There are two alternatives available to entrepreneurs wishing to launch a new enterprise in the United Arab Emirates. Some decide to locate their enterprise in one of the nation’s free zones in order to profit from the numerous tax, duty, and repatriation advantages. While the others decide to register a business on Dubai’s mainland.
Which would be your best choice, then?
Well, the mainland option might simply be the best one for your business if you want to conduct direct business with the UAE local market, engage in a wide range of commercial operations, or work for the government.
Choosing your Business Activity
Prior to forming a business on the UAE mainland, you must first choose the sector where you will operate. The Department of Economic Development (DED) has a list of thousands of allowed business ventures, including manufacturing, farming, hospitality, and retailing. Mainland enterprises are permitted to engage in any of the more than 2000 DED designated activities, in contrast to several free zone companies that are limited to specific activities based on where they are located.
Determination of Legal Structure According to your Business
Legally, international business owners can establish a number of different corporate structures on the UAE mainland. Company in Mainland can have a Sole Proprietor or Civil Company. Sole Proprietorship requires 1 shareholder, while Civil Company involves 2 or more partners. A firm must be formed in the UAE mainland if it wants to conduct business under an industrial or commercial license (covering trading, industrial, and manufacturing activities). You’d need a local sponsor for this. However, a professional service firm can be established without a foreign sponsor and with 100% foreign ownership. Let’s delve deeper into this topic.
Choose a Local Sponsor or Local Serving Agent
Before submitting the final documents to DED for obtaining the license, it’s crucial to understand the role of a local service agent and their importance in the license process. Any professional license required for Dubai Mainland must have a UAE national or local service agent, who acts as anagent in the company but holds no shares. The foreign national or investor who establishes the business will hold 100% of the shares.
Name your Company
Choosing a memorable brand name that represents your brand’s values is challenging worldwide. In the UAE, there are additional factors to consider. It is important to note that derogatory language is prohibited, and corporate names cannot include references to religion or well-known organizations such as the “FBI” and “Mafia.” Your company name should include your entire name, including your last name, if you are using your given name for your business. When using corporation name in other languages, ensure that titles are presented as pronounced, not translated.
Get your Paperwork in Order
When you first go to the DED to reserve your desired business name and apply for your business license, you then give them the following paperwork: your license application; a memorandum of association outlining sponsor agreements and ownership percentages between all partners; an incorporation certificate (if more than one shareholders are corporates); the board resolution approving the LLC (if applicable); and copies of shareholder passports and visas.
Apply for Visa
A significant benefit of establishing a business on the UAE mainland is that business owners are free to apply for as many visas as they need, with no maximum limit. However, there is one catch: for each additional visa you apply for, you must rent an additional Space of workplace or warehouse space. However, the DED may be willing to negotiate this. For instance, if you operate a domestic cleaning business with 500+ remote workers, you probably won’t need to rent 50,000 square feet of office space. As the proprietor of a UAE mainland company, you can also sponsor dependents such as family, friends, and domestic employees.
Own Shares in your Company
Shares in your UAE mainland company can be acquired primarily in one of two ways: personally or through a company. While both options are possible, it is often more logical to hold your shares through a business. By doing so, you establish a strong legal structure that protects all shareholders in the event of any issues. For instance, if a shareholder passed away, the assets of your company will not be subjected to Sharia inheritance laws. Additionally, offshore businesses enable investors from outside the UAE to repatriate their money. Shares may also be owned through a foreign corporation, but you must first go through all the legalization procedures.
Find Office Space
Once you obtain your business license, it’s time to search for office space. In the UAE mainland, there are several common options available. Serviced offices, for instance, are owned and maintained by third parties. They come fully equipped with desks, phone, internet connectivity, and receptionists, allowing you to start working immediately. Typically, your lease payment includes electricity costs, rent, and the use of office supplies.
On the other hand, shell and core spaces require extensive fitting and decoration, which incurs additional costs in addition to the rent. Sublets fall somewhere in between; they usually don’t require decorating or furnishing, but you may need to provide your own office supplies and cover expenses separately from the lease.
Partner with a Company Setup Consultant
Finally, you have the option to work with a UAE-based expert or handle the company setup procedure on your own. Starting a business anywhere in the world can be challenging, and doing so abroad, particularly in the UAE with its complex legal system and requirements for company creation, adds further difficulty. By partnering with the Clever Corp Business Advisors, you can streamline the process, requiring only a few hours of your effort instead of the weeks it would take if done alone. Our expertise and local knowledge ensure that all necessary steps are executed accurately. For valuable services throughout the Mainland company formation process, contact us.