What is meant by a holding company in Dubai?

A holding company is a business structure that owns assets (such as property) and/or one or several subsidiary companies. The principal activity of a holding company is to own the businesses or assets in the group. It is a tax-efficient way for businesses to structure themselves if they hold a variety of assets and would like to limit their liability. You can think of a holding company as a parent company that has a controlling stake (up to 100%) in all of its subsidiaries and assets. This means that it is in overall charge of the group but does not get involved in the actual running of those companies or management of the assets.

Holding companies do not perform any other services or activities. They don’t manage the corporations in the group directly, nor do they administer assets or partake in any decision-making for the subsidiary companies.

Benefits Of Opening A Holding Company In Dubai, UAE

The benefits accrue from opening a holding company in Dubai are similar to those in other jurisdictions, but with additional advantages from basing yourself in the United Arab Emirates. Some of the key benefits of opening a holding company in Dubai include:

• No Share Capital Required: If you base yourself in Meydan Free Zone, you do not need any share capital.

• Tax Efficient: The United Arab Emirates is well known for its zero tax rates, and if you base yourself in a free zone like Meydan Free Zone, you will pay 0% tax and 0% VAT.

• Risk Mitigation: As with opening holding companies elsewhere, a Dubai holding company helps you to reduce risk. Your business won’t be liable for any risks or debts that your subsidiaries take on.

• Residency Visa Route: Meydan Free Zone license allows you to own property under the company structure. This is done so that in the event your other business goes bankrupt, your property cannot be seized.

Types Of Holding Companies In Dubai

There are two types of holding companies in Dubai. If you choose to open a holding company in the emirate, your options are as follows:

• Open a free zone LLC holding company in Dubai. This is a good option for foreign investors who would like to maintain 100% control over the holding company.

• Open a Mainland investment company in Dubai. To operate as a holding company in Dubai mainland, you will need a commercial license issued by the Department of Economic Development.

Requirements For Holding Companies

Dubai holding companies must comply with all regulations relating to company law, as well as the following specific requirements:

• Appointing a management board that sets policies for how subsidiaries are organised

• Overseeing subsidiary activities for a management board

• Appointing directors for each of the subsidiary companies

• Verifying that the subsidiary businesses have access to the necessary capital to stay afloat

• Find ways to minimise the risk that the subsidiaries take on

Activities Permitted For Holding Companies In Dubai

Holding companies are restricted from performing the activities of a holding company. They can own assets, subsidiary companies, property, and intellectual property.

Holding companies are not permitted to partake in any operations activities, such as producing products, selling services, or directly managing assets. All these activities must be carried out by a subsidiary company.

Functions Of A Holding Company In Dubai

The function of a holding company in Dubai is to hold shares in subsidiary companies or to own assets. Business owners or shareholders often decide to set up holding companies because they provide a means to limit liability if there are any problems with their subsidiary companies.

Holding companies in Dubai operate by appointing a board of shareholders. The board will decide on how it structures its ownership of its subsidiaries and vote on key decisions such as mergers and acquisitions and sales of subsidiaries or assets. It will also monitor the behaviour of subsidiary companies, checking in on their performance and overall financial viability.

Cost Of Starting A Holding Company In Dubai

If you own a business in the UAE and already have an existing visa, then you can open your holding company in Meydan Free Zone with the zero visa package, which means it will only cost you AED 12,500. However, if you need visas, you will need to pay an additional AED 1,850 per visa allocation.

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At Meydan Free Zone, our experienced teams can help you with every step of company formation in Dubai. Many organisations choose to base their holding company in our free zone because of the speed at which we can help you set your company structure up. Thanks to our long experience setting up holding companies at Meydan Free Zone, we can form your business in just a few days – which is much faster than other free zones or the mainland, where the process could take as much as six months.

Setting up your holding company in Dubai means that it will have other businesses listed under its control. Even if one of those businesses were to go bankrupt, the holding company itself would be protected from liability, because a Meydan Free Zone license is a limited liability license (LLC). This gives you peace of mind that your assets and investments will be protected.

At Meydan Free Zone, we can advise you on the best option for your company to #GrowFromDubai.

Get in touch today!