Have you ever dreamed of starting your own business in UAE and doubted if it is possible without someone’s help? Possibly, you have some ideas but don’t have people to support you. Now you might wonder, can a company be formed by a single person in UAE? Well, here’s the good news: absolutely! Globally, many entrepreneurs decided to take the leap and start building a business without a team, and they have worked quite well.
So, in this guide, we will discuss the process of single-person company formation in the UAE, explain the benefits of going solo, and outline the steps to take to get started. Continue reading this guide to learn how to start your solo business journey:
What Is A One Person Company (OPC)?
An OPC is a form of company setup that can be established owned by a single person. It is a flexible type of single individual business that combines the good of sole proprietorship and the protective benefit of a Limited Liability Company. Essentially, it allows you to set up an LLC without the hassle of having multiple shareholders or investors within the company.
Is It Possible To Create A Company By A Single Person In UAE?
Let’s first discuss the question: can a company be formed by one person?
Yes, you can start a one-person company in Dubai. The UAE allows individuals to set up Single Person Companies (SPCs) or a Sole Proprietorship. These business structures are set up for entrepreneurs or individuals looking to own their company completely.
Here are the main options:
1. Sole Proprietorship
It is wholly owned by a single person, who must be a UAE national or a GCC national trader. In free zones, foreigners may establish sole proprietorships, even with a local service agent.
This business allows professionals such as consultants, Doctors, Artists, and service providers to operate in Dubai. Moreover, the business is liable for the debts and obligations of the owner.
2. Limited Liability Company by Single Shareholder LLC
Under the new UAE Commercial Companies Law amendment, a single person (individual or corporate entity) can own up to 100% of the shares in this structure in mainland Dubai.
Moreover, it allows you to engage in various commercial, industrial and service activities. Moreover, the owner’s liability is limited to his investment in the company.
One Person Company Formation Process In Dubai, UAE
Follow these steps to set up your own one member company:
- Choose and select a sole trade name that relates to the business.
- Dubai requires initial approval from the Department of Economic Development for your business registration.
- To clear the legal side, get approval from different other departments.
- Within the application form, submit documents.
- Once you’ve registered your business, apply for a license. Also, if you need any help in getting license approvals, contact Xpert Advisory.
What Documents are Required to Establish a One-Person Company In UAE?
Here are the documents that need to be present for a one-person company formation in the UAE.
- Business application form.
- Licensing application form.
- Copy of sole proprietor’s passport, residence permit, and name.
- Details of the local sponsor, such as if the owner is a foreigner and runs the sole proprietorship.- subject to the type of entity
- If applicable, the sponsor’s no-objection letter.
- The registered address of the company proved.
- If the sole proprietor is foreign, details of the local sponsor. – not
- No objection letter from the sponsor, if any.
- Registered address of the company must be provided.
One Person Company Registration Process In Dubai, UAE
The governing body responsible for issuing and registering trade licenses for new businesses in Dubai is the Department of Economic Development (DED). Here is the complete process for a one person company registration in Dubai:
- It requires initial approval from DED. The approval comes from a form that the UAE government has no objection to forming a company in Dubai.
- The concerned person needs to submit 3 trade name options, and these 3 options need approval for at least 1 option.
- Sign and prepare the local agreement. While signing, the Local Service Agent and the person must be present.
- The only requirement for forming a mainland company is a physical office. Thus, an office space should be ready to be finalised. After that, the person has to submit an office tenancy contract.
- After all the above, the person will get a payment voucher. Pay and collect the sole establishment trade license.
How Is a Complete Establishment Different from a One Person Company?
The location and booming economy of the UAE market make it the first choice for businesses across the globe. This new OPC structure now makes it easy for many individual entrepreneurs to tap into this opportunity. Here’s how to compare an OPC and an establishment.
- Ownership Structure: OPC is a combination owned and operated by a single person in the company and a sole proprietorship. On the other hand, the establishment license applies for a sole proprietorship owned by one person without protection offered by a corporate vehicle.
- Legal Identity: An OPC is treated as a separate legal entity. However, in the case of an establishment license, there is no separate legal entity. All contacts are entered directly into the license holder and not into a legal person.
- Liability: OPC, as stated above, has liability protection and the personal assets of the owner are protected from business debts or liabilities, while the establishment does not ensure this security.
- Duration & Continuity: The jurisdiction and the particular regulations may continue the existence of OPC after the life of its owner. But when the owner of the business dies, the business fades away.
- Easy Succession: As an established business, the sales don’t have ownership. However, as OPC is considered a separate legal entity, ownership can be transferred or passed on as per legal provisions more easily.
- Taxation: As an incorporated body separate from and distinct from its owner, an OPC might be subject to corporate and income taxes. On the other hand, an establishment’s profits are taxed in its owner’s pockets.
- Capital Requirements: Establishment licenses have more flexibility concerning the capital, whereas the OPC has specific minimum capital requirements or provisions depending on jurisdiction.
- Regulatory & Compliance Needs: OPC’s corporate nature might have steeper regulatory and compliance needs, such as batching and reporting. In establishments businesses, compliance might be simple, with fewer regulatory filings and requirements.
Tired to manage your business’s taxation? Xpert Advisory is here! As VAT professionals, we provide VAT accounting and consultancy services throughout Dubai and the UAE so you can confidently conduct business!
Final Words
Now you know the answer: can a company be formed by one person? In short, a one-person company in Dubai is ideal for entrepreneurs who want the advantages of sole proprietorship plus limited liability protection. The Dubai legal framework has streamlined the process and allows flexibility in ownership, making it easy to set up an OPC. However, knowing the differences and requirements will inform you what’s best in your circumstances, whether you choose a sole proprietorship or a single shareholder.
If you want to set up a business in Dubai, Xpert Advisory will support you in UAE in registering your company, location decision-making, company restructuring, and handling the legalities. Get in touch with our team of experts for free consultation and build a strong foundation for your business.
FAQs
Can A Company Have No Director?
Under the Companies Act 2006, every private limited company must have at least one active director, and every public company must have at least two. Any business that fails to meet these minimum requirements will be in direct violation of the legislation.
Is It Possible For One Person To Belong To More Than One OPC?
Members can only be a part of one OPC.
