Sole Proprietorship

An establishment or sole proprietorship is an entity owned by one individual with the trade license issued in his or her own name. The owner assumes all the financial responsibilities of the entity including all its financial liabilities. Establishments that practice professional services and do not extend to any commercial business are exempt from the Commercial Companies Law (CCL) but are required to be licensed by the Department of Economic Development (DED).

Unlike a  Limited Liability Company (LLC), which requires that at least 51% of shares must be registered to a UAE/GCC national sponsor, a qualified foreign investor that sets up an establishment or sole proprietorship to practice a professional service is permitted 100% ownership in the company.

Establishments that are owned by foreign nationals are required to appoint a Local Service Agent (LSA) to assist in obtaining licences, visas etc. LSAs have no direct involvement in the business. A&A Associate is able to act as the LSA.

These business-friendly features are complemented by Masdar City’s state-of-the-art technology infrastructure, world-class facilities and liberal investment regulations creating a favourable environment for companies to freely conduct business. The Masdar City Free Zone is home to over 400 companies, including the International Renewable Energy Agency (IRENA) and the regional headquarters of Siemens.

Masdar City relies on solar energy and other renewable energy sources but its unique construction allows for the temperature in the streets to be between 15 and 20°C, much cooler than the desert climate. It is powered by a 54-acre field with 87,777 solar panels, and movement sensors have reduced electricity and water consumption by more than half. The project has gained the support of global organisations such as World Wide Fund for Nature, BioRegional and Greenpeace.

Key steps to setting up an Establishment or Sole Proprietorship:

Appoint a Local Service Agent (LSA), which must be either a UAE national or a company wholly owned by UAE nationals. A&A Associate has created a number of 100% UAE-owned LLCs that it fully manages and controls through power of attorneys and other legal agreements. These companies can act as the LSA.

The required documentation for registration and approval will include but is not necessarily limited to:

Advantages of a Sole Proprietorship or an Establishment

Disadvantages of an Establishment or Sole Proprietorship

Establishment or Sole Proprietorship – FAQs

Expatriates are allowed to form sole establishments only for practicing professional services, such as management, medical, engineering and IT consultancies or similar services.

Yes. A business bank account can be opened with any of the UAE banks.

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