Reducing liabilities is important for any business owner. Liabilities include accounts payable, interest payments, taxes, bills, and loans. They can be a heavy burden no matter where you are.
To avoid this hassle, you can get a business License in Dubai as a Holding Company. With the assistance of this license, you can own and manage various assets in the state. The plus point is that it keeps these assets separate from your business’s liabilities and losses.
Let’s learn about the benefits of opening a holding company in Dubai, the requirements, and the registration process.
What Is A Holding Company?
A holding company is a type of business that owns assets like property or other companies. Its primary role is to possess the businesses or assets within its group. This setup provides a tax-efficient method for businesses to organize themselves, especially when they hold diverse assets and aim to limit their liability.
It functions as a parent entity with the majority ownership of all its subsidiaries. Although it oversees the group, it does not involve itself in the direct management of these companies or the administration of the assets.
Holding companies are involved in any of the services and activities. They do not oversee the group of companies or participate in decisions made by the subsidiary companies.
Types Of Holding Companies In Dubai UAE:
In Dubai, investors have two primary options for establishing holding companies, each with its own advantages and regulatory frameworks:
1. Free Zone LLC Holding Company
A Free Zone Limited Liability Company (LLC) holding company is established in one of Dubai’s free zones. This option is particularly attractive for foreign investors, allowing for 100% foreign ownership and control.
2. Mainland Investment Company
A Mainland investment holding company works under a Dubai commercial license issued by the Department of Economic Development (DED) in Dubai. This type of company allows for a broader scope of business activities across Dubai and the UAE.
Requirements for Holding Companies
Dubai holding companies must implement with all relevant company laws and the following specific requirements:
- You must appoint a management board to establish policies for the organization of subsidiaries.
- Supervise subsidiary activities through a management board. Select directors for each subsidiary company.
- Ensure that subsidiary businesses have access to the necessary capital to remain operational.
- Implement strategies to minimize the risks undertaken by subsidiaries.
Functions of a Holding Company in Dubai
A holding company in Dubai functions as a parent entity that holds shares in subsidiary companies and owns assets. Business owners or shareholders often establish holding companies as a strategic move to limit liability and protect their investments.
This structure safeguards against potential issues with subsidiary companies, ensuring that risks are minimized and the holding company’s assets remain protected.
Limitations for Holding Companies in Dubai
There are specific limitations on the activities of holding companies in Dubai. They can own assets, subsidiary companies, property, and intellectual property.
Holding companies in Dubai are prohibited from conducting operational activities such as manufacturing products, providing services, or directly managing assets. These functions are the responsibility of subsidiary companies.
How Holding Companies Can Operate In Dubai:
Holding companies in Dubai usually function by appointing a board of shareholders tasked with strategic decisions. This board determines the ownership structure over subsidiaries and oversees critical actions such as mergers, acquisitions, and sales of subsidiaries or assets.
Steps Involve In Registration As Holding Company in Dubai
Registering a holding company in Dubai requires adherence to government regulations. The steps are outlined below:
- Systematic Planning and Research: Conduct thorough research and plan according to your goals and visions. Decide on the type of industry, holding structure, and acquisition of subsidiaries before registration.
- Select a Business Activity: Choose from various business activities available in Dubai, such as investment holding, property holding, and intellectual property holding. Select the activity that best suits your company’s objectives.
- Select the Right Location: Choose an optimal location in Dubai to attract the right consumers and clients and boost revenue. Research to ensure you buy or rent the right location in accordance with your business plans.
- Choose the Entity type: Choose the right type of company structure that fits your needs. Options include Free Zone, Mainland, and Offshore companies, each offering different benefits and restrictions.
- Pick a Management Board: Appoint a management board to set organizational policies and supervise the activities of subsidiary companies.
- Appoint Directors: Hire professional directors for each subsidiary company. Directors oversee the finances and business operations of the subsidiaries.
- Prepare and Submit Documents or Hire Professional Business Consultants: Prepare and submit required documents or enlist business consultants to ensure a smooth registration process. Consider hiring professional business consultants like Ignitezone Consultants to handle the entire process and assist in daily business operations.
How Much Does It Cost To Start a Holding Company in Dubai?
The cost can vary depending on the size of your business and where it’s located. A well-designed business plan can help reduce extra costs. We have mentioned a rough estimate of the costs involved:
- Name Approval Costs: AED 600
- Initial Approval Costs: AED 120
- Memorandum of Association Drafting: AED 1,500
- Rent of Office Spaces: Variable
- Activity Fees: AED 15,000
- Licensing Fees: AED 10,000
Benefits of Setting up a Holding Company in the UAE
Tax-Free Business Environment:
Establishing a holding company in the UAE offers significant tax advantages. For instance, In UAE, most business activities are not subject to corporate or personal income taxes, which makes it a favorable location for holding companies looking to manage their tax obligations efficiently.
Securing Business and Personal Assets:
A holding company structure provides strong asset protection by isolating assets from the risks and liabilities of operating companies. This setup offers an extra defense against legal challenges, bankruptcy, and creditors’ claims, safeguarding individual and business assets.
Multi-Industry Investments Balancing Market Fluctuations:
They are also entrepreneurs and investors to diversify their interests across various industries. By holding stakes in multiple businesses, a holding company can reduce the impact of systematic risk and industry-specific risks, enhancing overall stability.
Efficiency Through Centralization:
One of the best benefits of setting up a holding company in Dubai is that it promotes centralized decision-making and strategic planning. This helps improve coordination and control over subsidiary companies. It also enhances corporate governance, streamlines operations, and boosts efficiency across the business group.
Register Yourself As A Holding Company In Dubai With Ignite Zone:
Registering as a holding company in Dubai involves navigating various regulatory requirements and strategic decisions. Whether you establish in a Free Zone for foreign ownership benefits or opt for a Mainland company in Dubai – the whole process demands careful planning and adherence to local laws.
Ignite Zone specializes in helping businesses set up holding companies in the city. We ensure a smooth registration process. From selecting the right business activities and location to appointing management boards and preparing essential documentation,
We provide comprehensive support to ensure compliance and operational readiness. All you will need to do is contact us with your business goals and register as a holding company in Dubai.
