How to Setup a Joint Venture Company in Dubai?

How to Setup a Joint Venture Company in Dubai?

Dubai is often regarded as the "City of Gold" as it is a hub of business that provides vast Business opportunities to Investors and owners who wants to set up business in Dubai. Among many businesses set up in Dubai, Joint Venture Company is one of the most famous businesses in Dubai. A Joint Venture is one of the methods for investors to execute their market entry or expansion strategy. It provides innovative business strategies for enterprises from all over the world.

What is a Joint Venture?

In Dubai, a Joint Venture refers to a contractual agreement between a foreign party and a local party licensed to conduct the most wanted business activity. It is a commercial agreement between two or more participants, where both usually enter in order to achieve specific business goals such as launching a new type of business or selling products into a new market.

What are the features of a Joint Venture Company in Dubai?

The features of a Joint venture Company are as follows:

1. There is no limitation on the companies, any number of companies can collaborate with Joint venture companies.
2. The equity participation in the joint venture has to be at least 51%.
3. The profit and loss distribution can be mutually agreed upon while deciding about the company set up in Dubai
4. The licensing and publishing of the Joint Venture agreement is not required
5. In practice, joint ventures are seen as offering a suitable structure for companies who are working together on specific projects.

What are the benefits of a Joint Venture Company in Dubai?

The benefits of a Joint Venture Company in Dubai are:

1. There is no personal income and capital taxes required.
2. There is no corporate taxation.
3. There is a 100% ownership of capital and profits.
4. No currency restrictions there.
5. There is a competitive import duty (5% with many exemptions).
6. There is an abundant and economic energy supply.
7. Competitive freight charges are present.

Key steps to set up a Joint Venture Company in Dubai?

When both the parties agree upon the joint venture in Dubai, they must register the agreement with the Department of Economic Development (DED). Therefore,

The key steps to registering the business are as follows:

1. Decide on a trading name for the business

First to start a business a catchy company name is required. So the very first thing which a person needs to do is to select the name of the company. The name should be proper and professional so that the customers are easily attracted to the company.

2. Choosing the business activity

After selecting the business name, the next step is to select the business activity, that is the type of business that is to be carried out. Deciding upon the business activity is crucial as it will require research work on the target customers who will be attracted to buy products and services.

3. Choosing a location to set up business in Dubai

After the selection of trade names is done, it's time to select a location to start up the business. It is important to select the right location for the company. Choosing the right location is important as it helps the firm to get the right customers and clients and boost the business.

4. Registering a Joint Venture Partnership agreement with the DED Dubai

After getting the approval there are certain documents required which are mentioned below. These documents are required to start a Joint Venture Company in Dubai.

5. Submit additional documents

Once approved by the DED, all the documents have to be submitted which is required for company formation in Dubai.

6. Pay fees and get an office space

To get the office space a minimum fee is required. This fee has to be paid before getting the license.

What are the Documents Required to set up a Joint Venture Company in Dubai?

Here is the list of documents required for the set up of the Joint Venture Company in Dubai:

1. An application form is required which is duly filled.
2. A Reserved trade name certificate is required.
3. The Passport copy and ID of the applicants are needed.
4. NOC issued by the local sponsor is required.
5. Approval is required for the business activity undertaken.
6. A resolution from the company management board is needed.
7. A Dubai residence permit is needed only for foreign applicants.
8. The applicant is required to submit a few documents to the Dubai register.
9. Initial approval from the DED (Department of Economic Development) is required.
10. The documents are required to register for approval.
11. A copy of the office lease agreement is needed.
12. A copy of the association agreement notarized by a public notary is mandatory.

What are the advantages of a Joint Venture Company?

Below are the advantages of starting a joint venture company in Dubai.

1. Expertise thoughts and Unique Viewpoints 

A Joint Venture Company may run effectively with a proper setup and views of both parties. This allows both the parties to brainstorm the Government solicitation resulting in a better solution to the problems.

2. Time limitation

Joint ventures have a definite timeframe. It is not a long-term commitment. It will expire after the contracts expired. It can be a great way to test a relationship with potential partners.

3. Entry and Exit

The business partner can exit the business anytime whenever the person wishes to come out of the business. But it is better to stick to the same company unless there is any other way.

4. Greater Resources and large scale of operation

Joint ventures allow each partner to set up a large scale of business and allow greater resources from each party. This will result in a larger market, more diverse product and service offerings, and more effective supply chains.

5. Pooled risk

Each partner involved in the Joint Venture will share an equal amount of profit and risk to the business. This will dilute the risk of a single partner. In case the business fails and suffers loss then both parties have to bear the sunk cost. All the partners have the same motive and aim towards the business.

What are the disadvantages of a Joint Venture Company?

1. Flexibility

Joint Ventures are not always flexible for small business owners. Every partner has to decide on their business activities. A single partner cannot take the decision of the business alone and both the parties have to decide and come to the conclusion.

2. Culture clash

Many joint ventures flounder due to a clash of cultures, processes, and approaches when two companies work together due to different management skills.

3. Decision-making

Trust is a crucial element in the case of any joint venture business. It can make decision-making more difficult if both parties need to sign off decisions when there is a lack of trust. A lack of decision-making skills can lead to failure in the business.

Take Help from us To Launch Joint Venture Company in Dubai

The economy of the United Arab Emirates has made its policies and laws which invite and encourage foreign investors for company formation in Dubai. Its approach to company formation is centered around your business vision and objectives. Contact Danburite business consultants in Dubai to set up a joint venture company in Dubai.