Chamber.

Minimum capital
The next step was to obtain a Capital Contribution Certificate for the company, confirming that the minimum required capital (in the case of an Abu Dhabi LLC this is US$40,000) had been paid up into a UAE bank. Our Banking Team approached the National Bank of Abu Dhabi to open an ESCROW account, a process which took three working days. The bank was also able to issue a Capital Contribution Certificate, which was then submitted to the Chamber of Commerce by our Incorporation Team.

The next legal requirement in the process was to secure approval from the body which oversees the client’s principal activity. In this case, the application was referred by our Incorporation Team to the UAE Supreme Petroleum Council for approval. Once a week for three weeks our staff in Abu Dhabi called the Chamber of Commerce, the Supreme Petroleum Council and the Municipality to check on progress, so we could update Mark. One of our Incorporation Team then visited the Supreme Petroleum Council in person, and was able to secure verbal approval that the new company had been incorporated. Three days later, we received written confirmation from the Supreme Petroleum Council that the company had been incorporated.

The next step was to submit the company’s details into the Commercial Register at the Chamber of Commerce, including the incorporation approval letter from the Supreme Petroleum Council.

Trade License
The final step to obtain a Trade License was to prepare the Mussafah office for inspection by an officer from the Chamber of Commerce. Although Mark was out of Abu Dhabi, Healy Consultants received the officer, who was able to pass the property. Three weeks after this, the Trade License was mailed to the Mussafah office, where a scanned copy was taken and e-mailed to Mark in the Far East.

With the company now a legal entity, Mark requested our assistance with a range of corporate support services, from helping furnish the office in Mussafah to opening a corporate bank account and applying for work permits for expatriate staff to run the operation and bid for contracts in Abu Dhabi.

Corporate Bank Account
To open a corporate bank account, our Marketing Team first prepared a detailed business plan outlining the company’s intended activities, its ownership structure and an analysis of the market conditions. This was e-mailed to Mark, who signed the document and returned it by courier to our Dubai office, where our Banking Team had already completed an account application form for Standard Chartered Bank in Abu Dhabi. Our Banking Team submitted the application pack, which also included due diligence as required by the bank, and within two weeks received an account number, which was sent to Mark. This was followed by ATM cards and PIN numbers, which were held securely in Healy Consultants office.

Work Permit/Residence Visa
The final step in the business setup procedure was to assist Mark to obtain a work permit for one Dutch expatriate manager in Abu Dhabi, who would be responsible for the early phase of the company’s growth. Obtaining a UAE work permit is time consuming. In order to obtain a UAE work permit, the applicant is required to provide his/her educational certificates (attested by the UAE embassy in the applicant’s home country, in this case Holland), as well as passport copies. Thanks to the efficiency of the Dutch employee, Dirk, the required information was supplied swiftly and the application process could begin.

Firstly, Healy Consultants completed an application form from the UAE Ministry of Labour, and then submitted this to the Post Office along with the attested university degree, passport copies, a completed Degree Verification Form (from the Ministry of Labour). Within one week the Ministry of Labour in Abu Dhabi had approved the work permit. Following Ministry of Labour approval, Healy Consultants obtained a labour card from the Ministry, and paid a bank guarantee of Dhs3,000 to the bank located at the Ministry. The work permit was then collected.

The next stage is to obtain an Employment Visa from the Abu Dhabi Immigration Department. Healy Consultants submitted the original work permit, the labour card, and the sponsoring company’s trade license. This was obtained within one week. At this stage, Dirk traveled to Abu Dhabi to obtain a health card and undergo a medical check up. Our staff accompanied Dirk to a local hospital in Abu Dhabi, where he passed the medical and was issued with a fitness certificate, allowing him to obtain a UAE residence visa.

Conclusion
After a protracted incorporation and business setup process, Mark’s Abu Dhabi company is growing, and it is likely that he will request Healy Consultants’ assistance to obtain employment visas and help with payroll functions in the next few months. Overall, Mark was grateful that he was not required to travel to Abu Dhabi (apart from voluntarily meeting Hassan and selecting a suitable office premises in Mussafah) at any stage of the engagement, since he is a busy contractor who is often in remote field locations in Australia, Indonesia and Malaysian Borneo.

Contact Us
For more information on our Abu Dhabi corporate services, please email email@healyconsultants.com or telephone us at (+65) 6735 0120

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