Branch / Representative Office

The Dubai Mainland Company is a popular choice for business entities in Dubai, offering various benefits that attract many foreign investors. However, there are some limitations to this business structure. Notably, foreign owners can only hold up to 49% of the shares in a Dubai Mainland Company, with the remaining 51% owned by a local sponsor. To bypass this restriction and achieve full ownership, foreign companies can opt to open a branch office in Dubai.

Branch Office in Dubai

Entrepreneurs seeking a strategic edge in the expanding UAE market have several options. While many choose between free zone or traditional mainland setups, opening a branch office can be an excellent choice for gaining a local presence while retaining 100% control over your business.

Typically, the parent organization, whether based in the UAE or abroad, manages the branch’s commercial operations. The branch serves as an extension of the existing business and does not have a separate legal status from the parent company, except in cases where the branch operates independently. Branch offices are generally allowed to engage in the local UAE market but can only conduct activities similar to those of the parent company.

Establishing a branch office offers numerous benefits, including favorable tax rates and entry into new market sectors. Next, let’s explore the various types of branch offices you can set up in the Emirate and their respective activities.

Types of Branch Office

There are four different types of branch offices. The one that adequately suits your needs will depend on your business activities, the structure of your company, and a few other key factors.

Branch company:This is the most prevalent setup in the UAE. Like corporate shareholder offices, the parent company of a branch can be located either in the UAE or abroad. However, branch companies differ in that the parent company retains full ownership, so no share capital is needed to establish a branch office. Additionally, the branch operates under the parent company’s articles of incorporation.

Corporate shareholder:The parent company can be based either in the UAE or internationally. Corporate shareholder offices allow for individual shareholders to hold equity in the company alongside the license. For example, ownership might be divided with 50% held by a UK-based group, 25% by an individual (either from the parent company’s home country or residing in the UAE), and the remaining 25% by another individual. Multiple business owners are also permissible.

Subsidiary: Subsidiaries are among the less common types of branches, as they are considered separate legal entities from their parent corporation and must be managed within the UAE. This structure means that the subsidiary is fully responsible for its own actions and business operations. While the parent company can be based either in the UAE or abroad, the subsidiary’s management must be based in the UAE.

Representative oﬃce:Representative offices are generally the most economical type of branch. The parent company can be located in the UAE or internationally. Unlike other branch types, representative offices are limited to activities such as promoting and sourcing opportunities for the parent company. They are not allowed to generate profit in the UAE and must outsource any business operations to the parent company.

Difference between Branch and Representative Offices

There is a slight difference between branch office and representative office of a foreign company.

Factors to Consider When Establishing a Branch Office

When choosing to set up a branch office in Dubai, one must consider:

Steps to open a Branch Office in Dubai

The UAE government has offered a convenient and fast way to establish branch offices in Dubai or UAE. If you are looking to set up a branch office in Dubai, we have laid out the steps to follow for your convenience.

Benefits of Setting up Branch Office in UAE

The only requirement of a representative/branch office is to appoint LSA (local service agent). These agents have no part to play in the operations or management of a company. They only perform administrative functions.
A foreign company in Dubai holds 100% shares of its business through a branch/representative office. As compared to Dubai Mainland Company, they don’t need local sponsors.
The branch office is allowed to do business activities on behalf of its parent company. It can earn profit through these activities.
A representative office can’t earn profit but it is allowed to market products and services of its parent company. Through this way, it can provide exceptional benefit to its parent company by introducing its services in Dubai and other parts of UAE.