Setting up Company in Dubai has become a very profitable proposition nowadays. There has been a drastic development in the infrastructure of Dubai during the past years. This led to economic growth in the country. Dubai is not only successful in offering ample business opportunities to entrepreneurs but also has a seamless process for registering a Limited Partnership Company.
It has always been welcoming various kinds of businesses in the Dubai Free Zones like, the Sole Proprietorship, Limited Liability Company, and Joint Venture business to start their establishment in the country and expand it further. Now, for a business to business set up in Dubai one needs to choose a legal structure first and Dubai offers many such corporate entities to the entrepreneurs, one such thing is a Limited Partnership Firm.
Formation of Limited Partnership Company in Dubai
As per the Department of Economic Development (DED), A Limited Partnership is formed between a minimum of two partners, one is a General partner and another is a Limited partner. Sometimes it is called 'silent partner" as the partner does not take part in any of the business activities or share any profit or losses of the business. Limited Partners are liable for a share of company liabilities equal to their share of the company capital. The company can have more than one branch and every branch can take over one or all activities which is included in the primary business license.
Difference between a General Partnership and a Limited Partnership Company in Dubai
The main difference between General Partnership and Limited Partners is that the General partners must be UAE nationals whereas Limited Partners can be nationals of other countries. The company name along with the company should have names of the General partners but the name of the Limited Partner should not be mentioned in the name of the company.
A limited partner should not interfere in management functions or involve third parties even if he/she has the authority to do so. Although a limited partner can participate in internal administration. They have full right to verify the profit and loss account and the balance sheet and also company books and documents if this would not cause damage to the company.
Key Steps to Set up Limited Partnership Company in Dubai
The key steps to set up a Limited Partnership Company in Dubai are:
- Choosing a catchy trade name.
- Approval from the General Directorate of Residency and Foreigners Affairs for any foreign investor is required.
- Provisional approval is needed which is a certificate that enables the partner to apply for a business license.
- An authorization is needed from other relevant authorities which depends on the nature of your business.
- The partner may apply for a business license via the website of the Department of Economic Development (DED), or in person at a DED customer service Centre.
What are the Rules of Limited Partnership?
Like all other businesses, Limited Partnership also has certain rules and regulations for a company formation in Dubai:
- Besides the other details, the liability contract shall include the name of every partner, along with his surname, date of birth, country, nationality, the portion paid out, and capital share.
- The limited partner is only responsible for its capital share to the borrowers of the company.
- A limited partner cannot interfere in other matters relating to the company's administration even after getting the authorization.
- He/she can request a copy of the loss/profit reports and the balance sheet and verify the data is authenticated.
- If the limited partner fails to maintain the previous criteria then he/she will be responsible for all the obligations arising from his business in all companies.
- The limited partner may be held accountable for all his money for all obligations of the corporation.
- If the limited partners carried out any of the banned administration business based upon an explicit or implicit authorization from the partners, such partners should be held responsible for the obligations resulting from such acts.
A limited partnership shall issue resolutions in the consensus of all partners and limited partners unless the contract states a majority, and the majority number shall be considered unless otherwise stated.
What are the Documents Required to Set up a Limited Partnership Company in Dubai?
After submitting a commercial license issuance application form, these documents are required:
- The certificate of a trading name is required.
- A certificate of preliminary approval is required.
- The UAE identification card of the applicant is needed.
- The registration extract is required for each concerned who is a citizen of the Emirates.
- The lease arrangement is needed for the place of business.
- If the partner has a representative for presenting the application for a license, an approved power of attorney is required by a notary public.
- A photocopy is required along with the business sign, further carrying the calligrapher's seal and signature and the measurements of the board.
- A NOC is required by an appropriate authority if the business needs permission to carry out its economic activity.
- Approval is required from the General Directorate of Residency and Foreigners Affairs for any foreign investors.
- The founding agreement of the partner must be authenticated by a notary public.
- The proof is required showing that the partnership's founding agreement has been published in the Ministry of Economy bulletin.
- The registration certificate from the Economy Ministry.
What is the Cost Involved in the Limited Partnership Registration Process?
The fees vary according to business activity:
- The Commercial license issue fee-AED 100
- The Commercial register fee-AED 100
- The Signboard fee-AED 150 per square meter
- The Operation fee, commercial operation value + 25 percent service enhancement fee.
Termination of the Limited Partnership
The partner's termination occurs due to the following reasons:
- Due to withdrawal of any partner
- Due to a bankruptcy a partner
- Due to the insanity of a partner
- And due to the death of a partner
However, the partnership firm can continue if the rest of the partners agrees to this.
Why choose Danburite Corporate for business setup in Dubai?
Danburite Corporate has experts to guide you in your journey of setting up your business in Dubai. It is one of the leading consultancy service providers in Dubai. We can give you clarity on selecting legal forms, business entities, local partners, and every other crucial business setup solution and service. Contact us for any queries on business setup in Dubai. We will be happy to assist you!
FAQs
1. Is a trade name reservation mandatory for a Limited Partnership Company in Dubai?
Yes, reserving and obtaining approval for a trade name is one of the initial steps required for registering a Limited Partnership Company in Dubai.
2. Can a Limited Partnership Company open multiple branches in Dubai?
Yes, a Limited Partnership Company can establish multiple branches in Dubai, and each branch may carry out one or more activities covered under the main business license.
3. Do limited partners have management rights in the company?
No, limited partners are generally not allowed to participate in the external management of the business, although they may review financial records and monitor company performance internally.
4. Which authority is responsible for registering a Limited Partnership Company in Dubai?
The Department of Economy and Tourism (DET), formerly known as the Department of Economic Development (DED), is the primary authority responsible for registering and licensing Limited Partnership Companies in Dubai.
