Formation Requirements and Procedure for Incorporation Design Firm Dubai Design District
Established in 2013, the Dubai Design District (the “D3”) is one of Dubai’s newest Free Zones. D3 was created to act as a hub for creative design, and is becoming one of the primary destinations for creatives from all over the Middle East. This newsletter provides a general overview of the procedure and requirements in relation to the incorporation of a company providing design services (the “Company”) in D3. The publication also outlines the estimated total costs and approximate time frame for the incorporation and set-up of the Company Incorporation Design Firm Dubai Design District.
INCORPORATION PROCESS OF A DESIGN FIRM
D3 provides for two different types of licenses for companies looking to incorporate within the D3 Free Zone:
- the free zone license, or alternatively,
- the Department of Economic Development (the “DED”) license.
Thus, D3 allows companies to set up within its premises holding either type of license; however, the governing laws and regulations for the Company, and the requirements with regard to carrying out its business activities, will depend on the type of license chosen.
D3 FREE ZONE LICENSE
This section describes the regulatory regime of the free zone license, the types of licenses allowed within the D3 free zone license, the available license segments, details regarding the permissible activities under the various segments, and the costs and fees associated with the license.
Regulatory Regime
The D3 free zone license falls under the regulatory scheme of the Dubai Technology and Media Free Zone Authority (the “DTMFZA”). Thus, all the laws and regulations of the DTMFZA will govern the activities conducted by the D3 Company.
Types of free zone license
Within D3, there are four types of licenses available to the Company, depending on its intended structure:
- Free Zone – Limited Liability Company (“FZ – LLC”);
- Branch of a UAE Company;
- Branch of a Foreign Company; or
- Freelance Permit.
This publication shall cover the requirements and activities allowed under the FZ – LLC license.
Ownership
The FZ – LLC license would allow the Company to have one hundred percent (100%) foreign ownership.
License Segments and Permitted Activities
There are various license segments available within the FZ – LLC license; depending on the intended activities of a company wishing to set up within D3, the company would need to choose the license segments offered by D3 that would best suit the company’s needs.
There are three license segments which would be applicable to the Company intending to engage in design-oriented activities, as described below.
Interior, Furniture and Objects (except manufacturing) Segment
The license segment covering “Interior, Furniture and Objects (except manufacturing)” is available for companies that focus on interior architecture and its soft and hard furnishings, objects (ceramic, glass, lighting, etc.), textiles and materials, lighting for residential, exhibitions, office and industrial use.
This license segment allows for the following activities to be conducted:
- Design: activities involving the design of interiors, furniture, and objects; and/or
- Marketing: activities involved in the marketing and promotion of products or services, for the use of sales promotion strategies and techniques to persuade members of the target market; and/or
- Import/Re-export: activities involved in bringing goods from a foreign country and/or re-exporting the important products; and/or
- Assembling: involves importing and assembling of interiors, furniture, and objects.
Interior, Furniture and Objects (including manufacturing) Segment
This license segment allows for the activities discussed above, with the inclusion of the following activity:
- Manufacturing: activities involved in transforming raw materials into finished products; this process also includes packaging and labeling of the same.
Design Segment
The licensing segment covering “Design” would allow the Company to engage in three (3) of the below activities:
- Consultancy: consulting on the design of products, culinary art, spaces, virtual or interactive experiences; and/or
- Concept Design: conceptualizing, evaluating, developing, designing ideas for effective generation of new products, services or concepts and/or enhancing of existing objects, services or concepts that are either tangible or intangible as per market and end user requirements; includes concept development, business analysis, technical implementation, creating prototypes; use of digital tools and technology; and/or
- Information, Interface and Digital Design: designing user interfaces, information including info graphics and other digital materials; and/or
- Architectural Design: designing of buildings, urban landscapes, open areas, communities, usually with some regard to aesthetic effect; companies shall not undertake any construction documents and/or management of projects; and/or
- Industrial Design: using both the applied art and applied science to improve the aesthetics, ergonomics, functionality and/or usability of a product; companies are only limited to providing prototype for clients as part of their offering.
It is important to note that companies with a D3 free zone license can only do consultancy or design with regard to fit-outs (i.e., the installation of ceilings, floors, furnishings, partitions, etc.), and cannot do the actual fit-out themselves. If they wish to provide this service, a DED license is required.
Approval Process and Timeline
The Company must submit:
- the application for license
- business plan;
- a valid passport copy of the shareholders and directors; and
- propose an office space located within D3.
Upon receipt by D3, it is sent to for approval to the committee. Once provisional approval is furnished, D3 will send a proposal that would best suit the needs and requirements of the Company.
This process is expected to take approximately two to four weeks.
Minimum Share Capital
The Company with an FZ – LLC license would need to have a minimum share capital of fifty thousand dirhams (AED 50,000) to one hundred thousand dirhams (AED 100,000), depending on the license segments chosen.
Costs and Fees
In addition to rental costs for the office space located within D3, the Company would be required to pay a one-time registration fee of three thousand five hundred and ten dirhams (AED 3,510).
The license fee for one segment is fifteen thousand and ten dirhams (AED 15,010), however this price would range between fifteen thousand and ten dirhams (AED 15,010) to twenty thousand dirhams (AED 20,000), depending on how many segments are added to the license.
Please kindly note that these fees are subject to regulatory change.
DED LICENSE
As mentioned previously, the Company would also have the option of getting a DED license while continuing to operate out of D3.
The Company would benefit from the DED license as opposed to a D3 free zone license if the Company intends to
- do fit-outs (as described in the previous section), and/or
- conduct business in mainland Dubai.
Regulatory Regime
The DED license falls under the regulatory scheme of the Department of Economic Development. Thus, all the DED laws and regulations will govern the activities conducted by the Company.
Ownership
The Company must be at least fifty-one percent (51%) owned by a UAE national (the “Local Sponsor”) in order to hold a DED license; the remaining percentage can be foreign ownership.
Type of License
The applicable DED license type for a design Company would be the “Professional Services” license, defined as personally offered high-value services.
Applicable Licensed Activities
Under DED licenses, it is possible to conduct a number of various activities under one business license. With regard to the Company intending to engage in design related activities, some of the applicable activities would include:
- Interior Design Engineering Services; and/or
- Architectural Design Consultancy; and/or
- Products Design Services.
Approval Process and Timeline
The Company must submit:
- the application form;
- apply for initial approval certificate;
- apply for the trade name of the Company;
- submit passport copies and visa (if applicable)for the Local Sponsor and for the other owners/partners of the Company; and
- enter into tenancy agreement for the Company’s premises
The process should take approximately two to four weeks.
Minimum Share Capital
The Company would need to have a minimum share capital of three hundred thousand dirhams (AED 300,000).
Costs and Fees
In addition to rental costs for the office space, the Company would be required to pay an initial approval fee of one hundred and ten dirhams (AED 110).
The license fee would cost approximately twenty thousand dirhams (AED 20,000), depending on the licensed activities chosen.
The trade name reservation fee ranges between one thousand dirhams (AED 1,000) to two thousand dirhams (AED 2,000), depending upon the name chosen for the Company.
Please kindly note that these fees are subject to regulatory change.
OUR EXPERIENCE
lecocqassociate arabia dmcc provides a full range of financial regulatory, corporate and commercial advice in relation to the structuring and incorporation of entities.
This newsletter is for information purposes only. It does not constitute professional advice or an opinion. Please contact us for any questions.
