Doing Business in UAE - Business & Commerce - Establishing a Representative Office (Branch)
Establishing a Representative Office (Branch)

Foreign companies are permitted to establish wholly owned branches and representative offices in the UAE, provided that a UAE national is appointed as a local agent. The difference between this option and an LLC is that less UAE participation is required than as is the case with an LLC.

The difference between a representative office and a branch office, is that a representative office is limited to gathering information and is limited in the number of employees it may sponsor (typically three or four). In essence, a representative office merely serves as an administrative and marketing center for the foreign company.

By contrast, a branch office is a full-fledged business, permitted to perform and conclude contracts or conduct other activities as specified in the license of its parent company.

A foreign entity must appoint a UAE national "service agent" for the branch or representative office. A foreign entity typically contracts with the service agent to assist generally with administrative services such as obtaining visas, licenses and dealing with local authorities. The compensation of the service agent is a purely contractual matter between the service agent and the foreign entity, paid in a fixed fee and usually measured by the level of services provided or in some instances by the level of activity or turnover of the branch office. The service agent is not permitted to own equity in or participate in the management of the representative or branch office.

Due to the interaction between the UAE federal government and the government of the individual emirate in which the branch office is to be located (e.g., Abu Dhabi or Dubai), it should be noted that registration entails submitting a number of applications and obtaining a number of approvals from several government departments. After the government of the emirate where the branch is to be established approves the application, a federal government approval is then required.


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