What are the different kinds of entities for a Company Formation in UAE

Foreign entrepreneurs who decide to carry out a Company Formation in the UAE can choose between eight main legal entity options. These are the following:Professional FirmsBranch and Representative officesJoint Venture CompaniesShareholding CompaniesLimited Liability Company FormationMainland Company Formation in DubaiOffshore Company FormationImportant to realize: If you decide to start, for example, a Company Formation in IFZA or a Company Formation in Sharjah Media City Free Zone (or any other Free Zone) the options will be the same.

How to apply for your Business License

The type of license for which you are going to apply will depend on the productive activity to which your company is dedicated. The activities that you can do in some of the Free Zones are the following:Music VideosScript WritingGaming DevelopmentIllustrationRadio Content ProductionEducational Content MaterialTV ProductionPrint Content ProductionAnimationCorporate Film ProductionWeb Design and DevelopmentPublic RelationsMarketing and CommunicationsSoftware DevelopmentComposing and songwriting Note: This is only a list of the most common activities, if you want to see all the available activities you can go directly to the nearest DED service center, or you can see it through its website.Select an office space In a Free Zone, you can rent or buy an office space, the requirements will depend on the number of employees and the productive activity of your company.Approval, Registration, and License Companies established in a Free Zone must follow the regulations of the respective Free Zone. To receive the necessary approvals, you must submit a series of documents. These documents may vary depending on the type of company, the type of productive activity, and the requirements of the Free Zone authority. Below is a detailed guide with all the steps and documents required for the different approvals:Initial approval: Firstly, to get the initial approval you must submit the following documents.Completed application formColored Passports copies of the shareholders and the director for the new Company (in case you are forming a new company)Business PlanCopy of the Registration Certificate and of the existing Trade License (if you already have an established company, please note that this only applies to local companies)Signature of the shareholders of the company and the manager of the new company.Audited financial reports valid for two years for the corporate entity or personal bank reference of the individual shareholder.Letter of intentNo Objection Letter from the current local agent (for individuals)Unit title deedRegistry Identification Code Form (RIC) for the director of the company (original and certified) Important to realize: Those who work as Freelancers must submit fewer documents:CVBank Reference LetterApplication for registrationRegistry Identification Code Form (RIC) (Original and duly certified) Registration After receiving initial approval, you will need to pay the registration fee and license fees. The cost of your license will depend on the type of license you need. The documents to register are the following:Completed application registrationBoard Resolution appointing manager (Attested and Notarized)Articles and Memorandum of Association (Attested and Notarized)Passport-size photo of the Director of the company (must be against a white background)Share capital informationPower of Attorney given to the director of the company (Attested and Notarized)Visa process and Licensing At this point, the corresponding authorities will be in charge of preparing the lease agreements. After you have gone through the entire process, the Department of Economic Development will give you the license. Lastly, but not least, after all this process, the Visa application process will start.

How to Define the Location while applying for Business Licensing?

All companies in the United Arab Emirates must have a physical address in order to operate legally. The location of the company must meet the requirements defined by the Department of Economic Development of the respective Emirate, as well as receive the approval of the local municipalities. The Warehouse and office rental agreement must be delivered together with the other documents. Some Emirates require investors to certify these agreements. In the case of Dubai, Ejari is the entity in charge of certifying the agreements.Additional Government Approvals In some cases, you will need the approval of government entities that govern certain productive activities. Some of the government entities and the activities they govern are the following:Ministry of Interior: Driving schools, fire equipment, used-car dealers, safety and alarms systems, used auto parts and also general transport.Ministry of Justice: Legal consultancy and Legal activitiesLocal Municipal Department: Architectural and engineering affairsTelecommunications and Digital Government Regulatory Authority (TDRA): Activities related to telecommunications.Executive Council: General Services, car clubs, ship and maritime agencies, and also charter trading.Ministry of Economy: Insurance consultancy and Insurance activities.Local Health Departments: Activities related to the health sector.Supreme Petroleum Council: Offshore and Onshore gas and offshore and onshore oil drilling operations.Get your Business License After performing all the steps mentioned above, entrepreneurs can search for their respective licenses through the service centers or their websites.

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At Connect Zone we will assist with every step of company formation in UAE or business setup in Mainland Dubai & across uae, there are also other corporate services your business will need after. Our service areas include PRO services, business centers in Dubai options, staff outsourcing, recruitment, bank account opening, document clearing, document and data verification, translation, VAT registration, bookkeeping and tax consultancy, secretarial and related services and of course company formation in mainland, free zones and offshore.

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Frequently Asked Question's

The economic boom of the United Arab Emirates in recent years has brought with it the interest of hundreds of new entrepreneurs looking for an opportunity to expand their economic power. Also, factors such as government support, 100% ownership, no corporate and personal tax, and a robust network of international and local commercial Banks, have positioned the UAE as the must-watch region when it comes to investments.

The United Arab Emirates is home to thousands of multinational companies and in its territory, there are more than forty Free Trade Zones that offer different packages to form a company.

Free Zones offer expatriates 100% of the shares of the business and can hire anyone, from anywhere in the world. In the UAE there is total freedom for a global investor to start a Company Formation in the UAE and to carry out the necessary procedures, such as opening a corporate bank account.

The cost of Company Formation in the UAE can start at AED 25,000 for a Trade Company License in Dubai Mainland. If they prefer, investors can also create a civil Company with a single shareholder and a Local Sponsor for a cost of AED 20,000.

For the UAE and GCC Nationals, it is not necessary to acquire a Local Sponsor to form a civil Company.

There are three types of economic jurisdictions available for Company Formation in the UAE.

All jurisdictions have their regulations and benefits depending on the type of company. The economic jurisdictions are the following:

Mainland Company Formation in Dubai

A Mainland Company Formation in Dubai (also called Onshore Company) is licensed by the Department of Economic Development (DED) of Dubai. These types of companies are authorized to carry out commercial activities both in the local market and outside the United Arab Emirates.

Important to realize: If you decide to start, for example, a Company Formation in Abu Dhabi or a Company Formation in Sharjah, the license will be issued by the Department of Economic Development of the respective Emirate.

Free Zone Company

The Free Zones in the United Arab Emirates are designed to carry out commercial activities between them. Establishing a company in this area results in many benefits for investors, for example:

100% Foreign Ownership
Tax exemption
Custom privileges
Affordable cost for high-quality labor
And lastly, a well established Road Network and Transport Network

Offshore Company

Many investors prefer to start with the formation of an offshore Company, also known as the non-resident Company in Ras Al Khaimah Economic Zone and Dubai.

This is the best option to do business internationally, taking into account that you cannot do business in the United Arab Emirates under an Offshore Company. Investors also prefer to form an Offshore Company as a Holding Company, in this way they can hold:

Intellectual property rights like trademark, copyright, patent, among others
Licensing of franchises of companies
The shares of other businesses in other economic jurisdictions as a holding company

Foreign entrepreneurs who decide to carry out a Company Formation in the UAE can choose between eight main legal entity options. These are the following:

Professional Firms
Branch and Representative offices
Joint Venture Companies
Shareholding Companies
Limited Liability Company Formation
Mainland Company Formation in Dubai
Offshore Company Formation

Important to realize: If you decide to start, for example, a Company Formation in IFZA or a Company Formation in Sharjah Media City Free Zone (or any other Free Zone) the options will be the same.

The Department of Economic Development (DED) is the authority in charge of issuing business licenses to all types of companies in the UAE. The main requirement for entrepreneurs is to choose a Trade license that suits the needs, objectives, and principles of their company.

Among the Trade Licenses, you can choose from are the following:

Professional License

A Professional License in Dubai is aimed at those Civil Companies or Sole Establishments that depend on No Investors/Partners.

The individual who owns this license can enjoy 100% ownership, and to acquire it a UAE National must register as their Local Sponsor. However, the sponsor will not hold any share in the Company.

Payment of the Local Sponsor Fee must be made annually.

Commercial License

A Commercial License in Dubai includes all commercial activities that can be carried out in the territory of the United Arab Emirates and is mainly aimed at Limited Liability Companies.

As stipulated in article 22 of the Emirati company laws, a UAE National must hold at least 51% of the company’s shares. In other words, if you acquire this license you will have to hire a local sponsor who will hold the 51% of shares and you will have to pay them annually.

The local sponsor can be a corporate sponsor or an individual.

Industrial License

In order to carry out all kinds of activities related to the production or manufacture of materials and products, you need a valid Industrial License in Dubai. The government entity in charge of issuing this license is the Department of Economic Development. However, to operate legally you need the approval of other entities, for example, the municipality of the corresponding Emirate.

Tourism License

A Dubai Tourism License is an official document that allows entrepreneurs to carry out activities belonging to the travel and tourism sector in the United Arab Emirates. The demand for this license increases every day, so obtaining this license has become a mandatory requirement in order to regulate the tourism sector.

Important to realize: Every Trade License Renewal and Trade License Fee will vary depending on where your business is located and the type of license you choose.

Whether you decide to start a Mainland Company Formation in Dubai or a Company Formation in Abu Dhabi, you need to know the procedure to carry it out.

The steps to start Company Formation in the UAE are the following:

Define a Business Activity

The Business Activity is the basis when choosing the type of license and the legal form, enterprises can have more than one activity at a time and can choose from more than 2,000 activities to carry out in the United Arab Emirates.

Choose the Legal Form

The legal form will depend, above all, on the requirements of the company. This aspect is the basis for identifying the laws and regulations applicable to your company in the United Arab Emirates.

The legal forms available for a Company Formation in the UAE are the following:

Private Joint Stock Company (PrJSC)
Public Joint Stock Company (PjSC)
General Partnership
Limited Partnership
Limited Liability Company (LLC)
Local Company Branch
Foreign Company Branch
Civil Company
GCC Company Branch
Holding Companies
Sole Establishment
And lastly, Free Zone Company Branch

Important to realize: Each legal form must coincide with the activity of your business.

Trade Name

The Trade Name is what distinguishes one company from another, it also reflects the essence and form of the business. An investor can apply for the Trade Name at the Department of Economic Development of each Emirate, through the mobile application or its website.

The aspects that you must take into account when choosing your Trade Name are the following:

At the end of the name, the acronym of the business structure (legal form of the Company) must be placed. For example, LLC, PjSC, EST, PrJSC.
It must not include foul language and may not violate the moral values of the United Arab Emirates.
May not contain names of religious deities or government authorities.
Lastly, the name cannot be previously registered by another company and cannot bear any resemblance to any well-known organization.

During the application process, the DED will give you a voucher that you will use later as a reference when paying.

Also, you should know that the DED is the entity in charge of registering the name. However, the Ministry of Economy is in charge of registering the trademark.

Initial Approval

Firstly, obtaining the initial approval means that the government of the United Arab Emirates does not present any objection for your company to establish itself in its territory. It also allows entrepreneurs to advance in the process of their Company Formation in the UAE, however, they still do not have the authorization to practice the Business Activity.

Some activities require additional approval from government entities related to that activity before obtaining initial approval.

In addition to this, foreign investors must obtain the approval of the General Directorate of Residency and Foreigners Affair before applying for initial approval.

MoA and LSA

Depending on the legal form of the Company Formation in the UAE, a Memorandum of Association (MoA) or a Local Service Agent (LSA) is required.

The MoA is a requirement for the following legal forms:

Limited Liability Company (LLC)
Limited Partnership
Private Joint Stock Company (PrJSC)
Public Joint Stock Company (PJSC)

Define a Location

All companies in the United Arab Emirates must have a physical address in order to operate legally.

The location of the company must meet the requirements defined by the Department of Economic Development of the respective Emirate, as well as receive the approval of the local municipalities.

The Warehouse and office rental agreement must be delivered together with the other documents. Some Emirates require investors to certify these agreements.

In the case of Dubai, Ejari is the entity in charge of certifying the agreements.

Additional Government Approvals

In some cases, you will need the approval of government entities that govern certain productive activities.

Some of the government entities and the activities they govern are the following:

Ministry of Interior: Driving schools, fire equipment, used-car dealers, safety and alarms systems, used auto parts and also general transport.
Ministry of Justice: Legal consultancy and Legal activities
Local Municipal Department: Architectural and engineering affairs
Telecommunications and Digital Government Regulatory Authority (TDRA): Activities related to telecommunications.
Executive Council: General Services, car clubs, ship and maritime agencies, and also charter trading.
Ministry of Economy: Insurance consultancy and Insurance activities.
Local Health Departments: Activities related to the health sector.
Supreme Petroleum Council: Offshore and Onshore gas and offshore and onshore oil drilling operations.

Get your Business License

After performing all the steps mentioned above, entrepreneurs can search for their respective licenses through the service centers or their websites.

Initial Approval receipt and all required documents.
Copy of the lease contract duly certified by the Real Estate Regulatory Agency (RERA)
Memorandum of Association duly certified (for all types of companies)
Additional approval of other government entities related to productive activities.
Local Service Contract duly certified (for companies and civil establishments that are 100% owned by Non-GCC Nationals.

Starting a Business in a Free Zone

Whether you decide to start the process of a Company Formation in IFZA or a Company Formation in Sharjah Media City Free Zone (or in some other Free Zone), you need to take into account the following steps:

Define the legal entity

The first thing you should think about is the legal entity of your company, you can choose between the following two types:

Free Zone Establishment (FZE)
Free Zone Limited Liability Company (FEZ LLC) or Free Zone Company (FZ Co.)

The difference between these two legal entities is based on the number of shareholders and whether the shareholder is a natural or legal person.

Important to realize: Not all Free Zones register both legal entities, you must check in advance with the Free Zone authorities preferably what type of company they can register.

Choose a Trade Name

Once you have chosen the legal entity of your Company Formation in the UAE, you must now choose a Trade name.

In most cases, it is recommended that you check with the relevant Free Zone authorities or the Department of Economic Development which names are allowed and whether the intended name has already been registered by another company.

In essence, the requirements of the DED concerning Trade Names are the following:

You cannot attack the moral values and public order of the United Arab Emirates.
At the end of the name contain the abbreviated legal form of the Company. For example, DMCC, LLC, FZE)
May not be previously registered by another company.
May not contain names of any government authority or religion.

The type of license for which you are going to apply will depend on the productive activity to which your company is dedicated.

The activities that you can do in some of the Free Zones are the following:

Music Videos
Script Writing
Gaming Development
Illustration
Radio Content Production
Educational Content Material
TV Production
Print Content Production
Animation
Corporate Film Production
Web Design and Development
Public Relations
Marketing and Communications
Software Development
Composing and songwriting

Note: This is only a list of the most common activities, if you want to see all the available activities you can go directly to the nearest DED service center, or you can see it through its website.

Select an office space

In a Free Zone, you can rent or buy an office space, the requirements will depend on the number of employees and the productive activity of your company.

Approval, Registration, and License

Companies established in a Free Zone must follow the regulations of the respective Free Zone. To receive the necessary approvals, you must submit a series of documents.

These documents may vary depending on the type of company, the type of productive activity, and the requirements of the Free Zone authority.

Below is a detailed guide with all the steps and documents required for the different approvals:

Initial approval:

Firstly, to get the initial approval you must submit the following documents.

Completed application form
Colored Passports copies of the shareholders and the director for the new Company (in case you are forming a new company)
Business Plan
Copy of the Registration Certificate and of the existing Trade License (if you already have an established company, please note that this only applies to local companies)
Signature of the shareholders of the company and the manager of the new company.
Audited financial reports valid for two years for the corporate entity or personal bank reference of the individual shareholder.
Letter of intent
No Objection Letter from the current local agent (for individuals)
Unit title deed
Registry Identification Code Form (RIC) for the director of the company (original and certified)

Important to realize: Those who work as Freelancers must submit fewer documents:

CV
Bank Reference Letter
Application for registration
Registry Identification Code Form (RIC) (Original and duly certified)

Registration

After receiving initial approval, you will need to pay the registration fee and license fees.

The cost of your license will depend on the type of license you need.

The documents to register are the following:

Completed application registration
Board Resolution appointing manager (Attested and Notarized)
Articles and Memorandum of Association (Attested and Notarized)
Passport-size photo of the Director of the company (must be against a white background)
Share capital information
Power of Attorney given to the director of the company (Attested and Notarized)

Visa process and Licensing

At this point, the corresponding authorities will be in charge of preparing the lease agreements. After you have gone through the entire process, the Department of Economic Development will give you the license. Lastly, but not least, after all this process, the Visa application process will start.