How much does it cost to set up each type of corporate vehicle used to invest in real estate?
Limited liability company (LLC)
Legal costs to establish an LLC can be in the region of USD 20–30,000 (excluding VAT and disbursements).
There is no requirement to deposit the share capital of an LLC in a UAE registered bank and therefore it is not necessary to provide evidence of the deposit of the share capital in the bank.
An LLC must take a lease of premises from which to conduct its business (which are inspected and must be approved by various government entities). A fee of around 5% of the annual rent of the office space and the annual rent of the general manager's home is usually charged as a fee payable to the Municipality and is included as part of the trade licence fee.
The rent itself can be considered a set up cost and there are fixed fees for each employee of the company. Additionally, there are ancillary fees which include approval of the trade name, a general application fee and the cost associated with notarising the memorandum of association before a UAE notary public.
Public joint-stock company (PJSC)
In addition to the share capital, the other typical costs can vary widely.
The costs will include professional fees for preparing the founders' agreement, a prospectus or invitation for public subscription supported by a feasibility/business plan, auditors' certificate, due diligence report and memorandum and articles of association. The memorandum and articles of association must be in accordance with the specimen issued by the Ministry of Economy and Commerce and any deviation from this must be approved by the same Ministry.
The PJSC must have offices and therefore there will be rental costs and other costs ancillary to this.
The PJSC must register with the DED to obtain its trade licence and the Emirates Securities and Commodities Authority (ESCA) to obtain its certificate of registration. The fees to be paid to the DED are related to rent payable for the office space and ESCA has certain annual fees which need to be paid as well.
There are also fees relating to the cost of being listed on a particular stock exchange.
Private joint-stock company (private JSC)
In addition to the share capital, the other typical costs can vary widely.
The costs will include professional fees for preparing the founders' agreement and memorandum and articles of association. In addition, the application to set up a private JSC needs to include a business plan and feasibility study.
The memorandum and articles of association must be in accordance with the specimen issued by the Ministry of Economy and Commerce and any deviation from this must be approved by the Ministry of Economy and Commerce.
The private JSC must have offices and therefore there will be rental costs and other costs ancillary to this.
The private JSC must also register with the DED to obtain its trade licence and the Ministry of Economy to obtain its certificate of registration. The fees to be paid to the DED are related to rent payable for the office space.
Costs associated with setting up an entity in the Abu Dhabi Global Market free zone include rent, legal fees for preparing constitutional documents and fees payable to the free zone.
A schedule of fees can be found at the following link: https://www.adgm.com/documents/project/adgm/operating-in-adgm/ongoing-obligation/real-property/schedule-of-fees-v0-29.pdf