An Italian company wishing to enter the UAE market without a local organization of its own must first consider two main forms of investment.
Direct investments, i.e. those strategic forms aimed at establishing a permanent presence of the Italian company in foreign territory by opening Representative Offices, Branch Offices or establishing companies on site; or indirect investments, i.e. those forms of investment that, on the contrary, are not intended to establish a permanent presence on the territory, but are developed mainly through sales contracts, agency, distribution and franchising.
With regard to direct investment, the regulations of the UAE pose some limitations to the possibility of foreign investment, with particular reference to the mandatory participation of a local partner for setting up a company in the so-called mainland, and the necessary presence of a National Agent for the opening of representative offices and branches.
In general, the recommended and preferred company form for the Italian companies interested in the formation of a company from scratch is the so-called Limited Liability Company LLC. The latter can be established either on the mainland (in which case the presence of a local Partner with 51% of the shares will be considered as mandatory) or in one of the existing Free Zones (so the foreign investor can control 100% of the company shares).
The choice of one of the two ways of formation will obviously have to take into consideration what kind of business the company intends to establish in the UAE.
An enterprise who is not interested in establishing a company may consider the possibility to open a Representative Office or a Branch Office in the UAE. They do not have a separate legal personality of their own, they depend on the main company both in economic and in decision-making terms. This disadvantage is, however, more than compensated for by the many positive aspects that the establishment of these types of entities can bring, including, first of all, the management and the commercial and logistics support of the products and services of the parent company which are intended for the areas of the Middle East, North Africa and Southeast Asia.
(Bologna Office – Linda Tontodonati – 0039(0)51 2750020).
