After incorporation, opening a company bank account is one of the most important tasks for running a business. In order to avoid ambiguity in the future, all personal transactions should be separated from the business transactions. The requirements of a business account are different from personal banking, so the account should be opened with the most appropriate and relevant bank. This ensures the maintenance of a separate, clean and accurate record, which is necessary for tax purposes as well.
According to the Dubai Economic Report of 2018, banking, capital markets and insurance activities accounted for the third largest sector that contributed to the Dubai’s GDP in 2017, generating value added of AED 40.5 billion or 10.4 % of the total. The sector also ranked 11th among 20 sectors, in terms of employment. Banks and insurance companies are major contributors to the growth of financial activities in Dubai. Dubai is also home to the second largest conventional bank in the Middle East, Emirates NBD, and also to the third largest Islamic bank in the world, Dubai Islamic Bank.
Dubai is steadily occupying the global financial arena, as the second largest and most diversified financial center in the region. The UAE has 49 banks, mainly divided into:
- Foreign banks, namely, HSBC Bank Middle East Limited, National Bank of Bahrain, Banque Misr, Bank of Baroda, Barclays Bank PLC, Habib Bank Ltd, Habib Bank A.G Zurich, Standard Chartered Bank, CitiBank N.A, United Bank Ltd., National Bank of Kuwait, Doha Bank, ABN Amro, Royal Bank of Canada etc.
- Domestic banks, including, National Bank of Abu Dhabi, Abu Dhabi Commercial Bank, Arab Bank for Investment & Foreign Trade, Union National Bank, Commercial Bank of Dubai, Dubai Islamic Bank, Emirates NBD Bank, Emirates Islamic Bank, Mashreq Bank, Sharjah Islamic Bank, Bank of Sharjah, United Arab Bank, InvestBank, RAK Bank, Commercial Bank International, National Bank of Fujairah, National Bank of U.A.Q, First Abu Dhabi Bank, Abu Dhabi Islamic Bank, Dubai Bank, Noor Islamic Bank etc.
International banks tend to give preference to multinational companies, having previous bank accounts in their home countries. Local banks provide good support to local organizations. Banks provide various banking options to companies, on the basis of their respective jurisdictions of operation.
Corporate Bank Account Facility may be available for either of the following companies, on the basis of their location–
- Mainland Company
- Free Zone Company
- Offshore Company
The most hurdles are usually faced by Offshore or International Business companies. As the business is not operational within the boundaries of UAE, it becomes a lengthy process to open a corporate bank account. The shareholder has to provide documents from their business in the home country as proof.
Similarly, Free Zone companies have their own respective limitations, and it is relatively easier for a Mainland company to open a corporate bank account.
THE MOST IMPORTANT FACTORS FOR THE OPENING OF A BANK ACCOUNT ARE:
- All Company documents,
- Brief Business Plan,
- Shareholder’s business profile, passport, visa, IDs & other company documents, which is owned by him/her,
- If shareholder is Corporate Entity then share certificate of sister companies and all UBO’s (Ultimate Beneficiary Owner’s) profile, passport and IDs,
- Normally banks required $50,000 to $150,000 as Minimum Maintenance Balance, bank are giving preference to those who are buying any investment products also.
- Preference is given to shareholder(s) having the UAE residence Visa,
- CV of shareholder(s),
Some difficulties that may be faced
Businessmen tend to face difficulties in getting compliance approval from the bank because of inadequate provision of the above mentioned KYC documents. The KYC (or “Know Your Customer”) documents enable the banks to obtain information about the identity and address of the customers. This process helps to ensure that the bank’s services are not misused.
Sometimes, the UBO details are not properly provided. This absence of information leads to mistrust. Another common practice is the owners’ performance of some other activity, differing from the one mentioned to the bank. Such behaviors result in a loss of credibility of the owner and the business.
Companies should, therefore, get incorporated within the most appropriate jurisdiction.
With an experience of more than 17+ years and comprehensive knowledge of all the business zones, the consultants at Adam Global can help you select the most suitable business zone that matches your professional requirements. To learn more about the important factors that affect your credibility with a bank and the process of opening a bank account, please contact Email: [email protected]
References: Dubai Economic Report 2018, The Department of Economic Development, Government of Dubai List of banks from Central Bank’s articles