Companies looking to trade and operate in or from the UAE will typically be required to register a legal entity such as a company, branch or place of business. However, it is important you determine early what activities you want to carry out from this entity. Every company in the UAE requires a company license which is linked to its registered activity.
You have three options when setting up an operational entity within the UAE.
Under the UAE federal constitution, each emirate is permitted to set up “free zones” for general or industry-specific activities to encourage foreign direct investment. There are at least two free zones in every emirate; Dubai alone has more than 20. Each zone has its own laws and regulations.
The types of companies available within free zones differ, but the basic types available are:
The entities established in the free zone can have 100% foreign ownership and there is no requirement for having a local service agent for a branch or representative office.
Companies in the mainland are ruled by federal laws and regulations and can trade with local customers and globally.
The most common types of companies within the mainland for corporate clients are:
An LLC in the mainland can be usually 100% owned by an expat or a foreign company. In limited number of industries it requires a local UAE shareholder. A branch office, a representative office or a sole establishment in the mainland requires a local service agent to be their representative in front of the local authority. Every free zone specialises in a certain industry and business activities, so when you’re choosing a free zone jurisdiction you need to think about the type of activity and industry of your future company, though each of them have been trying to attract more companies recently and that specialisation might not be obvious at first sight. Almost all company licenses in the mainland are available in any sector, but the licenses are then linked with the permitted type of entities. Some business activities are reserved for LLC and some are for branches of foreign entities. A company license from a free zone allows the company to operate only within the free zone and outside the UAE, whereas a company license from the mainland can be used to operate in the whole UAE.
They are used to conduct business outside the UAE, but it is almost impossible to open a bank account for such a company in the UAE. Office space requirements An entity set-up in the UAE is always a combination of a license, a legal entity and a facility. The UAE has always been a real estate-driven economy and it is law that a company license is always linked to the size of the office space as stated in the official office space tenancy contract (ejari). Several free zones offer flexible desk solutions to provide companies with affordable options for office space. The conditions of minimum office space differ from one jurisdiction to another. Local statutory rules will often require companies to appoint officers such as a manager, directors and a company secretary.
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