Dubai offers plenty of business opportunities. However, federal law in the UAE stipulates certain regulations for setting up new business ventures. It may turn confusing and time-consuming for the outsiders to understand the rules of the land towards the commencement of a business.
There are three types of companies in Dubai and the UAE and those are
- Mainland Companies
- Freezone Companies
- Offshore Companies
Mainland companies in the UAE
Mainland companies are the most advanced type of business organisations and those are entitled to conduct both national and international business transactions.
The federal law has specific requirements and rules regarding mainland companies. The most important factor that is to be followed by the mainland company is that a UAE national must be holding 51% share of the subject company.
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Let’s have a cursory look at the procedures formainland business setup Dubai,UAE.
Type of Business You Plan to Pursue
The procedure to be followed depends on the type of company you plan to set up in Dubai. The trade license issued by the authority in Dubai, the UAE is solely based on the type of business. It may be noted that a service-provider or service-oriented business/ company that offer accounting/ auditing/ financial related services must have a Professional license. On the other hand, if your business is related to buying and selling of products, it will require a Commerical License. And the production-based industry will call for an Industrial License.
The Department of Economic Development (DED) is the authority to formulate financial strategies that ensure the economic growth of the UAE. Therefore, DED is the approved governmental agency to issue license for setting up a business in Dubai or any region in the UAE.
Legal Aspects and Structure of the Business
Every business will have a unique legal structure according to the type of business. The number of partners, the share percentage and nature/ authority of the shareholdings will depend on the legal structure. Limited Liability Legal structure is the most followed legal structure by foreign investors. Noetheless it is based on the discretion of the investor (s).
You must decide on a unique trade name for your business venture. It must be in tandem with the business you plan to commence. The tradename must be registered with the authorities in Dubai and will be valid for six months from the date of registration. The DED has the right to accept, reject or suggest amendments to the tradename submitted by you. If the tradename resembles any existing tradenames, it will be rejected outrightly.
The Department of Economic Development issues initial approval for your business proposal. The approval will contain details regarding the business such as legal structure, type of business, tradename etc.
Prepare and Notarize Memorandum of Association (MOA)
The Memorandum of Association (MOA) is the main aspect of any business entity. You will have to get it prepared by a credible legal firm or notary based on the legal structure of the business. The partners have to agree on the MOA and sign the document. An agreement has to be concluded with the UAE national prior to be the Local Service Agent (LSA) for your business. The UAE national associated with your business will act as an intermediary for all the legal and official formalities.
Acquire an Office
Office space is an essential requirement for the mainland company in the UAE. A tenancy contract has to be signed with the concerned person or authority to obtain the office space. The regulations mandate an office space of a minimum of 200 sq ft area for mainland company formation.
The competent authority will review your application along with the documents. Subsequent to final verification of the documents, a payment voucher will be issued for paying the fee for the trade license. The license fee has to be remitted within 30 days from the issuance of the voucher.
Advantages of a UAE Mainland Company
A mainland company can do business anywhere in the UAE. There are no restrictions regarding establishing new offices, additional branches and so on. This lures many of the investors to opt for setting up of mainland companies.
More Trading Opportunities – The mainland companies can undertake business and trading with any mainland company they intend to. However, this is not the case with Freezone companies. They are authorized to do business transactions in their authorised region only.
Financial Advantage - There are limitations or stipulations regarding the initial working capital of the mainland company. This enables even smallscale industrialists and startup companies to opt for mainland business.
Permitted to undertake government projects – Mainland companies can pitch for government contracts. They can be part of government projects, which would prove beneficial both in financial front and acquiring credibility. At the same time Freezone companies cannot pitch for government projects. They are entitled only for private contracts and projects.
Documents required for Individual shareholders
- Copy of passport and EID of individual shareholders
- The expat shareholders are required to submit the existing employer NOC. This is not applicable for UAE and GCC nationals.
- Visa copy and entry stamp (applicable for visit visa shareholders)
After reading this article, you might have understood the process and the requirements for setting up a business in Dubai. We will advise setting up of mainland business, which will be beneficial for the growth of your firm. Kiltons Business Setup consultants have been aiding business firms and individuals in establishing mainland businesses in Dubai successfully. Our expert consultants will guide you regarding the process and would do the needful for the hassle-free conclusion of the process. You may contact us today to know more.