establishing branch offices  

Establishing branch offices. 
In the UAE and in Dubai, a foreign company is permitted to establish and register a branch office.
 
A branch office is legally regarded as part of its parent and does not have a separate legal identity from that of its parent company. Accordingly, the name of the branch office will be the same as that of the parent company. Furthermore the activities of the branch office are restricted to those of its parent company. This is however, dependant on the type of activities as some of the activities are restricted and can only be licensed to a locally incorporated company. 

There are three possible ways to set up a branch in Dubai:  

1.      a local branch under the laws of the Emirate of Dubai;
2.      a federal trading branch under the UAE Commercial Companies Law; or
3.      a branch in one of the free zones (for example, the Jebel Ali Free Zone or the Dubai Airport Free Zone).  

Federal registrations fall within the jurisdiction of the UAE Commercial Companies Law whereas local registrations fall within the jurisdiction of the relevant Local Order applicable in each Emirate.  The distinction lies in the fact that under the federal jurisdiction either a trading branch office or non-trading representative office licence may be obtained whereas under the local jurisdiction only a non-trading representative office licence may be obtained.  

As part of the licensing procedure to establish a branch, the parent company is required to submit a bank guarantee in the amount of AED 50,000 in favour of the Ministry of Economy.  

In order to obtain a branch license, a UAE national must be appointed by the foreign company as a service agent. Whilst the appointment of a service agent is required by law, the scope of the agent’s role is essentially a matter for agreement between the parties and the service agent usually has no direct involvement in the business.  At the very least, the role of the service agent is to facilitate and provide assistance with respect to visa applications, labour cards, licenses and other administrative issues which require the service agent’s signature as a matter of law.  The agent may also agree to promote the foreign company’s operations in other ways using whatever influence the agent may have as appropriate.  The agent is usually paid a fee for his services, expressed to be either a fixed annual sum or a sum calculable by reference to the level of business conducted or generated by the branch or representative office.