A Civil Company is a specific form of business entity in Abu Dhabi, the capital city of the United Arab Emirates (UAE). Particularly designed to cater to professional services and consultancy businesses, it offers a unique blend of ownership structures and regulatory obligations. This article delves into the intricacies of Civil Companies, including their characteristics, advantages, legal requirements, and practical implications.
What is a Civil Company?
A Civil Company is a legal business entity that can provide professional services such as consulting, engineering, medical services, legal advice, and auditing, among others. Unlike other types of companies in the UAE, a Civil Company allows foreign nationals to hold up to 100% of the ownership, provided the nature of the business is professional and does not require any kind of commercial trading.
Key Features
Ownership
Foreign nationals can have full ownership of a Civil Company, although it requires the appointment of a UAE national as a ‘Local Service Agent.’
Activities
Civil Companies are restricted to professional, intellectual, and skill-based services. They are not permitted to engage in any form of trade.
Liability
Partners in a Civil Company are liable to the extent of their share in the company’s assets. This means that personal assets can potentially be at risk.
Local Service Agent
A local service agent, who must be a UAE national or a company owned by UAE nationals, must be appointed. However, the local service agent has no equity stake in the company and receives a fixed annual fee for their services.
Advantages
- Full Ownership: Allows 100% foreign ownership.
- Flexibility: More flexibility in internal company structure compared to other types like LLCs.
- Simple Setup: Generally easier to establish compared to a Public or Private Joint Stock Company.
- No Minimum Capital Requirement: Unlike some other company forms, Civil Companies have no requirement for a minimum share capital.
Regulatory Requirements
Registration
Civil Companies are registered under the Department of Economic Development (DED) in Abu Dhabi, which provides the commercial license necessary for operations.
Documentation
The list of required documents generally includes:
- Memorandum of Association (MOA)
- Passports and visas of the partners
- Approval from relevant ministries for specific activities
- Business plan
- Local service agent agreement
Licenses and Approvals
Specific professional services often require additional licenses and approvals from relevant governmental bodies. For example, an engineering consultancy would need approval from the Municipality and the Urban Planning Council.
Renewals and Audits
Civil Companies are subject to annual license renewals and may be required to undergo financial audits, depending on the nature of their services and turnover.
Taxation and Compliance
Civil Companies in Abu Dhabi must adhere to the UAE tax regulations, which includes submitting a tax declaration and may involve Value Added Tax (VAT) registration if the annual turnover exceeds the defined threshold.
How to Establish a Civil Company
- Initial Approval: Obtain initial approval for the business name and activity from the DED.
- Documentation: Prepare all the required documents.
- Local Service Agent: Appoint a local service agent and formalize the agreement.
- Final Submission: Submit all the documents for final approval and registration.
- Licensing: Once approved, pay the fees and obtain the business license.