Sole Establishment or Proprietorship is a legal entity formed in the mainland of UAE under the name of an individual sole proprietor. Sole Establishments can carry out either commercial or professional activities in the UAE.
As per UAE companies laws, a sole establishment for commercial business activities can only be formed by UAE nationals and nationals of Gulf Cooperation Council (subject to certain restrictions). 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.
Expatriates can register Sole Establishments for providing professional or consultancy services such as management consultancy, IT consultancy, HR consultancy, service providers, training and similar services. The Sole Establishment owned by a foreigner should appoint a local service agent who must be a UAE national in accordance with UAE laws. The local service agent can be either individual or a company, whose primary job is to act as liaison between the entity and the government departments. The relationship between the principal entity and the local service agent is regulated by an agency agreement that has to be notarized and registered with the Department of Economics Development. Local service agency agreement can be unilaterally terminated by the entity.
The liability of the sole establishment is not limited making the owner personally liable, without limit and to the full extent of his assets, for the liabilities of the establishment.