What’s new?
If your life’s dream is to be a real estate broker, then you will be interested in the recent publication of changes to the licensing requirements for real estate brokers.
The activity of “real estate brokerage” has been recategorized as a “professional activity” by the Dubai Department of economic development (“Dubai Economy”). This means that establishments undertaking the activity of “real estate brokerage” can now be 100% foreign-owned by a foreign national or nationals (not a corporate entity) and must appoint a UAE national to act as a local service agent.
This follows a similar announcement by the Abu Dhabi Department of Economic Development in August 2021 publishing a comprehensive list of ‘professional activities’ to which foreign ownership may apply provided certain conditions on the legal form are met and the company appoints a UAE national to act as a local service agent [See our alert here].
Registration of the company conducting “real estate brokerage” is still required with the Real Estate Regulatory Agency (RERA) in Dubai. However, the responsibility for taking a RERA-sponsored examination to maintain accreditation is no longer the sole responsibility of the shareholder of the company. Instead, it is understood that a manager may assume this responsibility. Further details on these requirements are expected in due course.
What does this mean?
- one or more foreign nationals may be shareholders in the company who need not have passed a RERA-sponsored examination;
- if there is one foreign national, then the permitted legal form of the company is a sole establishment/proprietorship;
- if there is more than one foreign national, the permitted legal form of the company is a civil company/partnership;
- a foreign corporate entity cannot be a shareholder in the company; and
- irrespective of the legal form of the company, a UAE national service agent will need to be appointed.
What we say
Even before the recategorization of the real estate brokerage activity as a “professional activity” and allowance for 100% foreign ownership, we reported that the majority of real estate brokerages operate through sole establishments / civil partnerships; vehicles with no limited liability and substantial ‘personal’ and ‘financial’ risk linked to the proprietor.
Liability risks are not the only concern. The impact of the passing of the sole shareholder or partner in a civil partnership can be enormous – dragging the company it into years of complicated probate procedures in the UAE and directly impacting on business continuity. Then comes the notion of value creation and resale value: operating the business under an LLC should always be the preferred avenue.
Is this possible? YES!!
Want to know more? Get in touch!
Team M/HQ has experience working with companies to put in place tools and documents to mitigate against the risks associated with the sole establishments / civil partnerships legal forms. Please contact us to learn more.
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