United Arab Emirates: Offshore Companies in the Jebel Ali Free Zone Background and Developments

Last Updated: 4 November 2010
Article by Andrew Sleiman

The concept of offshore was first introduced in Dubai in late 2001 but it took concrete shape on January 15, 2003 when Jebel Ali Free Zone Offshore Companies Regulations 2003 came into force.

Jebel Ali Free Zone Offshore Companies Regulations 2003 laid down detailed rules and regulations for establishing offshore companies in JAFZA.

An offshore company is defined as a non-resident company having a corporate legal entity. Jebel Ali Free Zone Offshore Companies
Regulations 2003 allows the formation of an offshore company by individuals or a corporate body.

Distinctive benefits of Jebel Ali Offshore Companies include:

  • No requirement to acquire office premises.
  • Easy and simple procedure for registration.
  • Minimum operating cost.
  • Highest asset protection.
  • 0% tax environment.
  • Opportunity to invest in property and stocks worldwide.
  • Unrestricted flow of capital.
  • Transfer of assets, stocks, etc.
  • 100% foreign ownership.
  • No minimum capital requirement.

Bank accounts can be opened and operated in the name of the offshore company subject to the requirements and approval of such local and international banks where such an account can be opened.

In addition to the above, upon registration of a Jebel Ali Free Zone Offshore Company, you are permitted to open a branch office of the same outside the UAE with office premises and employees subject to the approval and requirements of the proposed branch jurisdiction.

Distinctive features & Restrictions of the Jebel Ali Free Zone Offshore Company

Shareholders

  • A minimum of one shareholder is required.
  • Corporate shareholders are permitted.
  • Shareholders will decide capital structure of the Company.
  • No fiscal minimum capital requirements have been stipulated.
  • Bearer shares are not permitted.
  • Different classes of shares are not permitted and shares have to be fully paid when allotted.
  • A shareholders meeting should be conducted periodically (at least once in a year).
  • Every offshore company shall maintain minutes of all proceedings at general meetings.
  • The Register of Members shall be open for inspection by any member of the offshore company.
  • If inspection is refused, the company commits an offence.


Currency
Where previously the denominated currency of the share capital was to be stipulated and paid up in UAE Dirhams, the capital can now be denominated in U.S. Dollars.

Directors & Company Secretary
A minimum of two individual directors are required to be appointed and corporate directors are not permitted to be appointed or act as directors of an offshore company. Every company shall have a secretary who may also be a director of the offshore company. Furthermore proposed directors of an offshore company who have valid residency visas will require a no-objection letter from their sponsor to take up the position of a director in an offshore company.

Criminal Investigation Department (CID) Approval
When registering an offshore company the shareholders, directors and company secretary are screened by the CID Department in the Jebel Ali Free Zone for security clearance to ensure the shareholders, directors and secretary are able and suitable to take up such positions within the offshore company. The CID screening and approval process should be undertaken as a first step prior to commencing the registration process of the offshore company.

Confidentiality
The details of the offshore company including the details of the shareholders, directors and company secretary are not available for public inspection. Only the registered agent of an offshore company has access to information and details of the offshore company.

Restrictions

  • To carry on certain business activities such as Banking, Insurance, Re-Insurance, Insurance Agency or Insurance brokerages etc. are closed for offshore companies.
  • To carry on business with persons resident in the United Arab
    Emirates.
  • To carry on any other business which may, by regulations made by the authority, be prohibited.
  • Names of offshore companies must end with limited.

The Registered Agent
In order to register an offshore company there is a requirement to appoint a registered agent. The registered agents role will provide the offshore company with its registered office address and act as the intermediary between the offshore company and the free zone authority where communication can be maintained in fulfilling the offshore company's filing requirements and obtaining necessary documentation and attestation of documents as and when required for the operation of the company.

Developments
Recent developments with the JAFZA Offshore Registrations Department have seen the implementation of an online application system which registered agent's have access to in order to process changes to offshore companies, obtain copies of official documentation and attestations on behalf of their client's company. The new online system has the intention of increasing administrative efficiency to a much higher level

Penalties have also been implemented and commenced towards offshore companies who do not fulfill their obligations to renew their offshore registrations on an annual basis. Where offshore companies have failed to renew their annual renewal registrations at the time of expiry, the free zone authority have further taken steps to halting all assignments to process actions and changes to offshore companies when requested by the client. The result of this action would no doubt create problems towards the operation of such business which are in use and operational inside and outside the UAE.

The offshore companies registration department in the Jebel Ali Free Zone have also implemented a procedure whereby in the event that an offshore company is to be liquidated / wound up, that particular offshore company should have a valid registration. In the event the registration has expired the offshore company will be required to renew its registration for an additional year prior to applying for liquidation.

Requirements for registration of JAFZA Offshore Company

Individual Applicant

Non-Individual Applicant

   

Applicants personal profile (short CV)

Certificate of registration of the company (N&A)*

Passport Copy

Certificate of good standing of the company (N&A)*

Bank Reference

Memorandum and Articles of Association of the company (N&A)*

Proof of Residence (copy of utility bill)

Board Resolution calling for the establishment of the offshore company with a power of attorney authorizing individual to sign on behalf of the company to establish offshore company (N&A)*

NOC Letter from Director / Secretary sponsor company (if such director or secretary is resident in the UAE).

NOC Letter from Director / Secretary sponsor company (if such director or secretary is resident in the UAE).


Note
(N&A)* to be Notarized and Attested by the UAE Consulate where outside the U.A.E.

Cost
Registration costs are currently AED 10,000 payable to the Jebel Ali Free Zone Authority with an annual renewal cost of AED 2,500 per annum from the date of registration.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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