Middle East

A. BUSINESS MODELS:-

Following are the different types of business structures that can be set up in the UAE:-

  1. Establishment or Sole Proprietorship- an entity owned by one individual with the trade license issued in his or her own name. The owner assumes all the financial responsibilities of the entity including all its financial liabilities. Establishments are usually owned by UAE nationals and GCC nationals. Since establishments are exempt from the Commercial Companies Law, certain foreign nationals may also set up sole proprietorships depending on their business activity/activities. These firms usually practice professional services and do not extend to any commercial business. Establishments owned by foreign nationals need to appoint a UAE national service agent to assist in obtaining licenses, visas, etc. The agents have no direct involvement in the business and are paid a lump sum and/or percentage of profits. Establishments or Sole Proprietorships are also sometimes referred to as Civil Companies.
  2. General Partnership- are limited to UAE nationals only, consisting of two or more partners who are jointly responsible for all financial obligations to the extent of their personal assets.
  3. Limited Partnership- consist of one or more general partners liable for the partnership’s financial obligations to the extent of their personal assets, and one or more limited partners liable for the partnership’s obligations only to the extent of their respective shares in the company. Usually the general partner manages the business and the limited partner does not participate in day-to-day activities.
  4. Joint Participation (Ventures)- is an association between two or more partners who share in the profit and loss in one or more commercial businesses conducted by one of the partners in his or her name.
  5. Public Joint Stock Company- has its capital divided into equal value and tradable shares. Each partner is liable to the extent of his or her respective shares in the company. A minimum of 10 founding members is required. Any UAE businesses involving finance and management of funds on behalf of third parties must take this business form.
  6. Private Joint Stock Company- requires a minimum of 3 founding members and the shares of this entity cannot be offered to the public unless converted into a public joint stock company. Several conditions must be met before this can occur.
  7. Limited Liability Company(ies) (LLC)- areformed by a minimum of 2 and a maximum of 50 individuals whose liability is limited to their shares in the company’s capital. Foreign equity in the company may not exceed 49 percent; therefore a UAE national partner must hold a 51 percent share. LLCs are most common among foreign investors.
  8. Partnerships Limited with Shares- are formed by general partners that are jointly liable for the partnership’s financial obligations to the extent of their personal assets and participating partners who are liable to the extent of their shares. General partners must be UAE nationals and are responsible for the management of the company. Participating partners are prohibited from being involved in the day-to-day activities.

Following are the different types of business structures that can be set up in Saudi Arabia-

  1. Limited Liability Company (LLC)– most common form for entering into joint ventures with Saudi partners; however, a Saudi partner is not required since there are no legal limitations on the percentage of foreign ownership.The minimum capital investment required to establish an LLC is SR 500,000. An LLC must have between 2 and 50 shareholders and is managed and represented by one or more managers. Following documents are required for registration of LLC in Kingdom of Saudi Arabia (KSA)-
  • Completed Investment License Application Form;
  • Company board resolution stating their desire to invest in KSA enclosing the partners’ names, capital, each partner’s contribution percentage, activity and general manager appointment;
  • Proof of track record or experience in the industry the company wishes to engage in;
  • Copies of the participating companies’ CRs attested by the concerned authorities and KSA Embassy in the foreign investor’s country;
  • Copy of the enterprise articles of incorporation attested by the concerned authorities and KSA Embassy in the foreign investor’s country;
  • Copy of the passport of the general manager;
  • Where the activity requires the approval of the concerned authority including financial services, insurance, information, tourism, health or education, the applicant shall provide the approval of the concerned ministry; and
  • Copy of trade name booking in case the company desires to obtain trade name. • Authorization to a lawyer’s office approved to finalize all the procedures. This authorization shall be attested by the Saudi embassy or by the investor in the case where it enters KSA conforming to commercial visa.
  1. Partnership- Foreign companies seeking to do business in the Kingdom may enter into a limited partnership. The limited partnership, or “sharikat tawsiya baseetah”, is a separate business entity comprised of several individuals or companies, including general (at least one) and limited partners. The general partners are liable for partnership debts to the full extent of their personal assets while the limited partners are liable only to the extent of their capital contributions.
  2. Joint Stock Company– is an entity with at least five shareholders holding transferable shares. The minimum capital requirements are SR 2 million for a private JSC and SR 10 million for a public JSC. Liability of shareholders is limited to the par value of each shareholder’s share capital. The JSC must be approved by license or Royal Decree published in the Saudi Official Gazette. Additionally, it must be registered with the MOC Companies Department and the MOC Commercial Registry.
  3. Branch Office- Foreign companies may register a wholly foreign-owned Saudi branch office, provided that they obtain the requisite license. The branch office may engage in any government contract or private sector work within the scope of its license. Branch offices are subject to the requirements of the Government Tenders Regulations, where applicable. Branch office registration follows the same general procedure as for the registration of an LLC.

B. ENTREPRENEURSHIP IN THE MIDDLE EAST–

Middle East has emerged as one of the most thriving and rapidly growing market with numerous entrepreneurship opportunities. The region is rife with entrepreneurship initiatives, sponsored by governments, the private sector and NGOs, from the Dubai Enterprise Center to Creative Jordan to the Qatar Business Incubation Centre. These initiatives, along with a huge rise in the use of mobile technology and social networks, have fostered the kind of collaborative and creative attitude needed to get startups off the ground.