Joint venture business setups: key steps & advantages to set up in Dubai

Business and trade are the popular activities in Dubai. In order to facilitate everyone seeking to join the fleet of entrepreneurs in this city, Governmental authorities have formulated flexible policies and variable systems to establish business setup in Dubai. Among these systems, joint ventures are very popular. The system allows foreign entrepreneurs and companies to unite with local firms and partners via a contractual agreement. They offer similar advantages like limited liability companies. The only difference between JVs and LLCs is the division of profits and losses between the partners.

business-setupsWhat is a joint venture?

It can be defined as a strategic agreement between two or more candidates to perform specific commercial activities to earn profits. Despite being grouped in a kind of partnerships, JVs are made for the short term to complete a single project. Participants usually share the project objective to gain individual benefits. Unlike to general partnerships, this model is a separate legal entity. Everything from revenues, operating cost and asset ownership flows to the participant via agreement. As soon as the project ends the entity proceed to exit.

How to establish a joint venture in Dubai?

These contracts are usually made between the individuals possessing a complementary set of skills and resources like finance, technology, distribution channels and expertise of core business activity. If you are planning to set up a JV, all you will need is to possess the matching expertise or resources to support the core commercial activity for which this association is made. Irrespective of the number of participants, it requires 51% of the local equity participation. Once all the parties are agreed on the conditions, the group proceeds registering the agreement with Department of Economic Development in Dubai (DED). The document has DED form that has to be signed before a public notary. After drafting the agreement associations proceed to get it approved from DED. To ensure receiving the approval they have to attach the list of documents mentioned below:

  • Registration application
  • Trade name reservation
  • No-Objection letter from local partner
  • Copies of applicant and director passport
  • Endorsement for the planned trade activity

Note: Applicants from overseas have to submit Dubai residence permit and as a resolution by foreign company management board.

After completing the initial registration with DED, partners in a joint venture have to follow few further steps to start commercial operations. At this stage they have to submit few more documents like initial approval, office lease agreement copy and the association agreement copy of notarized by a public notary to the Dubai Trade Register. Although unregistered JV project is allowed to operate, but only for the short tenure.

What are few advantages?

  • Proffer enterprise an opportunity to gain not only the new technical expertise but also facilitate them to enter in related trades and new geographic markets.
  • Make it possible to access good resources like skilled staff and technology. This will empower them to free up themselves from non-core activities.
  • Foreign candidates don’t need to obtain business license, as their local partner will have the license to carry out the activity

Summary: If these benefits stimulate you to launch a joint venture in Dubai, don’t delay contacting with a reliable business consultant.