Your Primer for Successful Business Setup in UAE Mainland
What are the primary differences in setting up a mainland company in the United Arab Emirates? We’re going to break it down for you as it has critical distinctions compared to UAE Free Zone companies. The most crucial thing you should know is a mainland company is an onshore enterprise licensed by an emirate’s Department of Economic Development. That enterprise can do business in the local market of their emirate as well as outside of the UAE.
What type of UAE mainland corporate structures can you choose?
When it comes to doing business on the UAE mainland, you have to consider your entity’s purpose. That means you’ll have to determine whether your enterprise will 1) perform commercial activities on its own, 2) advertise the services of a foreign parent entity or 3) participate in local tenders using experience acquired outside the UAE.
From there, you can make a more informed decision about what is the most optimal outcome for your business goals.
If you plan to set up and independent entity
You can establish mainland entities to independently carry out commercial activities that are classifiable into two groups by the Department of Economic Development:
Professional companies, or professional service companies (i.e., ICT, consulting firms, restaurants, etc.)
Commercial enterprises that carry out a trade or industrial activities (i.e., commercial brokers, food trade, manufacturing of any goods, etc.).
This classification, along with the number of shareholders determine what legal structures you can employ. You can incorporate a professional company under the Sole Establishment format, which grants you one shareholder, or as a Civil Company, with two or more shareholders. Some professional entities can also opt into a Limited Liability Corporation (LLC) structure when there are no restrictions on the part of the Department of Economic Development. If you are carrying out commercial activities, you can only establish your enterprise as an LLC.
An LLC requires that your enterprise have a local sponsor and that the ownership be majority Emirati, meaning that foreigners will only have 49% ownership. In contrast, the local partner will own at least a 51% stake in the firm. Any LLC that undergoes any commercial activities can form under this mainland structure.
As for a Sole Establishment/Civil Company, you will be able to form it with 100% of foreign ownership. You will have to appoint a local agent (Emirati national) to represent the company before the Immigration and Labour departments merely. The local agent will not play any ownership/managerial role in your entity.
If your enterprise will have corporate shareholders
For a mainland business with corporate shareholders, only an LLC can have a corporation as a shareholder in the allowed proportion of 49%. However, there are more attractive legal forms for representing the foreign entity in the UAE Mainland, which are Representative Offices or Branches of Foreign entities. The parent company has full ownership of these legal forms and only require you to appoint a local agent.
A representative office is a legal form that allows the entity to perform marketing activities on behalf of the primary foreign entity. An example of an entity could be a representative office for an overseas exhibition organiser that encourages Emirati companies to participate in events abroad. Representative Offices can only carry out promotional activities for their parent company’s products and services. They’re not entitled to conduct any professional activity, sign any contracts with customers on their own accord, or engage in trade.
Another possible format is a branch of a foreign company. This entity can use the parent company’s international experience to participate in government tenders, as well as hold its own licence (for the same activity as the parent company) and operate under its own name. If a foreign company wants to do business in Dubai, it must apply for approval from the Dubai Ministry of Economy before acquiring their licence from the Department of Economy Development. The Ministry of Economy will require a bank guarantee equivalent to 13,500 USD or £10,350.43.
What are the available mainland licences?
As with all businesses in the UAE, not only must you register your enterprise, but you also have to apply for a licence that covers the auspices of your business activities.
- General Trading: You can sell a variety of products.
- Other commercial activities: An example would be investment services.
- Trade of specific goods: The licence stipulates what products your company can trade, and you can only buy and sell those goods.
- Industrial: This licence covers the production of any goods.
- Professional: This licence covers activities that require special professional qualifications, such as management consulting.
What are the requirements for registering your mainland company?
Before applying for your Mainland license, you should ensure that you have a pre-arrangement with the local sponsor/agent and decide about the commercial space that you are planning to rent out, as this decision will affect the whole procedure. To determine what type of commercial space to choose, you should look into the number of employment visas that you are going to need during the first year.
If you are registering a mainland LLC company, Sole Establishment or Civil Company, there are three paths you may pursue.
If you are renting office space of under 200 square feet with the Ejari rental agreement in a business centre, you can get up to seven visas issued once you receive approval from the UAE Ministry of Labour. If you opt for the Instant Licence route, which means that you go without an office space for your first year of activities, you will only receive visas for your shareholders. Finally, under the new Sustainability desk incorporation procedure that allows entities to register and renew based on a 50 square-foot Dedicated Desk, you will get visas issued to your shareholders without limitations and up to two work permits. As for Branch and Representative offices, you must have an office space of up to 200 square feet with the Ejari agreement.
What are the other conditions for UAE mainland company incorporation?
A lot of the required documentation will depend on what part of the mainland you’re choosing to operate, as well as the commercial activities you will employee. Our expert UAE business formation team at Europe Emirates Group will look at the characteristics of your enterprise to recommend the legal structures and licences that work best for your needs. After that, we will meet your end-to-end business needs so you can tap into the potential stemming from the Emirati economy. Are you ready to start your UAE mainland adventure? Don’t hesitate to get started.
Corporate Services, Europe Emirates Group