Branches of foreign and GCC companies help expand investment base in Dubai

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Staff Report

Dubai: The number of branches of foreign and GCC companies operating in Dubai has reached 2,764 as ease of doing business and competitive policies continues to attract foreign direct investment into the emirate. The branches of foreign companies account for 72% (1,977) while GCC companies have 769 branches in Dubai, according to Waleed Abdul Malik, Director of Business Registration in Dubai Economy.

Abdul Malik said that investment attracted through foreign and GCC companies opening their branches in Dubai could bridge the gap in resources and open up new possibilities, while also expanding the investment base in the emirate.

“Foreign investments, or the participation of foreign investors in local capital, can also increase production, which positively affects the balance of payments by increasing exports, replacing imported goods with national goods, and improving the quality of local industries. It eventually helps optimal utilisation of the locally available resources and also promotes advanced management methods, training, production, and marketing. Foreign investments are also an effective tool in emiratisation,” said Abdul Malik.

Abdul Malik explained that the branch of a foreign company in Dubai is considered as the
headquarters of the parent company and it is subject to the laws of the Dubai and the UAE.

In order to open a branch of the foreign company in Dubai, a manager must be appointed to represent the company. The manager must submit a proposal approved by the board of directors to open the branch.

The parent company shall retain 100% of the ownership of the branch or representative office which must be operated under the same trade name and practice the same activities of the parent company, and the branch shall not have any separate legal identity.

Abdul Malik pointed out that the branch or representative office must appoint a local service agent who shall have no rights, interests or any financial contribution in the company.

He said, “The local agent could be UAE national or a company owned by one or more UAE nationals to handle and carry out necessary government procedures and administrative work. The representative office shall have an independent budget, a statement of its profits and losses, and shall appoint a certified auditor in the UAE.”

Abdul Malik said that the requirements to register a branch vary according to main activities – commercial, industrial or professional – practiced by the parent company and the branch. The foreign company may engage in commercial or industrial activities in Dubai by registering first with the Ministry of Economy and then with Dubai Economy.

“Dubai has a comfortable business environment for investors, and we work hard to remove the barriers faced by investors through the adoption of new economic laws, including the recent Companies’ Law, which allows the foreign investor to choose the form of company to be established in Dubai,” Abdul Malik said.

The legal forms of companies include a branch of the foreign company being authorised to operate within the Emirate of Dubai for the purpose of direct investment. This kind of investment plays an important role in the development of economic projects in Dubai.