You can rely on us for nominee director and shareholder services in the UAE – Dubai. Below, our lawyers in Dubai explain what this service implies. To understand the context, it is important to note that companies in the UAE must comply with specific requirements, among which having a local director. When this condition cannot be fulfilled, a nominee director can be appointed.
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Who can use nominee services in Dubai?
Nominee services are widely used around the world, as this is a convenient service that can be employed by foreign investors. These services can be used when the law requires compliance with specific requirements.
Here are the main nominee services we offer in the United Arab Emirates – Dubai:
- the nominee or local director solution, which is an alternative when foreign business owners do not have a resident manager;
- the nominee shareholder service, which is optional and is used for beneficial protection reasons.
If you need either of the two services, you can rely on our law firm in Dubai, which specializes in offering such solutions.
Local director services in Dubai/ UAE and what they entail
According to the Company Law No. 2, which was last amended in 2015, all companies in Dubai need to have one or more directors, based on the type of structure they use. At least one of them must be a resident natural person.
The nominee director in Dubai will fulfill the role of a regular manager, with certain restrictions. Among the responsibilities of a local director in the UAE, we mention the following:
- to act in the best interest of the company and its shareholders;
- to represent the business in aspects in which the service provider is allowed to by contract;
- to comply with the legal requirements imposed by the law;
- to respect other agreements reached with the company’s shareholders.
The nominee director is usually appointed for a limited duration of time and the main situations in which such a service is used imply:
- when, upon the business registration procedure, the director to be appointed cannot be present;
- when in a hurry to complete the company registration procedure;
- when the director must be replaced and there is a need for an intermediary to occupy the function until a new person can be found and installed.
So, if you need our nominee director services in the UAE, do not hesitate to get in touch with us. Our lawyers are in the Dubai Bar Association.
The nominee shareholder in the UAE/ Dubai
Dubai companies can also use nominee shareholder services. These are usually needed when seeking ownership protection or, better said, when the identity of the real owner of the company needs to be protected.
A nominee shareholder in Dubai or anywhere in the United Arab Emirates is based on a contract between the company’s real shareholders and the service provider.
Considering that in most cases the law requires businesses to use local providers, such services are offered by professional agents, such as our law firm in Dubai.
When to use a nominee director or shareholder in Dubai
There are several situations when the services of a nominee are required. They usually refer to foreign investors doing business in Dubai and must:
- register a company in mainland Dubai and obtain specific licenses for which a local shareholder or director must be appointed;
- appoint a local agent to complete the application for a professional license.
Other cases when such services may be needed refer to having a local director for certain businesses for which the management must be physically in Dubai. In other situations, a nominee can be used to ensure economic substance.
Another scenario in which nominee shareholders can be used in Dubai is when protecting beneficial owners. Nominee directors, on the other hand, can be appointed to act as a liaison with various authorities and submit specific documents.
Our lawyers in Dubai can offer more information on the use of such services.
Who can provide nominee services in Dubai?
Here is who can act as a nominee shareholder or director in Dubai:
- professional corporate service providers;
- accounting firms;
- consulting companies;
- law firms, including our Dubai lawyers.
As such, if you need such services, you can also rely on our local specialists.
Restrictions on nominees in Dubai
The first and most important thing to know when using nominee directors or shareholders in Dubai is that they do not have any powers within the company. This means they will not:
- sign any documents on behalf of the business;
- open bank accounts in the name of the company;
- be liable for any wrongdoing in the enterprise;
- obtain any financial benefit from the company’s profits (the pay of the nominee is established through contract);
- have access to the finances of the company;
- make decisions about the operations of the entity.
This means that the beneficiary will be the only one responsible for any financial or legal decision made in the company. Also, once the nominee’s contract ends, the owner will be able to complete all actions presented above.
Our law firm in Dubai can assist foreign clients who need such services. Our solutions are based on a contract where all information is agreed upon with the beneficiary.
Can nominees be used in Dubai free zones?
Dubai free zones are known for the advantages they offer to foreign investors. As such, nominee directors or shareholders are not often used in these zones. However, they can be employed by those who want to reduce the time they spend in the respective free zone or who simply want to have a local presence there to handle the relationship with the authorities.
Company management requirements in Dubai
According to the law, there are a few aspects to consider about the appointment of company directors in Dubai:
- the limited liability company must have at least one director, however, when the number of shareholders exceeds 7, the company must have at least 3 managers;
- the public company must have between 3 and 11 directors;
- at least 20% of the board members in a public company must be women.
These are also some of the reasons why some companies use nominee directors in the UAE.
A director’s duties and responsibilities
Foreigners can have 100% ownership in Dubai’s free trade zones and can appoint the board of managers as they wish. Sometimes, a resident can fill in such a position, but there are cases in which they decide to take this place for a proper control of the activities involved. For instance, a director is in charge of running the business in a professional manner, leading it to progress and avoiding the cases of liquidation or bankruptcy.
The company director is appointed by the shareholders, and his/her obligations are as much towards the company as towards the shareholders, who must be informed of any changes regarding the company. The director also has to seek the shareholders’ approval for certain matters and decisions. The director of a company in Dubai has the legal duty to ensure that that enterprise observes the requirements of the Dubai Companies Act. Changes in the company must be reported to the relevant authorities.
The limited liability company is one type of legal entity in Dubai that requires a company director or manager. Such companies must have between one and five managers. A limited liability company that has more than seven shareholders must also have a supervisory board. Our attorneys in Dubai can give you more information about the types of companies in Dubai and their organization.
Liabilities for company directors in Dubai
The directors of a company in Dubai are liable towards the company, its shareholders, and third parties for any acts of fraud, abuse of power, and violation of the law or the company’s articles of association. They can also be liable for poor company management. Company directors can have criminal liability for making false statements, entering false information on corporate documents, willfully omitting substantial information, or divulging company secrets for personal gain. They are also liable for conflicts of interest that may arise during the performance of their duties towards the company.
What happens in the case of insolvency?
The directors of a company in Dubai are in charge of notifying the owners if the losses exceed 50% of the share capital. They can also propose the company’s liquidation, especially if the losses surpass 75%. In this situation, the business cannot meet its financial liabilities, and the board of managers must file for bankruptcy within 30 days, in accordance with the provisions mentioned by the Companies Act and the Commercial Transactions Law.
We are also at your service if you want to immigrate to the UAE and want to apply for investor visas for Dubai.
If you find yourself in this position and need nominee services, do not hesitate to contact our Dubai lawyers for professional solutions. Besides nominee director and shareholder services, our lawyers can also help you open a company in Dubai.