Representative Office

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Representative Office/Branch Office

Firstly, both types are affiliates of a parent company, carry its name and remain wholly owned by the parent company without them having their own legal entity.
Foreign companies are permitted to establish wholly owned branches and representative offices in the U.A.E.; however, these offices are limited in the activities they may conduct within the U.A.E. (Article 314 of the Commercial Companies Law). However, both types of affiliates require a service agent, who has to be a national of the UAE, but has no decision-making rights or any other rights whatsoever.
The role of the service agent is to assist in obtaining licenses, visas, labour cards, etc. The main difference between both types of affiliates is that a representative office – as opposed to a branch office – is not allowed to perform any commercial activities.

By setting up a representative office, the parent company creates its own legal and physical presence in the market. The task of a representative office is mainly providing support to the parent company. It may perform the following duties:

  • Observing the market
  • Preparation of project studies
  • Marketing and promotion for the products and services of the parent company
  • Negotiation of contracts between local customers and the parent company
  • Customer advice services
  • Supervision of commercial agents
  • Training activities
  • Observation of public sector invitations to tender

Representative offices must not perform any commercial activities, import or export goods, or sign contracts on their own behalf or set up their own accounts.

The activities a branch office can perform depend upon the license issued by the respective authority, the Dubai Department for Economic Development. As a rule, only such activities are approved, which are at least similar to those of the parent company.

Important Note

The service agent must be strictly distinguished from the commercial agent/distributor. The UAE Companies Law provides that the service agent is responsible neither for the legal nor the financial obligations of the company; neither is he entitled to get involved in any way with the business operations of the company. In reality, the service agent is a formality. The role of the service agent is to assist in obtaining licenses, visas, labour cards, etc.

The service agent is paid an expense allowance, which is agreed in the service agency agreement to be concluded between the parent company and the agent. As opposed to the commercial agent/distributor, the service agent is not entitled to a statutory compensation payment in the event of termination of the service agency agreement

To establish a branch or representative office in Dubai, a foreign commercial company should proceed as follows: