Each year, hundreds of companies set up operations in the UAE to take advantage of the many benefits of doing business there including tax incentives, stable economic conditions, cutting-edge infrastructure, and centralised proximity to major world economies. Moving to the UAE is becoming increasingly popular as governments and regulatory bodies around the world tighten their laws putting stress and strain on the companies that operate in those countries.

But what about existing companies that have an established corporate structure in another country? Setting up a branch is an option, but the core business will still be required to comply with the existing jurisdiction’s tax and regulatory codes. Fortunately, companies have the option to pursue a process called redomiciliation which allows them to move their entire company to another jurisdiction. In this guide, we’ll walk through what redomiciliation is, the benefits, and how the process works in the UAE.

What is Redomiciliation?

Redomiciliation is the legal process that allows companies to transfer their seat of incorporation (or domicile) from one jurisdiction to another. During the process, the company remains the same legal entity. This is different from setting up a satellite office or branch. With redomiciliation, the entire company structure moves to the new jurisdiction. For example, a company that redomiciles from the UK to the UAE will officially become a UAE-registered company while maintaining its history, rights, liabilities, vendor contracts, and banking relationships.

There are many benefits that can come with redomiciliation. Companies that currently operate in an expensive, regulatory restrictive, high tax, and high-risk environment, may seek to eliminate these challenges by transitioning to a more business-friendly jurisdiction. Redomiciliation allows for:

• Migration to a new jurisdiction without having to sell and repurchase assets.
• Maintenance of existing branding, goodwill, international reputation, and operating history.
• Maintenance of existing banking and financial relationships.
• Elimination of the need to update and renegotiate vendor agreements. Existing contracts will transfer with the redomiciled organisation.
• Removal of obligations to the laws of the previous jurisdiction.

Redomiciliation to the UAE

In the UAE, there is no official legal framework that addresses redomiciliation for onshore companies. According to the UAE Federal Law No. 2 of 2015, there is no mention of a redomiciliation process for companies established outside of the UAE. However, many free zones do have processes in place for redomiciliation.

Since each free zone has its own rules and regulations, companies will need to find out which free zone has the right structure for them. Companies will need to comply with all free zone requirements. For example, if the selected free zone has a capital share requirement, the incoming company may need to adjust its share holdings.

Currently, the free zones that have frameworks in place to permit redomiciliation include the Abu Dhabi Global Market (ADGM), the Dubai Airport Free Zone (DAFZ), the Dubai Development Authority Free Zones, the Dubai International Financial Centre (DIFC), the Jebel Ali Free Zone (JAFZ), and the Ras Al Khaimah Free Trade Zone (RAKFTZ).

Process and Timeframes for Redomiciliation

There are two main phases to the company migration process — exiting the current jurisdiction and transferring to the new one.

• Step 1: Confirm Exit Process – Some countries don’t permit companies to alter or change their domicile or location of incorporation. It’s critical to first confirm that your outgoing (or emigrating) jurisdiction has laws in place to facilitate and permit redomiciliation. Here is a list of countries that do allow redomiciliation to the UAE.
• Step 2: Finalise Open Financial and Legal Actions – Most emigrating jurisdictions require companies to submit financial statements to the governing tax authorities. Companies may also need to finalise any open legal processes such as settling any lawsuits prior to being approved to exit the jurisdiction. It may take some time for your company to gather and organise the documentation that the emigrating country needs to process the closure.
• Step 3: Start the Redomiciliation Process – Once you are approved to redomicile your company to the new jurisdiction, you can start the actual transition process. Some steps may need to be started prior to completing step two to ensure there are no gaps or delays that could disrupt the business.

The duration of the redomiciliation process may vary depending on many factors including the shareholder structure, number of employees, and outgoing jurisdiction’s processes. In some cases, simple corporations can be transferred in as little as a couple of weeks if all paperwork is in order. However, larger multinational corporations may take many months.

Streamlining the UAE Redomiciliation Process

The redomiciliation process can be confusing and complex depending on the size and scope of your company. Failure to complete each step accurately can result in major disruptions to the business or incur unnecessary costs. It’s highly recommended that companies take the time and effort to engage an expert to guide them through the legal, tax, and operational transfer process. These professionals can help you avoid unnecessary delays and help resolve any challenges that may arise.