Mainland Company Formation in UAE

UAE is one of the safest countries in the world and also the trading hub of Middle East. Being a tax haven, with a strong network of Banks, businessman find UAE as an ideal location to setup company and bank account.

As per Commercial Company Law of UAE, a company is defined as a contract under which two or more persons are committed to participate in an economic enterprise with the objective of profit realization by contributing a share in capital or work and dividing between themselves the profit or loss resulting from the enterprise. Article 8, Clause 3 of CCL also says that a company can be incorporated or held by a single person in accordance with the provisions of this Law.

Limited Liability Company (LLC) is a popular company structure in the Mainland of UAE. Investors can setup a Limited Liability Company with a minimum of 2 shareholders and up to 50. The major shareholder (51% ownership of the company) is vested among the UAE National Sponsor and the rest 49% ownership can be remained with the foreign investors.

The recent cabinet decision has granted 100% ownership in mainland company in selected industry sectors by the expatriates and eliminates the requirement of local sponsor for the selected industry sectors and business activities.

The changes made to the Federal law No. 2 of 2015 on commercial companies and the amended law No. 26 of 2020 apply to any entity involved in commercial, financial, industrial, agricultural, real estate or other kinds of economic activities in the mainland.

The 100% ownership in mainland company for the expat is subjected to certain capital requirements and conditions laid out by the UAE Government’s Cabinet decision. There is a minimum share capital required for obtaining 100% ownership in mainland (onshore) companies in UAE and it varies from AED 2 million to AED 100 million approx., depending on the industry sector and the business activity chosen by the investor.

There are other types of company structures in the mainland of UAE. Investors can choose them by assessing the company requirements and business objectives. Expert Business Consultants at AURION will guide you through various available Company Structures in the Mainland of UAE and choose the right option for your business.

Forms of Companies

1. SOLE PROPRIETORSHIP

A Sole Proprietorship is a business owned by an individual, not a company. This individual will possess 100% of the business, control the all part of its activities and keep 100% of any profits. He or she will likewise be 100% in charge of business obligations and some other financial commitments.

2. CIVIL COMPANY

A Civil Company is a business partnership for professionals such as doctors, lawyers, engineers and accountants.

3. ONE PERSON LIMITED LIABILITY COMPANY

The one person limited liability company is owned by one natural or one corporate body. This company is different from other forms that require at least two parties to sign a contract. The one-person company comprises of only one person. It is like the sole-proprietorship however they vary in a few provisions, the most important of which is that its liability is limited to the single partner’s share whereas in the sole-proprietorship the liability is unlimited.

4. PRIVATE SHAREHOLDING COMPANY

A Private Shareholding Company (Private Joint-Stock Company) is a partnership of 2-200 people. A minimum capital of AED 5,000,000 must be invested by the partners in the business.

5. PUBLIC SHARE HOLDING COMPANY (PUBLIC JOINT STOCK COMPANY) PJSC

Company whose capital is divided into transferable shares of equal value is the Public Share Holding Company.

6. LIMITED LIABILITY COMPANY

A Limited Liability Company (LLC) is an adaptable type of enterprise that mixes elements of partnership and corporate structures. An LLC must have between 2-50 investors, every one of whom is liable just to the extent of his or her share in the company’s capital. Except for public shareholding organization, an LLC can be changed to any other legal form.

7. SIMPLE LIMITED PARTNERSHIP

Simple Limited Partnership is formed between a minimum of two partners that is one general partner and one limited partner. The general partners are liable for the liabilities of the company to the extent of all their personal and business assets; the limited partners are liable for a share of company liabilities equal to their share of the company capital.

8. PARTNERSHIP COMPANY

A single business where two or more people share the ownership is the Partnership Company. Each partner contributes to every aspects of the business and the company must be administered unless a contract assigns administration to one partner or to another party.

9. BRANCH OF A FOREIGN COMPANY

A branch of a foreign company can carry out professional activities and some commercial and industrial activities. For practicing commercial and industrial activities, an approval from the Ministry of Economy is required.

10. REPRESENTATIVE OFFICE

A Representative Office for Commercial Activities isn’t a business structure in its own right but it’s a business activity that a branch can conduct. It has its own criteria, which incorporates the authorization to promote and market the business of the parent company – however not conduct business operations. A Representative Office requires a Local Service Agent (LSA), who can be a UAE National or a company owned by at least one UAE Nationals.

The Agent’s duties towards the company and third parties shall be limited to rendering necessary services to the company without his bearing any financial liabilities or commitments related to the company or its branches and offices inside and outside the State.

11. BRANCH OF DUBAI – BASED COMPANY

A Branch of Dubai- based Company must carry out one or all the activities that are included in the main company license. For a company having multiple branches, each branch can carry out various activities as long as they are all included in the original license for the main company.

12. BRANCH OF UAE- BASED COMPANY

A Branch of a UAE-based Company must carry out one or all the activities that are included in the main company license. Different activities can be undertaken by each branch for a company with multiple branches, as long as they all were included in the original license for the main company.

13. BRANCH OF A GCC- BASED COMPANY

A Branch of a GCC-based Company must carry out one or all the activities that are included in the main company license. Different activities can be undertaken by each branch for a company with multiple branches, as long as they all were included in the original license for the main company.

While other GCC countries may follow various rules in terms of combining activities, for Dubai branch licenses, activities of the same group only will be accepted, regardless of whether other activities are registered in the GCC main company.

14. BRANCH OF A FREE ZONE COMPANY

A branch of a free zone company can practice professional, commercial and industrial business as long as the main company’s activity is authorised in mainland Dubai. If the main license of your company was issued in a UAE free zone, (not as a branch of a foreign company), then you can obtain a branch license from DED in order to expand your operations to mainland Dubai.

15. INTELAQ (Home-based business for UAE Nationals)

An Intelaq License Company can only be established by UAE Nationals. It is a home-based business which can conduct almost any type of professional, trade or artisan business. The business must be reasonable to operate in a residential atmosphere. The environment or the health of a person must not be harmed by the business and also should not generate noise or other irritants that could negatively impact neighbours. The following legal forms can be taken: Sole Establishment, LLC, Civil Company and Partnership. Intelaq license holders are not allowed to sponsor employees.

16. SME LICENSE

An SME license can be given to businesses that are owned 100% by UAE Nationals and can take any legal form. This license is valid for three years and permits the owners to sponsor employees.