A Guide to Holding Companies in the UAE

October 11, 2023

There are many reasons why you may want to operate your company in Dubai, such as low tax rates and ownership advantages. Learn more about the purpose and benefits of holding companies in the UAE.

What is a holding company in the UAE?

A holding company is a legal entity that is attached to another company, known as a parent company. The holding company can be used to protect assets and shares and cannot engage in any of its own business activities.

Holding companies can be used as protection for a business’ shareholders regarding liability for company assets. Holding companies can be used by both UAE nationals and foreign investors.

It’s important to note that the regulations and requirements for setting up holding companies can vary based on the emirate and the type of business activities you plan to undertake.

What are the types of holding companies in the UAE?

When forming a new company, it’s important to consider all of the options available and decide on which will be the most suitable for you. There are two main types of holding companies in the UAE.

Onshore Holding Companies in Dubai

An onshore holding company can be used by those with a mainland company. For this type of business structure, there must be a local partner in the company who owns at least 51%.

At CBD Corporate Services, we can act as a local sponsor on your behalf. This allows you to run your onshore holding company with peace of mind. As your local sponsor, we’ll represent your company in a professional manner and will not be involved in any business or financial decision-making regarding your Dubai holding company.

Freezone Holding Companies

Another option is to set up a free zone holding company. There are many free zones available across the UAE, such as in Dubai and Abu Dhabi. Freezone companies can benefit from 100% foreign ownership. Find out more about the Dubai International Financial Centre (DIFC) and the Abu Dhabi Global Market (ADGM). Free zones offer several advantages. Find out more about the DIFC Innovation License vs. ADGM Tech Startup License.

These are two of the most common types of holding companies. Others can include public joint stock companies, private joint stock companies and offshore companies.

What are the requirements for setting up a holding company in the UAE?

There are some steps that you must complete to establish your holding company successfully. We can assist you with the whole process, taking the pressure off you.

  • Holding companies must have a management board to create policies for subsidiaries and supervise activities.
  • Each subsidiary company (holding company) must have its own director and the capital to continue business activities.
  • The holding company must outline risk management processes and arrange contracts.

How to start a UAE-based holding company

Setting up a holding company in the UAE is a relatively simple process. Unlike some other areas, very few requirements need to be met. Holding companies can be used by those operating in any business sector.

The process of setting up a holding company varies depending on the exact location chosen. However, most follow similar steps. You will be required to complete the following steps.

  • File the articles of incorporation for all new subsidiary companies
  • Outline the business managers of the existing company and the new holding company in Dubai
  • Select a business name
  • Complete applications for the necessary licences and permits
  • Create bylaws for the holding company and outline stock shares across owners and shareholders

During this process, you will also need to ensure that visas are obtained for those who require them. We can support you with all Dubai visa applications.

You will also need to register your company for a UAE bank account. There are many accounts available, and it’s worth researching which ones will be the most beneficial to you.

What are the benefits of holding companies in the UAE?

Liability protection

One of the main reasons why businesses choose to have a holding company is due to the limited liability protection that comes with it. This means that if you experience business problems, such as financial trouble, your assets belonging to the holding company will be safe. This is known as a limited liability company or LLC.

Government support for subsidiary companies

The UAE government offers a lot of support to businesses operating in the area. In addition to company support, they offer competitive tax rates and exemptions.

You’ll also find that there is no minimum share capital requirement when setting up a holding company in the UAE. This means that if you already have a company in the UAE, deciding to form a holding company as well is a reasonably simple decision. You can receive more benefits and protection for an affordable price.

Monetary benefits

Holding companies in the UAE will find it easier to obtain loans and other investments from banks. This is because having limited liability signifies higher levels of protection for everyone involved.

Additionally, holding companies in the UAE receive impressive tax benefits. The government does not currently tax foreign companies operating in the UAE. This is a huge benefit for foreign investors setting up a Dubai holding company.

The experts at CBD Corporate Services are here to assist you with all company formation in the UAE. Contact us for an efficient and friendly service – we’re happy to answer any questions you have regarding holding company formation in the UAE and foreign investment.

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