Difference between a branch and representative office in the UAE
Before diving into explaining what the differences between a representative office and a company representation business are, let us learn about them individually.
Defining representative office and company representation
A representative office is a branch / extension of its headquarters. It is a small division which solely represents one company. All its activities and outputs are on behalf of the headquarters and to facilitate the main office’s business. Whereas, company representation enterprises are agents who can locally promote multiple foreign businesses. Moreover, this service is available for both commercial businesses as well as corporations.
Moreover, the company representation businesses can also offer franchise models to international chain entities. They, however, need to obtain franchise agreement from the government. This legal document lists the expectations of the franchisor and entails all the operational aspects.
Setting up a representative office in Dubai
The following section will explain the process for setting up a representative office in Dubai as well as the documents required for the same:
Process for setting up a branch office
Depending on the headquarters’ nature of business, the branch office can either be a professional sole-establishment, or a commercial limited liability company. The overlapping procedure for setting up a branch office with either of the corporate structures includes:
- Obtaining initial and name approvals
- Payment of various government charges including Tasheel fee, license fee and yearly fee
- Getting your ejari (tenancy contract) done
- Acquiring TRA approval, LSA notarisation and company stamp
- Paying foreign name charges
Documents Required for Setting Up a Branch Office in the UAE
Here’s the list of all the necessary documents required to set up a representative office in Dubai:
- Registration Certificate/Trade License: the documents should specify all the details related to the company’s trading name, type, date of registration, and authority where the company is registered.
- Board Resolution: it includes the decision of the company to set up a branch office in UAE, and the details of officers, assigned representative, and the signatory of the bank account.
- Certificate of Good Standing: this indicates that the company is sound, valid, and in good standing.
- Article and Memorandum of Association: these documents include the type of business activity, full list of shareholders and partners, type of structure, and powers/authority of directors and managers who have signed the Board of Resolution.
- Certificate of Incumbency/Extract from Registry: it includes the list of current shareholders, directors, secretaries, and officers in the company.
- UBO Declaration Form: it specifies the partners who hold more than 5% share in the company.
Documents required for representative office
|Sole Establishment (Individual Shareholder)||Commercial Establishment (Corporate Shareholder)|
|Passport copy||Passport copy of the manager|
|Visit visa or resident visa copy||Manager’s visit visa or resident visa copy|
|Resident visa holders need to acquire a No-Objection Certificate (NOC) from the employer/sponsor and also a copy of the Emirates ID||Resident visa holders need to acquire a No-Objection Certificate (NOC) from the employer/sponsor and also a copy of the Emirates ID|
|Passport size coloured photograph||Passport size coloured photograph|
|Options on trade name / company name (to check their availability)||Options on trade name / company name (to check their availability)|
|Activity details of the company to be formed||Activity details of the company to be formed|
|Parent company’s documents –|
– Incorporation Certificate – Board of Resolution – Articles of Association – Share Certificate – Memorandum of Association
Setting up a company registration business in Dubai
This section will explain the process for setting up a company registration business in Dubai as well as the documents required for the same.
Process for becoming a company registration agent
According to the Department of Economic Development, this business falls under the services category. Therefore, a professional license is required for entities representing international companies in Dubai.
The process includes – Obtaining initial and name approvals; paying various government charges including Tasheel fee, license fee and yearly fee; getting your ejari (tenancy contract); acquiring TRA approval, LSA notarisation and company stamp; and paying foreign name charges (if any). It is here where experienced business setup professionals will be able to guide you in the best direction.
- Passport copy
- Visit visa or resident visa copy
- Additional requirement for resident visa holders
– No Objection Certificate (NOC) will be required from the employer/sponsor
– Emirates ID and Passport size coloured photograph
4. Options on trade name/company names (to check their availability)
5. Activity details of the company to be formed
Representative office vs company representation agent: Which one is beneficial?
Businesses that are ready to test the international waters, may often wonder – Should we open up our own representative office in our target location or go with a company representation firm? According to company formation experts, it is wiser to choose a company representation agent and assess the market first. Based on that, they may later choose to set up a branch office by availing the appropriate license.
Difference Between Branch and Representative Office in the UAE
A representative office is a branch of a parent firm that serves to promote a foreign company and introduce its products to UAE businesses. A representative office cannot export, import, or distribute in Dubai.
A representative office may only conduct promotional business for the parent company’s products and offerings. A branch office, on the other hand, can conduct business in the UAE in addition to serving as a marketing tool.
- Activities – A representative office never deploys operations in sales, services, or any other type of commercial activity. Instead, it promotes/markets the parent company’s offerings by obtaining information and eliciting orders and projects for the parent company’s head office to complete. A branch office, on the other hand, can do all the business activities related to sales and services. This is the main differentiator for branch office vs representative office.
- Local Service Agent – Each representative office, like a Branch, requires a local service agent (LSA). The LSA is not a shareholder in the company and has no financial obligations to it. We, at Shuraa, become your business setup agents at affordable costs and ensure that you enjoy complete operational and legal ownership of your business entity in Dubai.
- Bank Guarantee – A representative office, like a branch, will be required to post a refundable security bank guarantee of AED 50,000 for the period of your license, which cannot be retrieved or used as operating capital.
Still contemplating your options? Consult with experts
If you are wondering how to go about expanding your business footprint in the UAE, talk to the company formation specialists at Shuraa Business Setup. They will put forward your options and walk you through the entire process. Furthermore, they will also give an overview of the documents required for setting up your representative office as well as partnering with a company representation agent.
Get in touch by calling on +971 44081900. You can also send a WhatsApp message to +971 501287254 or drop an email to [email protected]