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Home >Business Setup (UAE Resident Companies) > Limited Liability Company (LLC)

Limited Liability Company (LLC) - LLC Company Formation Dubai

A Limited Liability Company (LLC) is a corporate structure whereby the members of the company cannot be held personally liable for the company’s debts and obligations. The laws governing Limited Liability Companies differ in each country. The following are the basic details on LLC Company formation Dubai and other UAE free zones.

  • Limited Liability Company is one with limited liability, where the number of partners may not exceed fifty and should not be less than two. Each of the partners shall only be liable to the extent of his share in the capital. The partners’ participation should not be represented by negotiable certificates.
  • The name of the Limited Liability Company shall be taken from its purpose or from one or more of the names of partners, the statement Limited Liability Company shall be added to the company's name, stating the company's capital.
  • Other than the insurance, banking, and investment businesses for others, the Limited Liability Company shall be entitled to practice any legal business.
  • The company may not resort to Public Subscription to make up its capital or to increase it or to get the necessary loans, and it may not issue any negotiable stocks or shares.
  • The minimum share capital shall be Dhs 300.000 divided into equal shares with a minimum face value of Dh. 1.000 per share.
  • Shares may not be divided, and if several people owned it, they shall choose one to be an individual owner against the company, and it may fix for the shareowners a time for such selection, provided that after that date, the share may be sold to its owners, in which case partners shall enjoy a priority in purchase.
  • Losses and profits shall be divided equally among shares unless otherwise herein stated.
  • The share of each partner shall be transferred his heirs and the ones mentioned in the will shall be treated as heirs.
  • A Limited Liability Company can be managed by manager / managers that may be selected from among the partners or any other parties providing that they do not exceed a total of five persons.
  • The manager / managers shall be appointed by memorandum of association or by a separate management contract for limited/unlimited terms. If the manager/managers are not appointed as stated in the above paragraph, the General Assembly of the partners will appoint them.
  • Unless otherwise stated in the MOA, the company manager shall enjoy full powers of administration, and his acts shall be binding to the Company, provided that it is supported with stating the capacity he enjoys.
  • The manager's resolution shall be as responsible as that of the company board, all conditions in the company contract contrary to that shall be invalid.

The other types of legal business structures are

General Partnership:

  • A general partnership is an arrangement between two or more partners whereby each of the partners is jointly and severally liable to the extent of all their assets for the company's liabilities.
  • Only UAE nationals are allowed to be partners in a general partnership.
  • The name of the company shall be made up of the name of all partners, and its name might be limited to the name of one or more partners and adding a word to modify the presence of the company. In addition to that the company may have a special commercial name, if the name of a person other than the partners was mentioned in the name while he is aware of that, the said person shall be responsible in partnership for the company's obligations.
  • All partners shall be considered a dealer, and the bankruptcy of any partner leads to the bankruptcy of all partners.
  • The company shares may not be represented in negotiable certificates.
  • Partners are severally responsible in all their money for the company's obligations and any agreement to the contrary might not be made against Third Parties.
  • The company administration shall be undertaken by all partners, unless the company contract or an independent contract assigns the administration to a partner or to a non-partner party.

Simple Limited Partnership:

  • A simple limited partnership is a company formed by one or more general partners liable for the company liabilities to the extent of all their assets, and one or more limited partners liable for the company liabilities to the extent of their respective shares in the capital only.
  • Only UAE nationals are allowed to be general partners.
  • The name of the company shall be made up of the name of one or more of the limited partners, adding a word to modify the presence of the company. In addition to that the company may have a special commercial name.
  • The name of the limited partner may not be mentioned in the company name, if it was mentioned with his knowledge of that, he shall be considered a partner for Third Parties in good faith.
  • The simple limited partnership shall be a partnership for all partners and shall be subject to all the rules of partnerships, based on the following:
    1. The simple liability contract shall include in addition to the other data, the name of each limited partner, his surname, nationality, date of birth, country, capital share, and the part paid of it.
    2. The limited partner is only liable towards the company's debtors with his capital share.
    3. A limited partner may not intervene in the company administration-related issues related to others even if upon authorization, he may rather require a copy of the loss / profit accounts and the balance sheet and check the validity of the data by reviewing the company's records and documents by himself or by a representative from any of the partners or others provided that this does not harm the company.
    4. If the limited partner violates the above mentioned ban, he shall be responsible in all businesses for all the obligations resulting from his business.
    5. The limited partner may be held responsible in all his money for all company's obligations if the business administration he carried out leads others to believe that he is one of the ultimate actual partners, in which case the rules and regulations of the actual partners shall apply to the limited partner.
    6. If the limited partners carried out any of the banned administration business based upon an explicit or implicit authorization from the partners, such partners shall be held responsible with him for the obligations resulting from such acts.
    7. Limited partnership shall issue resolutions in consensus of all partners and limited partners, unless the contract states a majority, and the majority in number shall be considered, unless otherwise stated.
    8. Resolutions to amend the company contract shall not be passed unless duly approved in consensus of all partners and limited partners.

Private Joint Stock Company:

  • A number of founders, not less than three, may establish a Private Joint Stock Company.
  • The shares of a Private Joint-stock Company cannot be offered to the public or for the Public Subscription.
  • The founders must subscribe all capital and minimum requirement for such capital is Dh. 2 million.
  • A Private Joint-stock Company is subject to all rules and regulations pertaining Private Joint-stock Companies, except for rules and regulations of the Public Subscription.
  • A Private Joint Stock Company may be converted into a Public Joint Stock Company, in order to do so the following conditions must be satisfied:
    1. The nominal value of the issued shares is fully paid up.
    2. A period of not less than two financial years has expired.
    3. During the two years preceding the application for conversion, the company has achieved net profits, distributable to the shareholders whose average is not less than 10% of the capital.
    4. A resolution of the extraordinary assembly for the conversion of the company is adopted by a majority of three-quarters of the company capital.

Partnership Limited with Shares (PLS)

  • A Partnership Limited with Shares is a company formed by general partners who are jointly liable to the extent of all their shares for the company liabilities and participating partners who are liable only to the extent of their shares in the capital.
  • For the general partners, the company shall be a general partnership, and the general partner shall be a dealer even if he did not enjoy such capacity before entering the company, all general partners must be nationals.
  • The capital of Partnerships Limited with Shares shall be divided into negotiable equal shares.
  • The company shall be named after the name of one or more of the general partners. Its name may be added to another innovative name or a name derived from its purpose.
  • The rules related to the incorporation of limited liability partnerships shall apply to Partnerships Limited with Shares, according to the following:
  • All general partners and other founding parties shall sign the MOA and its regulations, and their resolutions shall be as effective and valid as the founders of the limited liability companies.
  • Names of the general partners, their surnames, nationalities, and countries shall be stated in the company contract and its regulations.
  • The minimum share capital requirement for limited partnership is Dhs. 500.000.
  • The documents issued by Partnerships Limited with Shares shall be subject to the same rules of the documents issued by the Limited Liability Partnerships.

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