Civil Partnership Firm
A civil partnership firm in UAE is suitable for conducting service-related or professional activities. A civil partnership firm is also referred to as a professional company, and is governed by the relevant provisions of the UAE Civil Code, as well Local Order No. 63 of 1991 that relates to the licensing of craftsmen and professionals in the Emirate of Dubai (replaced by Law No. 13 of 2011 Regulating the Conduct of Economic Activities in the Emirate of Dubai). A civil partnership in Dubai or elsewhere in the United Arab Emirates is usually formed by two or more individuals.
The partners do not enjoy limited liability. Instead, they are jointly liable for any losses or debts that arise out of the civil partnership, unless stated otherwise in the Civil Partnership Agreement. A civil partnership in Dubai requires a Civil Partnership Agreement that must be signed before a Dubai Court Notary Public.
A civil partnership firm in the United Arab Emirates also requires a UAE national or company completely owned by UAE nationals as the Local Service Agent. The Local Service Agent is usually appointed in accordance with the Local Service Agreement providing local services in return for an Annual Service Fee. The local services include facilitating issuance of residence visas, work permits for employees, and handling renewal of Professional License every year. The Local Service Agreement does not assume any legal or financial liability for the civil partnership.
What is a Civil Company?
Professionals like doctors, architects, engineers, and lawyers enter into a civil partnership in Dubai or elsewhere in the United Arab Emirates when setting up their companies. This is called a civil company, and 100% owned by the partners in the firm. The exception to this rule would be civil companies that offer engineering services and in a few other fields like defence. For instance, in the case of an architecture firm or a construction company, it is imperative that one of the partners be an Emirati or UAE national and his/her share be a minimum of 51%. This partner must also hold relevant qualifications and have work experience in the field.
The minimum number of partners in a civil company is two and the upper limit is 50. Some fields of business allow 100% foreign ownership, that is all the partners can be foreigners.
A partner in a civil company need not be an individual. It can be a foreign company, provided the foreign company operates in the same field as the civil company set up in the UAE. A company incorporated in the United Arab Emirates cannot be a partner in a Civil Company.
A Local Service Agent, who is an UAE national, is a must for all civil companies on the mainland. The Local Service Agent does not hold any stake in the civil company, but is paid a Fee for his/her services. These include coordination with all Government agencies.
A Civil Company is not a Limited Liability Company, where the liability of the company is limited by law. However, it is preferred over LLCs because there is no limit to the number of visas that can be issued in the case of a civil company. The only precondition is that one needs to acquire more office space if he/she needs more work visas. As a general rule of thumb, one needs about 100 square feet of office space for every additional visa. However, there are restrictions on the number of Managers a Civil Company can have.
Because of these, both professionals as well as small, medium, and large organizations set up their companies as civil companies on the mainland.
If you would like to know more, please get in touch with us. One of our friendly and knowledgeable company formation experts will patiently answer your queries and let you know of all that is required when setting up a Civil Company. We are committed to your success just as you.