Offshore Company formation, a complete guide

Expanding and shifting your business activity through a UAE Offshore Company set up

The Emirate of Ras Al Khaimah (RAK) has launched an offshore facility - The

second in the UAE.

The International Business Companies (IBC) Registry allows foreign investors to register offshore companies as RAK Offshore, a division of RAK

Investment Authority (RAKIA) without the need to establish a physical

presence in the UAE.

Companies are usually incorporated within 24 hours. Any non-resident individual or corporate entity can register a company.

Many jurisdictions are considered only as tax havens. The United Arab Emirates is a 'real' country with a 'real economy' with a population of

approximately 4 million. It has an established history of international trade, finance and business, and today it is one of the fastest growing countries in

the world with one of the highest standards of living.

The choice of a suitable jurisdiction is an important decision and requires careful considerations. Important aspects to be examined and which RAK

offers may be outlined as follows:

Political and economic stability of the jurisdiction

• The availability of a modern and flexible legislative framework

• Simple incorporation and filing requirements

• The availability of Double Taxation Avoidance Agreement (DTAA)

• State of the art banking system • State of the art telecommunication facilities

Uniqueness

UAE is not a dependent or 'overseas' territory of another country

Pressure has been put on traditional low tax jurisdictions by the Commission of the European Community (EU) in conjunction with the Organization for

Economic Cooperation and Development (OECD). The UK parliament has converted British Dependent Territories to British 'Overseas' Territories (in

1998). The UK government may apply greater control over its tax haven progeny (ie Bermuda, BVI, Caymans, Gibraltar, Turks & Caicos)

UAE has Double Taxation Avoidance Agreements (DTAA) with a number of

countries

Double taxation agreements prevent individuals and corporations from being susceptible to paying tax on the same item during the same time period.

These agreements determine which of the two states concerned should levy tax in a particular situation: Austria, Belarus, Belgium, Canada, China, Czech

Rep., Egypt, Finland, France, Germany, India, Indonesia, Italy, Lebanon, Malaysia, Malta, Morocco, New Zealand, Pakistan, Poland, Romania,

Singapore, Sudan, Thailand, Tunisia, Turkey, Ukraine.

UAE is not a member of the Organization for Economic Cooperation and Development (OECD)

No foreign exchange of information.

UAE is not on the OECD 'blacklist' of tax havens (nor the FATF blacklist)

UAE is not a member of the EU, and is not subject to EU regulation

Main activities of UAE OFFSHORE COMPANY

• General Trading

• Consulting and Advisory Services • Holding Company (Buy/Hold/Sell stakes of companies)

• Investments and Joint Investments Company • Property Owning

• International services • Professional Services

• Shipping and ship management companies • Commission Agents Company – Intermediary Brokers (IB's)

Fiscal & Regulatory benefits of UAE OFFSHORE COMPANY

• 100% income tax exemption • 100% corporate tax exemption

• 100% capital and profit repatriation • 100% ownership in Free Zones

• No Import or Export taxes • No capital gains tax

• No Value-added tax • No Withholding tax

• Proximity to entire Gulf and global markets

Main features of UAE OFFSHORE COMPANY

• It does not need to have physical offices in the UAE.

• It may not carry on business within the UAE. • It may not obtain UAE Residency Visa.

• It may have non UAE resident as director or shareholder. • It may have UAE resident as director or shareholder.

• It may have corporate shareholder/corporate director • It does not require the shareholder/director to be physically present in the

UAE for incorporation • It may own real estate in the UAE, with prior authorization from RAK

Investment Authority. • It may not do banking and insurance business without special license.

• It may maintain bank accounts and deposits in the UAE or worldwide. • It is not obliged to maintain its books and records.

• It may hold shares in other UAE and worldwide companies. • It may own yachts registered in the UAE.

In Brief

Location Gulf RAK Offshore is the first comprehensive

offshore centre in the Gulf region.

Time Zone GMT+4 Between Europe and Asia. Open on

Sundays.

International Business Companies

Yes First centre in the Middle East to offer IBC registration.

Trusts No Not offered yet.

Offshore Banking Yes Authorized to open bank account with UAE banks.

You can register International Business Companies bearing the status of 'Limited' or 'Ltd.' at RAK Offshore.

Middle East and the Gulf

Thanks to geographical proximity and cultural similarities, RAK Offshore is

an attractive location for businesses from countries in the Gulf and the Middle East. These countries already have strong business links with the

United Arab Emirates. RAK Offshore is also likely to benefit from the fact that some countries in the region suffer from political unrest and/or asset

protection issues.

Russia & CIS Countries

Confidentiality and financial privacy coupled with issues such as political

uncertainty, weak currencies, taxes, severe foreign exchange controls and asset protection in Russia and CIS countries make RAK Offshore a viable

option for businesses from these regions who seek an offshore location.

Europe, India & Other Countries

Companies in this region have a favorable image of the UAE as a business centre. Add to that their interest in investing in the booming economies and

financial markets of the GCC and it is not hard to see why RAK Offshore is a perfect offshore location for these companies.

Statutory description of

private limited company International Business Company (IBC).

Governing corporate

legislation

RAK Investment Authority (RAKIA) is the governing body and the companies is regulated

under RAK Offshore Regulations 2006.

Time-scale for

incorporation

24 hours. There is a time difference of +4 hours

to GMT.

Availability of ready-made companies

No.

The regulations

governing availability of names

Generally the nature of the company has to be indicated through the words "Limited" or "Ltd.".

Minimum and maximum number of shareholders

A company may be formed with minimum of one shareholder and there is no limitation as of

maximum.

Statutory minimum paid-up capital requirements

Capital is required for the incorporation of an offshore company but there is no minimum

capital requirement.

Classes of share available

Share capital may be divided into different classes. Bearer shares are not allowed. Shares

may be issued fully, partly or nil paid.

Denomination of share

capital

AE Dirham and US Dollar can be used as the denomination for the capital. Any foreign

currency is acceptable but prior consent has to be approved by the RAK Authority.

Annual Costs As per request.

Residency requirement

on shareholders or shareholders' meetings

No requirement for a local resident to be a

Shareholder, only proof of residence is required to be submitted.

Information published

relating to shares and shareholders

The company must keep a copy of the share

register at the registered office address. This is available for inspection by the members and is

not publicly available. The company may voluntarily file at the Registrar the copies of the

register of members.

Minimum and maximum

number of directors

Sole directors are permissible. There is no statutory limitation for maximum number of

directors permitted, although the articles may impose a limit.

Are corporate directors

or corporate shareholders permitted?

Yes. Corporate entities are even permitted to hold shares in a RAK Offshore companies.

Nationality and residency requirements of directors

The director can be a resident or any foreign

citizen but is required to submit the proof of residence and other relevant documents.

Nature of the powers of the directors

The directors have all the powers of the

company that are not reserved to the members under the Regulation or in the memorandum and

articles.

Directors' meetings

The directors may meet at such times and places within or outside the UAE as the directors

may determine to be necessary or desirable. Telephone and other electronic meetings are

allowed. Subject to a requirement in the memorandum and articles the director shall be

given reasonable notice of meetings of directors, although this rule is subject to a waiver of

notice. The presence of a director at a meeting shall be

deemed to constitute a waiver on his part. The quorum of a meeting of directors is fixed by the

memorandum and articles but where no quorum

is fixed, a meeting of directors is properly constituted if one half of the total number of

directors is present in person or by alternate.

Information published

relating to directors

There is no public register of directors, although

the company may voluntarily file its register of

directors with the Registrar.

Must accounts be prepared by the

directors?

A company incorporated under the Regulation

shall keep such accounts and records as the directors consider necessary or desirable in

order to reflect the financial position of the

company.

Must such accounts be

filed with the financial authorities?

No.

Must such accounts be

audited, and if so by whom?

No. They may be audited by persons approved

by the directors.

Must the company have

a registered presence in

Yes. The company must at all times have a

registered office and registered agent within Ras

the territory of

incorporation?

Al Khaimah. The registered office must be

maintained either by the company or its registered agent.

What records must be maintained in the

territory and are they available for public

inspection?

A copy of the share register and the register of

directors and an imprint of the common seal must be kept at the registered agent's address.

Other records such as minutes of meetings of directors, members and copies of all resolutions

may be kept at such places as the directors determine, but copies must be kept at the

registered agent's address. These are not available for public inspection,

other than by members or directors. If copies of these registers and documents are kept other

than by the registered agent, the registered

agent must be notified of the location of the original.

If the company fails to comply with these provisions it is liable to a fine.

Can the company make

secured loans? Yes.

Can the company make

unsecured loans? Yes.

What are the limits placed on the company's

borrowing powers?

None. There are no debt/equity ratios under the law.

Is there a register of

company charges?

A company may maintain at its registered office a register charges and other encumbrances. This

is not mandatory. Similarly, a public register may be maintained at the option of the

company.

Company seal A company must have a common seal.

Re-domiciliation provisions

A company incorporated under the laws of a foreign jurisdiction may continue its existence as

a company registered under the Act. Similarly, RAK Offshore business companies may transfer

their domicile to foreign territories that permit such procedures.

Vithul V Murali MBA

Asst. Vice President | ADAM Global

Dubai Mobile : +971 50 55 73 538

Email : vithul.murali@adamglobal.com

Skype : Vithul.murali

www.adamglobal.com