How to Establish a Joint Stock Company in Dubai?

How to Establish a Joint Stock Company in Dubai?

In Dubai, a joint stock company is a corporate organization that needs a minimum share capital. If there are more than 10 founding members, you can form a public joint stock company, or a private joint stock company with smaller share capital. You may depend on the assistance of our law office in Dubai in matters relating to the creation of these businesses.

Advantages of a Joint Stock Company

1. Increased Capital
2. Limitation of Liability
3. Existence Stability
4. Scale economies
5. Expansion Potential
6. Public Acceptance
7. Professional Management
8. Transferability of Shares
9. Tax Benefits
10. Risk Diffused
11. Social Advantages
12. Increased Borrowing Power
13. Encourages saving and investing
14. Increased Adaptability
15. Increased Accountability
16.Capital and Capability Synergy 

Disadvantages of a Joint Stock Company

1. Formation Difficulty
2. An absence of secrecy
3. Economic Power Concentration
4.Delay in Decision Making
5. Personal Interest Deficit
6. Increased Government Restraints
7. Management that is inept and unscrupulous
8. Excessive Speculation in the Company’s Stock
9. A Cold Work Environment
10. Various Rules and Regulations
11. Oligarchic Management
12. Conflict in Interests
13. Insufficient drive and a lack of personal touch
14. Ownership and management are kept separate.
15. False advertising and management
16. Negative consequences of large-scale operations
17. There is a lack of continuity and concealment.

Difference between a public and private joint stock company

A private joint stock company is one in which the members’ ability to transfer their shares, if any, is restricted; the number of its members (not including its workers) is limited to 50; and the public is not invited to subscribe for any shares in, or debentures of, the business.
When a group of persons owns one or more shares in a firm, they are considered as a single entity.
A public corporation is one that has no restrictions on its members’ rights to transfer their shares, if any exist; has no limits on the number of its members; and encourages the public to subscribe for any of the company’s shares or debentures.
Directors must either obtain a consent to function as directors, sign a MOA, or enter into a contract for qualifying shares.

Creating a Joint stock company in Dubai

Opening a private joint stock company in Dubai has certain legal requirements, including a minimum share capital of 2 million AED. The shares must be distributed among at least three people and cannot be sold to the general public.
The free zones and mainland regulations in Dubai allow for 100% foreign ownership.

There are also certain restrictions on the kind of operations that a private joint stock corporation can engage in. As a result, a private joint stock corporation can be used for commercial or industrial purposes. If you want to do business professionally, you should opt for a different sort of corporation than a private joint stock company.

In Dubai, a public joint stock corporation requires a minimum share capital of 10 million AED and allows its members to bargain their interests in the firm. Each member’s liability is limited to the value of his or her shares in the joint stock firm.

Steps to open a joint stock company in Dubai

• You’ll need to get a trade name approved if you haven’t already.
• After that, you’ll need preliminary approval, which is a certificate that allows you to apply for a company license.
• Depending on the nature of your business activity, you may additionally require authorization from other relevant authorities. For example-If you work in the insurance sector, you may need to apply for authorization from the Insurance Authority. If your company is in the healthcare field, you may need to seek Ministry of Health permission.
  
•  You can apply for a business license online or in person at a Department of Economic Development (DED) customer service facility.

Documents needed

You must provide the following papers as part of your business license application:

1. your trade name certificate
2. your preliminary approval certificate
3. the applicant’s UAE ID card (and passport, if applicable)
4. copy of the extract of registration for every individual concerned who is an Emirati citizen
5. the commercial license or registration certificate for any shareholders who are legal persons (companies)
6. the lease agreement for your business premises
7. if you have a representative submitting your license application, a power of attorney attested by a notary public
8. a representation, eg photo or photocopy, of the business signboard, carrying the seal and signature of the calligrapher and the board measurements
9. a no-objection certificate issued by the appropriate authority if your business needs permission to carry out its economic activity
10. the company’s memorandum and articles of association, authenticated by a notary public proof that the company’s memorandum and articles of association have been published in the Ministry of Economy bulletin
11. a letter of approval from the Executive Council regarding the company’s incorporation
12. a certificate from a bank operating in the UAE showing that the subscribed capital has been deposited 

Conclusion

By following a few simple steps, you can open a joint stock company in Dubai. A joint stock company has it’s benefits and risks which should be carefully evaluated.It is advised to seek help from professionals when planning for a company registration in UAE. 

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