What If I Want to Add a Business Partner After Registration?

This blog will help you understand the exact process for adding business partners after company registration in the UAE. Our team can also assist you in identifying supportive partners. The structural changes and the amendments in shareholders necessitate approvals and license updates.

The process to add a business partner after registration is:

• Partner Selection – Partners must be selected only after understanding their financial condition, their expertise (if any) in a business sector, market knowledge, and trustworthiness. Partner selection is a strategically crucial step. Be careful when selecting a partner, as it can have repercussions on your company’s performance and its existence. Talk to our experts if you need support for partner selection.
• Approval from Existing Partners – An already existing partnership firm, such as a Limited Liability Company (LLC), will have partners. Approval from them is mandatory before proceeding with adding partners after company registration. The partnership agreement or Articles of Association (AOA) have to be amended to accommodate the new partner.
• New Shareholder Agreement – An amended shareholder agreement specifying the obligations, share ratio, profit margins, authority, key roles, and dispute-resolution methodology has to be formulated. Get the agreement prepared by an expert legal authority to avoid future confusion and conflicts. The new agreement should be legally binding for all partners (both existing and new).
• Documentation – The new partner’s details have to be officially entered in the documents about the company. Documents including a copy of the passport, visa, Emirates ID, and NOC from the present sponsor (if UAE resident) are the basic documents required. A board resolution is the primary document needed for a new corporate partner. Prepare the documents in accordance with the laid-down rules and apply to the licensing authority, such as the Department of Economy and Tourism (DET). Get expert assistance to avoid errors in the application and associated documents.
• New Partner Approval – Pay the fee for adding the new partner. The fee will depend on the type of business and the number of partners being added. The approving authority will review the application and documents. Approval to add the new partner will be issued within days/weeks. The time taken for approval will depend on factors such as business sector, entity type, and the number of partners being added.

The DET/Freezone Authority will issue an amended trade license and associated legal documents after the addition of the new partner. Update the company documents accordingly. The information must be officially forwarded to the authorities, such as the Federal Tax Authority (FTA), the Ministry of Human Resources and Emiratisation (MOHRE), and the bank where they have opened the corporate bank account to undertake necessary changes to the documents held at those offices.

A few documents are mandatory to add a new business partner. These documents aid in the inclusion of the individual’s/corporate entity’s data in the system.

The board resolution approving the new partner should be notarized and attested by an approved legal authority. An updated shareholder agreement, common to both corporate and individual partners, should explicitly state the responsibilities, roles, authority, and profit-sharing terms and conditions for all the partners. The accuracy of the documents is crucial to the timely and hassle-free completion of the activity.

The cost to add a new partner will vary depending on factors such as the business sector, type of partner, and the business jurisdiction. The estimated cost to add a partner in the UAE is:

• Free Zone Company – AED 2,000 – 5,000
• Mainland Entity – AED 3,500 – 7,500

The license will indicate all the partners’ names. Once the partner is added, his/her name will be included in the trade license. The new partner is entitled to sponsor family through the business firm. Authorizing the new partner as a bank account signatory is optional.

Investors add new partners for many reasons, including fund requirements, expansion plans, and venturing into new business sectors. Adding a new partner also benefits the company in many ways.

• Expertise – The new partner might have expertise in specific sectors that will benefit the business. The partner’s insightful opinions will aid in productive decision-making.
• Share the Load – Managing multiple tasks is tiresome, complex, and stressful. A new partner can share the responsibilities and duties. It will help boost business and reduce workload.
• Team Effort – Teamwork is more effective than an individual’s efforts. From initial discussions and brainstorming to final implementation, the new partner is an extra support.
• Enhanced Growth – Better decision-making than before, group efforts, shared workload, fund availability, and expertise navigate the business towards enhanced growth. Adding a new partner will improve business operations.
• Risk Sharing – Taking calculated risks is common in business. You can reduce the stress of risky decisions by sharing the risk load. A trusted, supportive partner is an asset in making risky decisions. Even the financial loss is shared, reducing the impact on an individual.

Similar to adding a business partner, removal or change of a partner or partners is also possible. The share transfer process is possible if the partner is replaced. The procedure for partner removal or replacement involves:

• Amendment to the Memorandum of Association
• Trade License Amendment
• Amendment to the Partnership Agreement
• Notarization of Amended Partnership Agreement
• Authority Approval

Let us know if you need a hassle-free and effortless partner change, removal, or addition. Kilton’s expert team will comply with the regulations and complete the procedure on your behalf. You can focus on business operations while our specialists handle the entire process.

A few factors concerning the addition or removal of a business partner in the UAE are:

• Removal of a partner requires the partner’s consent and other shareholders’ approval. Only in a few specific cases can the partner be removed without consent. The process for partner removal/addition should begin only after obtaining necessary approval from the existing shareholders/partners.
• The procedure to add or remove a partner would be detailed in the existing shareholder agreement or the relevant company documents. The process laid down in the agreement/AOA may be followed to add or remove partner(s). Legal advice would be required if the document doesn’t state the partner addition/removal procedure.
• The application for removal of a partner has to be submitted to the DET or the relevant Freezone Authority. The procedure for adding and removing a partner is similar. Submit all documents for partner removal along with the application.
• All the company documents have to be amended on the removal of a partner. Receiving the partner removal approved from the authority, amend the trade license, and notify the partnership change to departments such as the MOHRE and Dubai Municipality.
• All the financial matters must be settled with the removed partners. No financial liabilities in respect of the company should be pending with the removed partner. Avoid future legal complications by settling financial obligations, including capital investment and loans.

Investors can set up a company in the UAE themselves or jointly with Emiratis or other expatriates. The types of business entities in the UAE are:

• Sole Proprietorship – A business entity fully owned by an individual. A single owner will hold all the authority and responsibilities of the company.
• Limited Liability Company (LLC) – Companies formed by 02 to 50 shareholders. LLC is the most popular company structure in the mainland business jurisdiction.
• Professional Partnership Firms – Professionals such as legal advisors, consultants, and medical professionals can set up a firm offering professional services. The professionals will share liability according to their role in the firm.
• Joint Venture – A joint venture is an ideal option for project-based partnerships.
• Free Zone Establishment (FZE) – FZE is a single-shareholder free zone company.
• Free Zone Company (FZC) – FZC is a free zone entity type with 02 to 50 shareholders.

You can also add a business partner after registering a company in the UAE. A stipulated procedure exists for the addition/removal of business partners. Kiltons Business Setup Services has been supporting investors across the UAE by delivering customised services according to their needs. Navigating through the entire process smoothly requires expertise and knowledge.

Kiltons can handle the procedure on your behalf while you focus on business operations.

Get in touch with us right away if you are looking to add a new business partner.