Unveiling the Key Legal Company Structures in the UAE:
Individual Establishment, Private joint stock company,
Limited Liability Company (LLC),,and Public Sharingholding Companies
Individual Establishment
An Individual Establishment in Dubai is a legal entity managed and owned by a single individual, known as the sole owner.
Advantages
- Simplicity and flexibility in transactions.
- Owned and managed by a single individual
Disadvantages
- Personal liability for debts and obligations
- Difficulty in increasing capital
Public Shareholding Companies
A public shareholding company is formed by five or more individuals, and it is also permissible for the federal government, local government, or any state- owned company to establish a public shareholding company.
Advantages
- Limited liability protection for shareholders.
- Access to capital markets.
Disadvantages
- Subject to more `regulations and rules compared to other legal entities.
- Complex and lengthy procedures for formation.
Limited Liability Companies (LLC)
An entity consisting of two or more individuals, with each partner being responsible for the company’s debt, obligations, and losses based on their share in the company’s capital. The number of partners in this type of company cannot exceed fifty.
Advantages
- Owners of LLCs enjoy protection for their personal assets from the company's debts and obligations.
- Flexibility in tax imposition, which can be imposed as individual ownership, partnership, or company.
Disadvantages
- Capital for the company cannot be increased, as it is predetermined before establishment.
Partnership
A type of commercial where the partners, consisting of two ore more individuals, jointly contribute their personal funds to cover the company’s debts, not limited to their share in the capital.
Advantages
- Ownership shared with partners.
- Flexibilty and division of responsibilities.
Disadvantages
- Personal liability for partners.
- Company capital limited to the financial capabilities of the partners.
Choosing the appropriate structure depends on:
- Business needs and available budget.
- Consulting a business advisory firm for company establishment before determining the optimal legal entity for your business.
