Offshore Company in Jebel Ali Free Zone in Dubai, UAE

Starting from 1 January 2011, the Land Department in Dubai will only register properties in the name of offshore entities registered as such with Jebel Ali Free Zone Authority (JAFZA).

The Jebel Ali Offshore Company (“JAOC”) is regulated in detail by Jebel Ali Free Zone Authority Offshore Companies Regulations of 2003 (“JAOC-Regulations”). The JAOC has some similarities with the offshore companies from other jurisdictions, however there are also some substantial differences (e.g. no bearer shares allowed, nominee shareholders and nominee directors are not accepted or supported by the concerned authority, the shareholders shall personally signed the incorporation documents).

The offshore companies have been created for the purpose of registering freehold property rights to real estate in some projects in Dubai (in particular, properties on the Palm Islands and other projects by Nakheel, Emaar and Dubai Properties) and consequently the offshore companies should not carry out any activity in the territory of the UAE. However, this does not exclude the offshore company’s right to be engaged in commercial activities outside the United Arab Emirates.

The Land Department issued a circular to prohibit offshore companies (except those incorporated in the Jebel Ali Free Zone) from owning properties in Dubai. The force of this circular is non-retrospective and will apply solely to new registrations for property ownership at the Land Department from 1 January 2011.

If an offshore company wishes to own property in Dubai, it must first incorporate an offshore company in the Jebel Ali Free Zone, which will become the registered owner of the property. When registering property in the name of the Jebel Ali Free Zone offshore company, the company will also be required to provide a separate formal undertaking to notify the Land Department of any change share ownership of the company.

Dubai real estate, which is currently registered with the Land Department and held by offshore companies, is not affected by the provisions of the circular; however, any request made after 1 January

2011 by such entities (excluding those incorporated in the Jebel Ali Free Zone) to register additional real estate with the Land Department will not be approved unless the company has established an offshore company in the Jebel Ali Free Zone.

There are the following differences between offshore companies in the Jebel Ali Free Zone from all other companies in the Jebel Ali Free Zone are:

• No requirement of renting an office or industrial premises. The legal address of the offshore company is the address of the registration agent (my law firm in particular);
• The limited kind of activities in Dubai - realization of purchase, sale and ownership of property rights to real estate in Dubai (only in some projects). Prohibition of the commercial activities in the territory of the United Arab Emirates;
• Prohibited activities of JAFZA offshore are:
  
  1. Insurance
  2. Banking
  3. Financial
  4. Professional Services
  5. Consulting
  6. Intellectual Property
  7. Media
  8. Security
  9. Publishing
  10. Advertising
  11. Movie Production
  12. Gambling
  13. Casino
  14. Game & Win
  15. Advisory
  16. Real Estate
  17. Military
  18. Education

• No residence visa for founders and directors. Shareholders and/or directors of a JAOC are not automatically eligible to obtain a UAE residence visa. However, in case property is bought by the offshore company in Dubai, then, subject to the developer’s restrictions, the terms of the property sales agreement and other conditions being met, there might be the possibility to obtain a UAE residence visa for the actual occupier of the property. For instance, property sales agreements issued by Nakheel do often provide that the developer will arrange residence visa sponsorship for buyers only if the buyer is a natural person. However, in the event that the buyer is a company, some agreements provide that a developer may, at its discretion, arrange for residence visa sponsorship for the occupier of the property nominated by buyer and subject to further conditions being met. Under any circumstances, such residence visa can only be issued once the construction of the property has been completed and the property has been handed over to the purchaser;
• Registration of the offshore company can be carried out solely by an agent licensed to act as the registration agent. Our law firm "Marina Fox Legal Consultancy" is licensed by Jebel Ali Free Zone Authority to act as an offshore companies’ registration agent.

The differences are summarised in the table below:

	Offshore companies in Jebel Ali Free Zone	Other companies in Jebel Ali Free Zone
Minimal capital required	AED10,000	AED500,000 – AED1,000,000
Paid-up capital	No	Yes
One or few shareholders/owners	yes	Yes
Minimal number of directors required to be appointed	2	1
Office or industrial premises required	No	Yes
The registration agent is a must	Yes	No
License for business in Jebel Ali Free Zone (export, import, trading, manufacturing, etc)	No	Yes
Certificate of Incorporation of an offshore company	Yes	No
Different legal forms	No	Yes
Provision of residence visas for shareholders/directors of the company	No	Yes
Bank account in the UAE	Yes	Yes

 

Documents required for incorporation of an offshore company

In order to proceed with the registration, we will require the following documents:

1. A passport(s) copy of each shareholder of the company;
2. An original bank reference letter for each shareholder in English;
3. An original proof of residence for each shareholder in English;
4. Curriculum Vitae of each shareholder in English;
5. Articles of Association, Memorandum of Incorporation and the Application for incorporating an offshore company.  In order to prepare these documents on your behalf, we require the following information:
   
   • The desired name of the offshore company;
   • The share capital of the offshore company (minimum AED10,000);
   • The number of shares in the offshore company;
   • A description of the activities of the company;
   • The name of the shareholder(s) and how many shares each shareholder holds (minimum 1 shareholder);
   • The name, address, nationality, residency status in Dubai and occupation of each director and secretary of the company (minimum 2 directors and one secretary).
6. Should any of the shareholders be a corporate body, we shall need the documents of the corporate body (i.e. Certificate of Incorporation, Memorandum of Association, Board/Shareholders’ resolution, Power of Attorney etc). Such documents should be duly attested by the competent authorities in the country where the said corporate body is established, namely, by the Ministry of Foreign Affairs in that country, then by the U.A.E. consulate in that Country, then by the Ministry of Foreign Affairs in the U.A.E. The attestation at the Ministry of Foreign affairs costs approximately US$3000 per set (depending on jurisdiction).
7. The shareholders shall personally signthe incorporation documents before the Jebel Ali Free Zone Authorities. Should this not be possible, the duly attested power of attorney on my name shall be issued at legalised by the Ministry of Foreign Affairs in the country of the in the U.A.E.
8. I should further mention that the bank account of an offshore company can be opened in the UAE. The type of account and requirements vary from bank to bank and often depend on whether the authorised signatory has a UAE residence visa or not.

Time frame for Incorporation of a JAOC:

From the date of application for registration of a JAOC (which may only be submitted once all the necessary information and documents are available) and the signature of the documents by the shareholders/attorneys it will take approximately 3-7 working days for the company to be duly registered. The presence of the shareholders and directors is obligatory unless the POA is provided.

The registration is completed once the following documents are received:

• Certificate of Incorporation;
  
• Memorandum and Articles of Association;
• Register of shareholders/directors/secretary;
• Share Certificate;
• First Board Resolution appointing Directors and Secretary;
• Company’s stamp.

Shouldshareholders desire, a company’s bank account could be opened in one of the UAE banks.

Cost of incorporation of offshore company

We charge a flat fee of US$6,000 (Six Thousand US Dollars) for the registration of an offshore company in JAFZA.
* Additional fees for the stamp of the company is US$100.
* Additional fees for the assistance in opening a bank account is $1,000.

Renewal fees are US$2500 (inclusive of JAFZA renewal fees and the agent’s annual fees). These fees are subject to change at any time. ThereisapenaltyofUS$35 permonth.

Should you wish to registeran offshore company in JAFZA, please contact my firm – Marina Fox Legal Consultancy - that is a duly licensed agent for registration of offshore companies in Jebel Ali Free Zone in Dubai.

© MarinaFox, 2011