Doing business in the UAE: corporate migration and redomicilation

A company might look to move its corporate seat from its current jurisdiction for several reasons. These could relate to tax, economic substance, or be about simply consolidating the group structure.

Introduction to redomiciliation

Redomiciliation, or corporate migration, is a legal process which allows a company to transfer its seat of incorporation from one jurisdiction to another whilst continuing the same legal entity. The date of incorporation of the company continues to be the same and it is issued with a certificate of continuance in the new jurisdiction. Several of the UAE free zones now permit redomiciliation, making the UAE a popular jurisdiction for companies looking to move to the region.

Where to redomicile to?

Once a company decides that it will redomicile from its current jurisdiction, there will be several considerations about where to migrate. These are likely to be linked to the reasons for redomiciling, and therefore may be driven by tax and economic substance requirements.

Where a company has a connection to the UAE, one of the UAE free zones may be an attractive option. Several of the UAE free zones permit redomiciliation, including:

• Abu Dhabi Global Market (ADGM);
• Dubai International Financial Centre (DIFC);
• Jebel Ali Free Zone (JAFZ);
• Dubai Multi Commodities Centre (DMCC); and
• Ras Al Khaimah Free Trade Zone (RAK FTZ).

When deciding which free zone to redomicile to, the company will need to consider which options are available to it. Once in the UAE, the company will only be able to undertake the activities it is licensed to perform, and therefore it will need to choose a free zone which permits the relevant activities. If the company is a holding company, then it will have many options. However, if it is in the business of oil and gas drilling, its options will be more limited.

Additionally, the company will need to consider the requirements imposed by the free zone. For example, JAFZ will require the manager of the company to be a UAE resident and hold a visa from the company. The ADGM and DIFC will require at least one authorised signatory to be a UAE resident. Generally, all free zones will require the company to lease office space so the availability and cost of suitable office space may also be a factor.

Some important things to consider will be:

• activities of the company;
• residency requirements for managers, directors or authorised signatories;
• lease requirements and costs;
• minimum share capital requirements;
• ·ongoing compliance requirements, such as the filing of annual accounts, etc;
• cost of redomiciling and maintaining the redomiciled company;
• complexity of redomiciling.

Not all free zones permit redomiciliation out of the free zone. Accordingly, if the redomiciliation is intended to be only temporary, a free zone which permits redomiciliation from the zone will need to be chosen.

Process and requirements for redomiciling

The exact process and requirements for redomiciling a company will depend on the free zone the company is redomiciling to. However, all free zones will require that the jurisdiction from which the company is migrating – the emigrating jurisdiction – permits redomiciliation. Each free zone will have its own requirements as to how this is evidenced, for example, by way of a legal opinion from local lawyers, or a no-objection letter from the company registrar in the emigrating jurisdiction.

At a high level, the process for redomiciling will typically involve:

• collating, and if required, notarising and attesting, the documents for the redomiciliation. These will include the constitutional documents of the company and resolutions approving the redomiciliation;
• applying to the free zone for initial approval for the redomiciliation;
• identifying suitable office space in the free zone and entering into a lease;
• signing the articles of continuation of the company. These may need to be signed locally by a duly authorised representative;
• paying the relevant fees;
• the free zone registering the redomiciliation and issuing the certificate of continuance;
• the liquidation or deregistration of the company in the emigrating jurisdiction, to the extent this does not happen automatically.

The redomiciliation process can be time consuming and companies should factor at least six-to-eight weeks for it to complete, starting from when the full set of documents have been collated, notarised and/or attested – which can take several weeks. Additionally, companies should factor in that the authorities may request additional documents or information during the redomiciliation process, which may cause delays.

Additional considerations

Before commencing any redomiciliation process, it is highly recommended that the company undertakes due diligence to identify the impact of the redomiciliation. For example, finance agreements and material contracts should be reviewed for any notification or consent requirements that may be triggered as a result of the redomiciliation. 

Additionally, if the company has employees, consideration will need to be given as to how to move them across to the redomiciled company. If they are to live and work in the UAE, they will require residency visas and work permits.

If the company has subsidiaries and branches, the impact of the redomiciliation on these entities will also need to be considered. For example, pre-domiciliation consents or post-redomiciliation filings may be required. Moreover, some jurisdictions may treat a redomiciliation as a share transfer and transfer fees may be payable as a result.