One: the shareholder who lives abroad and the manager who lives here
A trading company in one of the Dubai free zones, formed earlier this year, with a single shareholder who lives in Central Asia and has no intention of moving, and a resident manager — me, as it happens, under a no-objection letter from Polaris — who runs the company day to day. One bank approved the account in the week. A second bank, which we are opening as the backup every company should have, sent the questions that every bank now sends: why is the company in the UAE if the owner is not; what does the manager do and who pays him; does the owner have any relationship with the service provider; when will the owner move here; who will the company employ.
None of these questions is hostile and none of them is new. What is new is that they are asked in writing, in sequence, and the answers are filed. The bank is not deciding whether it likes the client. It is building the record that its own supervisor will read, and after a week in which the US Treasury designated three UAE trading companies and FinCEN put Dubai IP addresses on a red-flag list, that record has to be able to stand on its own.
So the answers we gave were short, true and the same in both files. The UAE incorporation is a commercial decision, because the goods and the customers are reached from here. The resident manager runs the operations and is paid for it; he holds no shares and has no claim on the profits. The owner has no connection to the service provider beyond the engagement letter. Residency for the owner is possible later and has not been applied for because nothing in the business requires it. Staff will be hired when the account is open, because salaries cannot be paid through the Wage Protection System without one.
The lesson is not that banks are difficult. It is that a company whose shareholder and manager are different people, in different countries, has a story, and the story has to be written down before the first account-opening form, not improvised across two banks in different words. Two inconsistent answers to the same question are the fastest route to a closed file I know of.
Two: can the council take my assets?
A founder with a factory in East Africa and a passport that makes every bank in this city read the file twice came to us, through an intermediary, for a holding structure. He had asked for a trust. We advised a foundation — DIFC if he wants the courts and the address, RAK ICC if he wants the same powers at a fraction of the running cost — and he accepted. Then, through the intermediary, came the question that tells you a client has actually understood what he is buying: if the foundation has a council, can the council members take the assets or the company from me?
It is the right question and it deserves a straight answer. A council is not a trustee. It has no beneficial interest and, under the DIFC and RAK ICC foundations regimes alike, it can be bound by a charter and by-laws that reserve the decisions that matter — sales, encumbrances, changes of beneficiary, changes to the council itself — to the founder, to a guardian, or to a defined majority that the founder controls. The two-member minimum can be met by the founder and by a legal person; the operating company itself can sit on the council. The risk is not that the law lets a council run away with the assets. The risk is a lazily drafted charter that gives a council it did not need to give, and a founder who signed it without reading the reserved-matters clause.
He also asked whether the foundation could itself be the founder of the trading company, instead of his creating the trading company first and transferring it. It can, and it is usually cleaner: the foundation subscribes for the shares at incorporation, the register never shows a transfer, and the equipment, formulations, licences and process charts he wants held outside the operating risk of the factory go to a vehicle that was never his personally. What the foundation cannot do, and we said so in the note, is protect him from a sanctions freeze or a criminal order; it protects against private claims against the founder, and that is the honest limit of the product.
Three: twenty visas on one desk
An adviser asked for a DIFC Innovation Hub company with twenty employee residence visas. The Innovation licence is one of the better-priced things the DIFC does: the incorporation and the first commercial licence together are a few thousand dirhams, the data-protection registration is under a thousand, and a shared desk at the Innovation Hub costs about AED 22,000 a year. What a shared desk does not do is sponsor twenty people. The DIFC allocates visa eligibility to premises, and a desk carries roughly three, sometimes fewer. Twenty visas means a real office, and a real office in the DIFC starts at roughly AED 23,000 a year for the smallest unit and climbs quickly with every square metre the visa count requires.
I set this out because the request is common and the arithmetic is not. The DIFC’s establishment card and personal-sponsorship deposit are paid once per company; the employment package is paid per person; and the premises decide how many persons there can be. A client who has been told that an Innovation licence gives him twenty visas for the price of a desk has been told something that is true in two of its three parts. Our offer to the adviser priced the desk honestly, priced the office alternative honestly, and said which one twenty visas requires.
Nothing about this is a complaint about the DIFC. It is the most transparent fee schedule in the country, and every line I have quoted comes from a service request we have paid. The complaint, if there is one, is about offers that quote the licence and leave the premises for later.
What the three have in common
A story that has to be written down before it is told to a bank. A charter that has to be read before it is signed. A visa count that has to be priced before it is promised. In every case the law did exactly what it says it does; the risk was in the gap between the product and the explanation of it. Closing that gap is most of what a corporate services provider is for, and it is the part that cannot be bought at a discount.
Mohanad Almeshal is Co-Founder and Corporate Counsel of Polaris Corporate Services, a licensed Trust and Corporate Service Provider in Dubai. The cases described are real; the identifying details are not.