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Branch & Representative

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Branches and Representative Offices of foreign companies

 

Under Articles 313 to 316 (inclusive) of the CCL, foreign companies are permitted to establish wholly owned branch and representative offices in the UAE. This business structure reduces the need for national participation.

 

A branch office, legally regarded as part of its parent company, is a full-fledged business, permitted to perform contracts or conduct other activities as specified in its license. A branch office may only be engaged in activities similar to those of its parent company and it is not permitted to carry on the business of importing the products of its parent company, a function reserved for local trade agents.

 

A representative office, on the other hand, is limited to promoting its parent company’s activities, i.e. to gathering information and soliciting orders and projects to be performed by the company’s head office. Representative offices are also restricted as to the number of employees they can sponsor and as a result, representative offices tend to act as administrative and marketing centers for their foreign parent company’s head office.


Provided that approval is received from the Ministry of Economy and the DED, and the appropriate trade license is obtained, a company may establish a branch or representative office in the UAE. The office must be registered on the Registry of Foreign Companies at the Ministry of Economy before it commences trading.

 

A UAE national must be appointed as a ‘service agent’ for the branch or representative office. A service agent is not the same as a commercial agent. The former is not permitted to own equity in or participate in the substantive management of the representative or branch office. In practice, a foreign entity typically contracts with the service agent to provide specific services such as assisting in communications with government departments or undertaking other administrative matters. The fees paid to the service agent are a contractual matter between the service agent and the foreign company, frequently quantified by the turnover of the branch or representative office.