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Set up a trading company

Set up a trading companyImage Credit: Supplied

A simple definition of a trading company is that of a middleman. It buys goods, stocks them and sells them. In other words, there is no manufacturing involved. Setting up such a company in a free trade zone in any emirate is simple enough. The first step is to obtain a trade license from the free zone authority.

Be clear about who the shareholders in the company will be and how many. Free zones have different suffixes attached to the company name based on the number of shareholders, e.g. FZ-LLC or FZE. Next, the minimum share capital has to be collected, either individually or as a whole in the company's name. Different free zones have different rules. Thereafter, three possible company names have to be submitted to the zone authorities, out of which they will pick one. A manager must also be hired as his name will appear in the trade license of the company. A preliminary application is then submitted.

After preliminary approval from authorities, a more detailed application must follow. For this, passport copies of all stakeholders and the manager are required. Next, the issuing authority ensures a bank account in the name of the investor is opened and the share capital is deposited. It is important to note that the full capital must remain in the bank account until the trade license is issued. After a confirmation from the bank concerning the bank balance, the free zone authority commences legalities pertaining to the last few steps in the process. These include payment of fees, renting a spot, obtaining a deed, and signing a memorandum of association in the company name. Operations can commence as soon as the license is issued.

Handy Hints:

• Setting up a company roughly takes a month

• Different free zones have different regulations

• Authority sets a minimum limit for needed capital

Source: Bushra Hameduddin, Special to Classifieds

The writer is a freelancer