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A joint venture (JV) is one of the easiest ways to start a business in the country. With this, you have the flexibility to focus on the area of your expertise and are not restricted to categories such as oil and gas and electricity and water where you can start on your own without local participation. You can also start up your business anywhere in the UAE and not be restricted to free zones.
A JV helps you fulfill several legal requirements and it comes with a host of advantages, too. For instance, you will be required to enter into a partnership with a UAE national who will hold 51% of the equity. This means that a little over half of your investment is funded. The bonus is that the profit and loss sharing ratio can be negotiated separately, which means you can keep a higher ratio of the profit. Your partner will also be more liable.
Another advantage of a JV is the flexibility to choose a field that is different from your “core” business operations. This will help you access new markets that may help improve your already existing business by exploring new technologies and business strategies. To make this successful, find a partner with the desired expertise in the target market.
JVs offer flexibility in the duration of commitment. If you are planning for a particular project with a fixed duration, a JV is the best option. With the highly skilled labor force in the UAE drawn from all parts of the world, competitive rates on utilities and relatively transparent processes, a JV seems like a winning proposition.
• JV is the easiest way to start an endeavor in UAE
• It is ideal for startups and firms looking to diversify
• JV companies benefit from many financial policies
See related story: The shareholder's agreement
Source: Asha Das, Special to Classifieds
The writer is a freelancer