Appointing Abu Dhabi agents or distributors or sponsors in 2021
- For Abu Dhabi company formation, foreigners find it difficult to function in Abu Dhabi without a partner, agent or sponsor to help handle i) government bureaucracy including issuing exit and re-entry visas ii) navigating through the upper echelons of ministry. Healy Consultants assists our Clients find a suitable agent or sponsor;
- Before contracting an agent or distributor, Healy Consultants recommends i) visiting Abu Dhabi for a face to face meeting with the agent ii) obtaining detailed due diligence from the agent including passport copy, resume, professional reference letters, etc iii) engaging a local lawyer or accountant to critically review legal agreements.
- The UAE Commercial Agencies Law regulates the appointment of commercial agents, sales representatives, and distributors. A commercial agent is appointed to distribute, sell, offer, or provide goods or services within the UAE for commission or profit;
- Commercial agents must be UAE nationals or companies owned entirely by UAE nationals. Commercial agents must be registered with the Ministry of Economy and Commerce to engage in commercial agency activities;
- The Ministry of Commerce and Industry has published standard forms of agency and distributorship contracts. An example of an agency agreement can be found on this web link;
- The maximum rate of commission payable to national agents for government tenders is limited under Abu Dhabi law to between 1% and 2% depending on the value of the tender;
- The agency contract clearly stipulates i) the agent will not interfere with the company’s management or activities and ii) he will be paid a lump sum and/or a percentage of profits or turnover.
Benefits of agents
- Government departments play an important role facilitating business in Abu Dhabi. All businesses deal with government departments on a regular basis. Abu Dhabi agents help foreign companies with government bureaucracy;
- Whilst English is widely spoken in business and government circles, all correspondence with the government authorities is conducted in Arabic. Hence following Abu Dhabi business formation, an agent will be of great help with this matter;
- UAE nationals prefer to do business with someone after they are properly introduced and have met face-to-face. An agent can act as a “go-between” to vouch for the reliability of both parties.
Problems with agents
- Disputes with agents and distributors causes serious problems for foreign investors. It is important foreign investors take steps to protect themselves including i) completing thorough due diligence of the proposed agent ii) retaining legal counsel to review and approve a well-drafted agency agreement;
- Commercial agents are entitled to an exclusive territory encompassing at least one Emirate for the specified products. If the agent is not the consignee, he is entitled to prevent company products being imported into the UAE;
- Commercial agents are entitled to receive compensation from the principal if the agency is terminated or not renewed without substantial justification. The agent can prevent the foreign company appointing a replacement agent;
- The majority of company visas and licenses are sponsored by UAE nationals, giving the latter indirect control over the business.
Doing business in Abu Dhabi without a local company
To minimize business costs, our Clients sometimes implement the following strategies:
- Through a local agent or distributor, a foreign company is allowed to sell its goods and services directly to UAE customers;
- Foreign companies can also sell their franchise to a commercial agent or distributor, eliminating the need to hire local staff and incorporate a local company. Examples include Hertz, Baskin Robbins, and Pizza Hut.
Other business support services
- Accounting and taxation services;
- Virtual office services;
- Human resource support;
- Represent our Client at trade shows;
- Marketing services;
- Identifying strategic business partners;
- Providing access to angel investors or venture capital;
- Technology commercialization assistance;
- Project lobbying mainly for government contracts;
- Identify UAE companies for franchising and licensing;
- Provide business growth advice;
- Assistance in business and product development among others.
Frequently asked questions
Can Healy Consultants help me find an agent for Abu Dhabi company formation?Certainly. Healy Consultants will be pleased to introduce our Clients to an Abu Dhabi agent based on our Client’s business and requirements.
Do I need a lease agreement to form a company in Abu Dhabi?Yes, for formation of an Abu Dhabi company our Client will require a lease agreement for their office premises. If needed, Healy Consultants will be pleased to provide virtual office services until our Clients find a permanent space.
What are the foreign company formation options in Abu Dhabi?For company formation in Abu Dhabi, our Clients have several types of business entities available such as LLCs, branch office, representative office, Free zone company. Healy Consultants recommends our Clients to form a free zone company in Abu Dhabi.