Abu Dhabi LLC Formation

A limited liability company (LLC) is the best corporate entity to efficiently and effectively conduct business in Abu Dhabi. The following information will help you determine whether Abu Dhabi LLC formation is the optimum corporate structure to fulfill your international business objectives.

Abu Dhabi is the wealthiest Emirate in the UAE in terms of Gross Domestic Product (GDP) per capita, which is US$42,000 (2009 estimate). Moreover, Abu Dhabi is a good alternative jurisdiction to Dubai. Although the Emirate states are similarly structured, Dubai relies heavily on tourism and has an overtaxed infrastructure, while Abu Dhabi is less dependent on foreign investment and is therefore more economically stable.

An Abu Dhabi LLC which exports national industrial products is exempted from any taxes or export fees.

The LLC is a popular form of company registration in Abu Dhabi and requires a minimum of two and a maximum of 50 members, but no minimum capitalization is required.

Investors setting up an Abu Dhabi LLC are required to pay the government 5% of the annual lease rent of the office premises (and at the time of annual renewal an additional 5% of the annual lease rent for the manager’s residence also becomes payable).

Setting up an Abu Dhabi LLC is difficult. A minimum of two shareholders is required and an Abu Dhabi LLC requires a minimum 51% shareholding by UAE nationals. However, profit and loss distribution can be mutually agreed, and the UAE national need not have a management role in the Abu Dhabi LLC. Healy Consultants will provide a local sponsor to fulfill this statutory requirement if required. 100% foreign ownership is restricted to the free zones. However, it is expected that changes will be implemented to allow foreign ownership of more than 49% of a company.

If the 49% shareholder in the Abu Dhabi LLC is a foreign corporate entity, the corporate documents of the foreign company (e g Certificate of Incorporation, Memorandum and Articles of Association, Board Resolution resolving to participate in an Abu Dhabi LLC and Power of Attorney in favour of the Abu Dhabi LLC manager) must be notarised and legalised in the country of incorporation of the parent company. In addition, these documents must then be legalised at the Ministry of Foreign Affairs in Abu Dhabi and then translated into Arabic. These requirements contribute to the complexity and costs of incorporating an Abu Dhabi LLC.

An Abu Dhabi LLC is required to allocate 10% of its net profits each year to a statutory reserve, until the reserve reaches US$20,500.

Following Abu Dhabi LLC formation, annual audited financial statements must be submitted to the Abu Dhabi government.

International entrepreneurs should budget for Abu Dhabi LLC engagement costs to range from US$40,000 to US$50,000, depending on corporate structure and professional services required.