UAE limited liability companies

A limited liability company (LLC) is one of the corporate structures available under the UAE Federal Law No 8 of 1984, which is the UAE’s company law. An LLC must have between two and fifty partners – owners are called partners rather than shareholders. Foreign investors, individuals and corporate entities, are permitted to hold up to 49% of the share capital.

Even though foreign partners can own only 49% interest of the share capital, the companies law gives them considerable freedom to draft the memorandum of association for the LLC according to their particular needs – particularly provisions regarding its management and governance. As such, the shareholders are free to include provisions allowing the minority shareholder to receive a majority of profits and retain management control of the LLC. This makes the LLC a useful vehicle for foreign companies wishing to set up subsidiaries in the UAE.

Share capital

In the Emirate of Dubai, the minimum capital of an LLC was previously set at UAE Dirhams 300,000 (US$81,700). However, a recent amendment to the companies law has removed the mini-mum share capital requirement for an LLC and the law now states that it should have the capital that is sufficient to achieve its purposes. However, in practice a lower level of capital, which is expressed as indivisible shares of equal value distributed in proportion to the shareholdings of the partners, will need to be approved by the appropriate emirate authority.

Saurbh Kothari is an associate in the Dubai office of Afridi & Angell, a UAE-based law firm. He can be contacted at saurbh@afridi-angell.com. Afridi & Angell has offices in Abu Dhabi, Dubai and Sharjah.