A limited liability company is a legal entity in which the liability of shareholders is limited to their shares in the capital. An LLC company may carry on any type of commercial, real estate, investment and manufacturing activities except for insurance, banking, or financial activities. A foreigner can be a shareholder in an LLC. According to the UAE Federal Commercial Companies Law, 51% of shares of an LLC company shall belong to a UAE national and 49% of shares can be owned by a foreign individual or entity. Nevertheless, profit and loss distribution can be mutually agreed by the parties at different ratios.
An LLC can be formed by minimum two (2) and maximum fifty (50) partners who can be either individual shareholders or legal entities or combination of both. The Commercial Companies Law requires an LLC to be formed with a minimum amount of AED 300,000 share capital divided into equal shares with a minimum face value of AED 1,000 per share. However, currently, there is no requirement to to provide a proof of shares or deposit the share capital amount in a bank account while incorporating LLC. Nevertheless, for special business activities the amount of share capital can be different. Shares of an LLC can not be offered to the public. The company may not resort to public subscription to establish or increase its capital, or to secure loans, and it may not issue any negotiable stocks or shares.
An LLC is largely formed to carry out commercial business activities. Commercial business activities are defined in the Article 5 – 6 of the UAE Federal Law No. 18 of 1993 on Commercial Transactions and include the activities such as trading, import-export, real estate development, brokerage, facilities management, construction, manufacturing and others. LLC can also be formed to conduct certain professional activities such as restaurant, cafeteria, and some other activities professional in nature but categorized as commercial.