Establishing Sole Proprietorship
The law permits the establishment of a sole proprietorship for U.A.E. Nationals and nationals of the Gulf Co-operation Council. Since the procedure and conditions may differ in each case, the following is a list of conditions governing each individual application for the establishment of a sole proprietorship.
- In the event that the investor is a national individual; any national individual who wishes to engage in a business activity may apply to the Department of Economic Development in order to obtain the requisite licence for carrying on such an activity.
- In the case where the investor is a citizen of one of the Gulf Co-operation Council countries: In accordance with Article 8 of the United Economic Agreement which treats all nationals of the Gulf Co-operation Council countries as nationals of any member state without discrimination in the matter of carrying on business activities in the fields of industry, agriculture, livestock, fisheries and contracting, the beneficiary of such a licence in the U.A.E. must actually be conducting the activity for which he is licensed in compliance with the provisions of article 10 of the executive regulations of the Federal Law no. 2 of 1979.
Pursuant to the Federal Law no. 2 of 1989 which allows citizens of the Gulf Co-operation Council countries to engage in retail or wholesale trade in the country, the first article of this law states that it is permissible for the nationals of the Gulf Co-operation Council states, whether they be laymen or juridical persons, to practice retail and wholesale trade in the U.A.E. according to the rules and regulations stipulated by Cabinet Resolution.
It is conditional for an investor, according to this law, to be a natural person resident in the U.A.E and be carrying on the relevant activity personally. He should also possess a licence to practise this activity in his country of origin. However, he may not open branches within the country.
In case the investor is a juridical person wishing to conduct retail or wholesale trade according to this law, the investor must form a company, which the share owned by the U.A.E. nationals may not be less than 50% of the capital. As for the ratio of legal shares concerning any activities for which no executive decisions have been issued in the country, the provisions for Article 22 of the Federal Law no.8 for 1984 concerning commercial companies stated that “observing the commercial activities confined to nationals and prescribed by this law, each company to be established in the country should have one or more nationals whose share is not less than 51% of the capital”.