How to Set Up a Joint Venture Company in Dubai?


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To investors and owners who want to set up business in Dubai, the city provides vast business opportunities. A joint venture company is one of the most famous businesses in Dubai among many businesses set up in Dubai. To execute the market entry or expansion strategy, a joint venture is one of those methods that helps the investor to do so. An investor can easily start and choose a local sponsor for their joint venture who would share ownership but would not take the profit made in the company. This blog details how to set up a joint venture company in Dubai

A small business owner needs to develop solutions with business partners, employees, or investors and needs a collaborative mindset to succeed in the business. From another individual or company, they might sometimes get the required expertise or resources. In such a case, entering into a joint venture with that particular individual or company would help them to succeed in their business. 

What is a Joint Venture? 

Licensed to conduct the desired business activities, a joint venture is a contractual agreement between a local party and a foreign party. The profits and losses are decided by the partners but the equity of the local party in the joint venture must be at least 51%. The contracts of the joint venture are not required to be notarized and the partners agree by contract to share the profits and losses of one or more commercial enterprises. Under the name of the local partner, the foreign partner deals with the third parties and there is no need to license the joint venture or publish its agreement. 

Just like the limited liability companies in Dubai, joint ventures also offer the same advantage to foreign companies. A joint venture is a commercial collaboration between two or more corporations although it can take any form. The companies remain independent although they interchange their resources to attain maximum profit. In a joint venture, both parties enter to achieve specific business goals as it is a commercial agreement between two or more participants. 

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One of the features of a joint venture is that any number of companies can collaborate as there is no limitation on the companies. For companies working together on specific goals, joint ventures are an ideal form of business in the UAE. 

Sometimes legal counseling and support from a local law firm are required to establish a joint venture in Dubai. However, by seeking the help of business setup consultants in Dubai, the company setup in Dubai becomes much easier as they would provide complete information and legal support to set up the company. They would identify the needs of the company and thereby the process of business setup in Dubai becomes more efficient. 

Procedures for Setting Up a Joint Venture Company in Dubai

The individual must register with the concerned authorities if both parties agree upon the joint venture business in Dubai. For reviewing and approving the joint venture business registration, the Department of Economic Development and the Dubai Municipality is responsible. For the formulation of the joint venture business, there are certain steps to be undertaken. 

The entrepreneur first must decide on the trading name for their business. A person must select a name for the company that is very catchy and attracts a lot of people. To get the customers attracted to the company, the trading name should be proper and professional. They should then select the type of business activity they intended to perform after selecting the business name. Choosing a business activity requires a lot of research work to be done by entrepreneurs. They must focus on the target customers who would be attracted to buy products and services and so this step is quite crucial. 

After choosing the business activity and selecting the trading name, the entrepreneur then should choose a location to set up their business in Dubai. It is vital to choose the right and apt location as it would help the company to get enough customers and clients. Doing so would boost their business. After choosing the location, the entrepreneur should register the partnership agreement with the Department of Economic Development in Dubai. 

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A form would be issued by the DED which must be signed in front of a public notary by both parties. They can get the initial approval from the DED once the contract is drafted. They should then submit all the documents for the company formation in Dubai once they get approval from the DED. The entrepreneur must pay a minimum fee before getting the license to acquire the office space. 

There are several documents required to get the initial approval from the DED. A duly filled application form and a reserved trade name certificate are required. They must also carry passport copies and IDs of the applicants, NOC issued by the local sponsor, approval of the business activity undertaken, and a resolution from the company management board. For foreign applicants, a Dubai residence permit is needed and the entrepreneur is required to submit a few documents to the registrar. 

In the wake of getting the initial approval, the initial approval certificate, photocopy of the office lease including the plot number, all documents submitted earlier to get the initial approval, and photocopy of the Memorandum of Association validated by the public notary. 

Reasons and Benefits to Create a Joint Venture Company in Dubai 

Many companies rely on joint ventures to optimize the start with an aim to extend their activity in a new region. Both businesses have the chance of more productive growth and higher profits by finding the right partner. Entrepreneurs can benefit from the local staff and technology by creating a joint venture in Dubai which will increase the performance of the business. By giving the company increased access to the new market, the local contribution coming from the partner is going to be extremely helpful for the entrepreneur. 

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One of the main reasons to create a joint venture in Dubai is because they can share the risks with their local partner. There is minimal risk involved in joint venture companies. An effective precaution that an entrepreneur can take is to engage in a joint venture so that they can lead their business in a safer context, especially while entering a new market. 

In a joint venture, no personal or income taxes are required. There are no currency restrictions or corporate taxation. With a proper setup and views of both parties, a joint venture company can run effectively and efficiently. This results in a better solution for their problems as it allows both the parties involved to brainstorm the government solicitation. If a person wishes to come out of the business, they are free to exit at any time as there is no restriction in that. However, unless there is any other way for that person, it is recommended that they stick to the same company. 

The joint venture is not a long-term commitment as there is a definite timeframe for that. To test the relationship with potential partners, a joint venture serves as a great way as it would expire after the contract has expired. Joint venture permits greater resources from each party and large scale of operation to their partners. As a result of this, joint venture results in more effective supply chains, more diverse products, larger markets, and service offerings. 

The most seen advantage of the joint venture is that there is pooled risk in the operation. An equal amount of risks and profits is shared by each of the partners involved in this type of venture. Both parties have to bear the loss if the business fails and suffers loss and it would dilute the risk of a single partner. Towards the business, each of the partners involved has the same motive and aim.


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