In the UAE, a branch office is essentially an extension of the parent company and doesn’t have a separate legal identity from the parent company. Here are some key points:
In most cases, the parent company, whether based in the UAE or abroad, remains entirely responsible for the business activities of its branch. The branch office operates under the authority and oversight of the parent company.
A branch office serves as an extension of the existing business. It operates under the same legal entity as the parent company, and decisions made by the parent company directly impact the branch.
Unlike a subsidiary, which is a separate legal entity, a branch office doesn't have a distinct legal identity from its parent company. It is considered an integral part of the parent company.
While most branch offices are permitted to engage in business activities in the local UAE market, they can only conduct activities that are similar or related to those of the parent company. The scope of activities is generally limited to what the parent company is authorized to do.
Branch offices are usually allowed to trade in the local UAE market, subject to the specific regulations and permissions granted by the relevant authorities. However, the range of activities is tied to the nature of the parent company's business.
This structure provides companies with the ability to establish a physical presence in the UAE without creating a separate legal entity. It allows them to leverage the benefits of operating in the local market while maintaining a direct link to the parent company's operations and decision-making processes.
Choosing the most suitable type of branch office depends on various factors, including the nature of business activities, company setup, and the level of control and liability the parent company desires in its UAE operations.
> Parent Company Location: The parent company can be based either in the UAE or abroad.
> Shareholding Structure: Allows for a mix of individual and corporate shareholders to hold stakes in the business along with the license.
> Parent Company Location: Similar to the corporate shareholder option, the parent company for a branch company can be based either in the UAE or overseas.
> Ownership Structure: The parent company remains the sole owner. No share capital is required to open a branch office, and the branch uses the parent’s articles of incorporation.
> The business activity will be the same as the parent company
> Parent Company Location: The parent company can be based either in the UAE or abroad.
> Business Activities: Limited to promoting and sourcing work for the parent company. Not allowed to make a profit in the UAE and must outsource all work back to the parent company.
> Cost-Effective: Representative offices are usually the most cost-effective among the branch types.
> Parent Company Location: Parents of subsidiaries can be based either in the UAE or abroad.
> Legal Identity: Considered a separate legal entity from the parent company and must be managed from within the UAE.
> Liability: Assumes total liability for its actions and business activities. Management of the subsidiary itself must be based in the UAE.
Octa Consult offers a comprehensive range of services to assist businesses in setting up a branch office in UAE with a holistic approach to the setup process
Octa Consult aims to provide a comprehensive solution that covers various aspects of the branch office setup process. This can be particularly beneficial for businesses seeking professional assistance and guidance in navigating the complexities of establishing a presence in the UAE.
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