Company Classification in the UAE
1. Solidarity Company
• Solidarity companies are formed between two or more individuals who are jointly and personally responsible for all the company’s obligations. Each partner is considered a merchant, and the insolvency of the company leads to the insolvency of all partners.
• The name of the solidarity company should include the names of all partners, and it may be limited to mentioning one or more partners’ names, with the addition of the phrase “and Partners.” At the end of the name, there should be the phrase “solidarity Company,” and it may also have a trade name.
• The management of the company is carried out by all partners, and each partner in the partnership company acts as an agent for the company and the other partners regarding the company’s activities.
Articles (39), (40), (41), and (45) of Federal Law Decree No. (32) of the year 2021.
2. Limited Partnership Company
• A Limited partnership Company is formed with one or more general partners who are jointly and personally responsible for managing the company and fulfilling all its obligations. The general partner acquires the status of a merchant. In addition, there are one or more limited partners who are not responsible for the company’s obligations except to the extent of their shares and do not acquire the status of a merchant.
• The name of the Limited partnership Company should include one or more names of the general partners, along with an indication of the legal forms and legal documents of the company. The company may also have a specific trade name.
• The management of the company is limited to the general partners, and its decisions are made unanimously unless the contract stipulates that the approval of the majority is sufficient.
Articles (62), (64), and (66) of Federal Law Decree No. (32) of the year 2021
3. Limited Liability Company
• A limited liability company is a company that cannot have more than fifty partners, with a minimum of two partners, and can be established by one natural or legal person. Partners in this company are only liable for the amount of their share in the capital.
• The company must have a name derived from its purpose or from one or more partners’ names, with the addition of the phrase “Limited Liability Company” and a statement of its capital.
• The company is managed by one or more managers as determined by the partners in the founding contract. There is no minimum capital required for establishing the company, but the capital must cover a feasibility study for the company’s activities.
Articles (71), (72), and (76) of Federal Law Decree No. (32) of the year 2021
4. Public Joint Stock Companies
• A public joint-stock company can be established by five or more individuals, the federal government, local government, or any company wholly owned by them. A public joint-stock company is any company whose capital is divided into equal tradable shares. Partners in such a company are only liable for the amount of their share in the capital. Each company must have a name derived from its purpose unless it owns a store and adopts its name.
• The company must have its own name, and it is not allowed to carry the name of another company in addition to the phrase “Public Joint Stock Company.”
• The company is managed by a board of directors that determines the company’s articles of association. The minimum capital required for a public joint-stock company must not be less than AED 30,000,000.
Articles (105), (106), (143), and (135) of Federal Law Decree No. (32) of the year 2021
5. Private Joint Stock Companies
• A private joint-stock company is a company with no fewer than two shareholders. Its capital is divided into equal nominal value shares, and the full value must be paid without offering any of them for public subscription. Exceptionally, one legal person may establish and own a private joint-stock company. The owner of the company’s capital is only liable for its commitments up to the amount of the capital stated in its establishment contract. The company’s name must include the phrase “Single Person Private Joint Stock Company,” and it is subject to the provisions of private joint-stock companies outlined in this law as long as it does not conflict with its nature.
• The issued capital of the company must not be less than AED 5,000,000.
• The company is managed by a board of directors that determines the company’s articles of association.
Articles (257) and (258) of Federal Law Decree No. (32) of the year 2021
6. Holding Companies
• A holding company is a joint-stock company or a limited liability company that establishes subsidiary companies within or outside the country or controls existing companies. The company’s name must be followed by the phrase “Holding Company.“
• The holding company owns shares or stocks in joint-stock companies and limited liability companies, provides loans and financing to its subsidiaries, owns the necessary real estate and movables to carry out its activities, and owns patent rights.
Article 268 of Federal Law Decree No. (32) of the year 2021
7. Sole Proprietorship
• Sole proprietorship refers to companies owned by a single individual, whether natural or legal. These companies are subject to the provisions of limited liability companies. The owner is only liable for the company’s obligations to the extent of the capital specified in the incorporation contract. The company possesses its own legal identity separate from that of the founder.
• The sole proprietorship is given a name derived from its purpose or the name of its owner, with the addition of the phrase “Single-Person Limited Liability Company.”
• The company is managed by one or more directors, as determined by the owner in the incorporation contract or by the general assembly unless otherwise specified in the incorporation contract.
• In the event of selling shares or introducing partners, prior approval must be obtained from the competent authority. Regarding the transfer of shares due to inheritance, the company continues temporarily until the estate is settled and the procedures related to the inheritance are completed. At that point, the company transforms into a limited liability company.
• The company is not permitted to enter into transactions with related parties without the approval of the manager or the board, unless the transaction’s value does not exceed (5%) of the company’s capital. Alternatively, approval can be obtained from the general assembly through a specific resolution, in cases where the transaction exceeds (5%) of the capital.
Article (3), (7), (16), and (20) of Cabinet Decision No. (77) of the year 2022.
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