UAE Company Formation – Business Consultants in Saudi Arabia

Company Formation

Establishing a company in the UAE is a strategic move for businesses aiming to access markets in the Middle East, Africa, and South Asia. The UAE provides various options for company formation, including mainland, free zone, and offshore companies. Each type offers distinct advantages depending on your business nature, ownership preferences, and operational goals.

Key Types of Company Formation in the UAE:

1. Mainland Company

2. Free Zone Company

3. Offshore Company

1. Mainland Company Formation

A mainland company is registered with the Department of Economic Development (DED) in the respective emirate, allowing you to operate both within the UAE and internationally. Mainland companies can also engage with the local market and government entities.

Requirements for Mainland Company Formation:

Local Sponsor: Previously, a local Emirati sponsor holding 51% of shares was mandatory, but as of June 2021, full foreign ownership (100%) is permitted for many business activities, eliminating the need for a local partner in several sectors.
Business License: You need to obtain a license based on your business activity:
- Commercial License (for trading).
- Industrial License (for manufacturing).
- Professional License (for service-based businesses).
Office Space: A physical office and a lease agreement are required.
Initial Approval: Submit necessary documents like passport copies and a business plan to the DED.
Trade Name Registration: Register your trade name with DED.
Memorandum of Association (MoA): Draft and notarize the MoA, detailing shareholder roles and responsibilities.

Benefits of a Mainland Company:

Free trade across the UAE and internationally.
No currency restrictions.
Can conduct business with government agencies.
No limit on visas, depending on office space.

2. Freezone Company Formation

Free zones in the UAE are designated economic areas offering favorable business environments, tax benefits, and specific regulations. Free zone companies are generally restricted to operating within the free zone or outside the UAE

Requirements for Free Zone Company Formation:

Free Zone Selection: Choose a suitable free zone based on your industry and location. Popular options include:
- Jebel Ali Free Zone (JAFZA) – Dubai
- Dubai Multi Commodities Centre (DMCC) – Dubai
- Abu Dhabi Global Market (ADGM) – Abu Dhabi
- Sharjah Airport International Free Zone (SAIF Zone) – Sharjah
Legal Structure: Choose your legal entity type, typically:
- Free Zone Establishment (FZE) for a single shareholder.
- Free Zone Company (FZC) for multiple shareholders.
Business License: Obtain a license based on your business activity:
- Trading, Industrial, or Service License.
Office Space or Flexi-desk: Most free zones offer flexible office arrangements like flexi-desk or virtual offices.
Capital Requirements: Minimum capital requirements vary by free zone, with some zones not requiring any.

Benefits of a Free Zone Company:

100% foreign ownership.
0% corporate and personal income tax.
Full repatriation of profits and capital.
Exemptions from customs duties on goods and services.
Quick and easy company setup.
Access to modern infrastructure and business amenities.

3. Offshore Company Formation

An offshore company is a legal entity established in a jurisdiction outside the country where it primarily operates. Offshore companies are typically used for asset protection, holding companies, or international trading, and they generally do not conduct business within the UAE.

Requirements for Offshore Company Formation:

Jurisdiction Selection: Offshore companies can be formed in jurisdictions such as Jebel Ali Offshore (Dubai) or RAK International Corporate Centre (RAK ICC) in Ras Al Khaimah.
No Physical Office Required: Offshore companies do not need office space in the UAE.
Directors and Shareholders: Offshore companies need at least one director and one shareholder, which can be individuals or corporate entities.
Bank Account: Offshore companies can open bank accounts in the UAE or internationally for asset holding and transfers.
No Local Sponsorship: Offshore companies can be fully foreign-owned without the need for a local sponsor.

Benefits of an Offshore Company:

100% foreign ownership.
No corporate or income taxes.
No physical presence required in the UAE.
Confidentiality and asset protection.
Ability to hold assets and intellectual property globally.

General Steps for Company Formation in the UAE:

Select a Business Activity: Decide the type of business (e.g., trading, service-based, manufacturing).
Choose a Legal Structure: Select the appropriate structure, such as LLC, sole proprietorship, or branch office.
Select a Jurisdiction: Based on your business needs, choose to register in the mainland, a free zone, or offshore.
Register a Trade Name: Select and register a unique trade name with the relevant authority.
Obtain a Business License: Apply for the appropriate license based on your activity (commercial, industrial, professional).
Submit Documents: Submit required documents such as passport copies, MoA, shareholder details, lease agreement, and business plan.
Get Necessary Approvals: Some sectors may need extra approvals from relevant ministries (e.g., medical, legal services).
Visa Application: Once the company is formed, apply for residency visas for employees and shareholders, if necessary.
Open a Corporate Bank Account: Open a business bank account for managing company finances.