Points to consider before getting into a business partnership in Dubai
Entrepreneurs looking to forge a business partnership in Dubai could either be seeking to fulfill pre-requisite for governmental formalities or actually run the company operations together. Here is the why and the what of business partnership in the UAE. The following column will elaborate on legal aspects of a general partnership firm.
Why seek a business partnership in the UAE?
For those looking to connect with potential business partner in the UAE to run the company, the primary reasons may include investment. One may have a great business idea but not enough money to go ahead with it. Here, convincing a trustworthy partner who is not only ready to invest in your business, but also believes in your plan is crucial.
Other major reasons for seeking a business partner includes value-adding prospects. Your partner may help you expand to a bigger marketplace or provide you with networking and marketing opportunities.
Moreover, a having a partner allows both parties to pool in your skills, knowledge, and financial assets to grow your business together.
What does a getting into a business partnership in Dubai look like?
First, one could be looking for a business partner in Dubai for legal reasons. Although the country now allows 100% foreign ownership, certain business sectors are regulated, and therefore, it is recommended that you partner with a local. This is applicable to quite a few commercial and industrial business activities, and to health and educational sectors. This, however, depends on the nature of the business activity and the requirements. Nevertheless, the local will be a sleeping partner and facilitate your company’s legal registration and supporting services such as licensing and visa related documentation.
More importantly, it is possible to change the corporate structure post the necessary formalities as it is flexible.
Entrepreneurs who want to have an active business partnership in Dubai have a few legal aspects to be mindful about:
Ownership and role distribution
The partners should be clear on the percentage of company ownership. They should also outline their specific roles and duties.
Before partnering, the stakeholders involved must also decide on financial points such as drawing salaries, profit and loss allocation, and reinvestment for business growth.
This is the most important part of your business’ functional aspects. These include processes, assignments, hiring and managing employees, marketing, day-to-day management, long term plans, and final say.
Another important aspect of business partnership in Dubai is banking. The partners need to allocate transactions, signatures, and loans.
It is likely that your company may hit a roadblock arising from difference of opinion between stakeholders. However, the partners must prepare a solid contract to deal with matters of trade secrets.
Exit or death
What happens in situations when either of the partner passes away or wants to exit the business or simply retire? The business partnership contract should define aspects such as:
- The fate of his/her share and profit
- Distribution of pending profit to his/her family members
- The process of new partner finalization and onboarding
- Retirement provision
- Document modifications
How to find a business partner in Dubai?
Looking for a business partner in Dubai, UAE may take a while as it is a huge decision for your company. However, when you have found one or even more, you can form a company with a limited liability structure or a civil company with general partnership contract.
Also, if you already have an LLC, and seek investment, you can approach outside investors, also known as angel investors. You can bring them on board for a limited time period by temporarily pledging shares.
– Mona Salim, Overseas Business Development Manager