With little question, Dubai is a magnet for investors and entrepreneurs from all over the globe who are looking to grow their companies in the Middle East’s commercial capital. Whether it’s startups, corporate headquarters and branch offices of multinational corporations, or family-owned enterprises, the city is a hive of activity when it comes to economic activity. In this blog post, we will discuss why it is preferable to establish a holding company in Dubai.
Consider the following scenario: you own a wellness clinic and want to expand your business by opening a retail shop for nutritional supplements and publishing a fitness magazine. Despite the fact that the three business sectors are complimentary, a single licence would not be sufficient to cover all of the activities and services you want to provide. To operate a clinic, you will need not only a professional licence from the UAE Department of Economic Development (DED), but your business will also need to be an LLC recognised by the Dubai Health Authority in order to be legally permitted to operate (DHA). A commercial licence is required in order to engage in trade. An industrial licence must also be acquired in order to operate the printing press.
While you are free to select the operational structure for each of your businesses, it is preferable to establish a holding company in Dubai Mainland to serve as a holding company for all of your ventures.
What is the definition of a holding company?
In its most basic form, a holding company is an LLC or a corporation that owns and manages the operations of subsidiary businesses. This parent business does not offer any services or products, nor does it participate in any manufacturing activities. It is also not responsible for any operations. It primarily owns and manages the operational businesses, which are in charge of the actual carrying out of operations and activities on the ground. Of certain cases, the holding company may possess 100 percent of the stock in its subsidiary business, while in others, it may own just enough to maintain complete control over the subsidiary company. Each of the subsidiaries is likewise overseen by a management team that is responsible for the day-to-day operations.
There are five advantages to establishing a holding company.
You may question why an entrepreneur would want to set up a holding company in Dubai Mainland when he or she has the option of investing in more than one firm under different licences. As a result, the following are some of the most significant advantages of adopting a holding structure:
Asset management is simplified since the trademarks of the parent business, such as the name, logo, real estate, and equipment, may be used by the subsidiaries as well.
Legal Structure — By making modifications to the holding company, any legal changes to the operating business may be made more quickly and easily.
The ultimate beneficiary’s privacy should not be compromised since the information about shareholders does not need to be shared outside the holding.
You may diversify your investments by establishing subsidiaries that act as branches or franchises. You may acquire a large number of foreign franchises by forming a holding company. You may have branches in a number of different industries at the same time. For example, a restaurant’s branch location is often another restaurant location. However, under a holding model, you have the option of investing in retail, real estate, and hospitality.
Employee movement – The human resource function is made simpler since employees may be transferred from one company to another in order to best use their talents.
Costs associated with the project
If you are thinking of establishing a holding company in Dubai Mainland, you must go via the Dubai Economic Department (DED). The following is a broad description of the procedure, as well as an estimate of the costs:
Obtaining preliminary approval costs AED120/-.
Obtaining permission for a name costs AED620/-.
AED1,500 and above for the drafting of a Memorandum of Association (MoA).
Obtaining a place of business
Sponsor on a local level: Partner will own 51 percent of the company’s stock.
Fees for activities: AED1,500/-
Fees for licences: AED10,000/-
To find out more about how to set up a holding company in Dubai Mainland, get in contact with Generis Global, one of the region’s top suppliers of business formation services.