When you need to register a new company, often you face the choice of registering a new company or buying a ready – made company (also sometimes called “shelf” company). Such choice may often arise especially when you register offshore international business entities in UAE or other jurisdiction which offers offshore companies registration.
When you register your company in Dubai, UAE you would be attentive to the following:
- Your company is registered fully in line with regulations.
- Your rights on the company are fully registered and totally secured.
- You are the only one who has the entire control over your company.
- Money on the business account is safe and under your control.
- Company has no risks which may potentially arise from its history.
Sometimes corporate service providers in UAE and other countries offer potential clients an option to buy the “shelf” company, which means a company they register in advance and then sell to you. Sometimes such legal entity is even sold with the bank account in UAE already opened for such company.
At the first sight the solution of buying a ready – made company in UAE may sound highly attractive as you seem to be able to save time and get the company documents relatively fast. However, in most of cases, this is very erroneous understanding.
We suppose that you want to buy a company absolutely within the applicable Dubai regulations which means that the legal entity ownership shall be duly transferred to you. Such ownership transfer requires preparing of share transfer forms and filing the company ownership change in the companies’ registry. This procedure takes time. For example, average time for ownership transfer of a UAE offshore company is at least 1 week-10 days. Registering new UAE offshore company takes 2-3 business days only. Means buying a shelf company does not save time, in contrary – requires more time then registering a new company.
In the event you are offered to have nominees as shareholders of your UAE offshore company in order to give additional privacy and make the company ownership transfer fast – this bears high potential risks. UAE legislation does not have any regulations on nominee shareholders and the shareholders registered in the company registry are treated as actual shareholders. Means nominee shareholders have ALL rights on your company. Thus you do not have rights on your own company. Neither you have full control over it.
When you are offered to buy a UAE offshore company already with a Dubai Bank account – we ask you to be extremely careful with such solutions. As according to internationally applicable banking regulations, if the company changes its ownership – a bank MUST be informed of such change. Failure to do so has very high risks for your account and your assets on the account may be blocked.
Another extremely important aspect of purchasing a UAE ready – made offshore company with a Dubai bank account – if account signatory is not changed and you are only given internet access – it means someone else has full access to your account = to your money. Even if you categorically trust the service provider which registered your company and opened an account for you – none of you would feel comfortable knowing that some person has a potential possibility to withdraw money from your account or to block you from your access to your money with no control from your side whatsoever.
When buying a ready-made UAE offshore shelf Dubai company, you also face potential risks of possible business done previously over this legal entity. And, if this is a case – you have no possibility to check it as UAE offshore companies do not have to keep accounting records.
Costs of registering a new offshore legal entity in UAE is also for sure less than for a ready - made Dubai company. For a ready – made genuine shelf company with no complications in its history, a service provider would charge you its regular price plus premium for the company being ready for you “on the shelf”. So there are no advantages on this point either.
Company name – when you register your own offshore company in UAE – you are absolutely free to choose a name of your company. If you buy a ready shelf company – you are very limited to the companies with given names being already registered and offered to you for sale.
Conclusion: If you need a ready UAE offshore company plus account in Dubai – the fastest and most secure way is to register such legal entity as a new one. This is the clear process which gives you a full control and security over your company and bank account of this company.
If you have questions on the above – please feel free to ask 1 hour advisory free of charge.