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Mainland Company Formation

Dubai’s strategic location, free-tax policy, open competition, diversified economy and excellent infrastructure has transformed it into a regional hub and investment destination in many sectors of business. Major industries that drive the business in Dubai include Real Estate, Tourism, Shipping, Media, IT, Retail, General Trade, Gold & Diamond Trade, Exhibitions and Banking.

Before setting up your business in Dubai or anywhere in the UAE, it is very important to understand and select the right company type at the beginning to ensure long term objectives of your business are secured.

 

A key requirement for setting up a business in Dubai mainland or onshore is that it must be formed in association with a UAE national(s), known also as a local sponsor. Local sponsor acts either as a shareholder in a company or as local service agents without holding shares in a company.

 

The role of the local sponsor is determined based on the company type and business activities. For instance, in a Limited Liability Company (LLC), a local sponsor should hold minimum 51% shares, whereas in a professional sole establishment, civil company, or a branch company, local sponsor can be appointed as an agent (without ownership of shares).

 

Mainland companies are registered and licensed by the Department of Economic Development (DED) in each Emirate.

MAINLAND COMPANY TYPES

Below is an overview of company structures that you can setup in Dubai mainland:

Mainland Company Types:

  • Sole Establishment– Sole Establishment or Proprietorship is a legal entity formed in the mainland under the name of a sole proprietor. The liability of the Sole Establishment is not limited meaning that the owner is personally liable, without limit and to the full extent of his assets, for the liabilities of the establishment.

 

  • Limited Liability Company– A limited liability company (LLC) is one of the widespread companies formed in the UAE. A foreigner can be a shareholder in LLC and the liability of the shareholder is limited only to the extent of its share in the capital of LLC. According to the UAE Federal Commercial Companies Law, 51% of shares of LLC shall belong to a UAE national and 49% of shares can be owned by a foreign individual or entity.

 

  • Civil Company– A civil company is an association or partnership wherein two or more persons agreed to carry out professional or consultancy Professional activities are those that are being provided using intellectual abilities, know-how, acquired information or professional skills. Such activities include medical clinics, management consultancy, legal consultancy, IT consultancy, HR consultancy, training and similar services.

 

  • Public Joint Stock Company– Public Joint Stock Company (PJSC) is defined as an organization whose capital is divided into negotiable shares of equal value and a partner therein shall be liable only to the extent of his share in the capital of the company, in accordance with the UAE Federal Commercial Companies Law (the ‘Law”).

 

  • Private Joint Stock Company– A Private Joint Stock Company is defined as an organization whose capital is divided into negotiable shares of equal value and a partner therein shall be liable only to the extent of his share in the capital of the company, in accordance with the UAE’s Commercial Companies Law (the ‘Law”).

 

  • Branch or Representative Office– A branch is a legal entity that is separately registered but considered as part of a parent company. A parent company holds 100% ownership of a branch, which has to have the same name and conducts the same business activities as its mother company does. For example, a parent company is engaged in trading business, so its branch in the UAE shall be licensed to do the same type of trading. The branch must have its own budget and profit/loss statement.

Mainland License Types:

Dubai mainland business licenses are divided into three different categories:

    • Commercial License– includes trading, import, export and other activities categorized as commercial under the UAE laws;

    • Professional License– includes various professional and consulting services and issued to service providers, professionals, artisans or craftsmen;

    • Industrial License– includes manufacturing activities.

Key Benefits of Mainland Company Formation:

    • Ensures extra credibility in business while dealing with banks and government departments
    • Freedom to trade across Dubai and in the UAE
    • Ability to trade internationally and expand your presence
    • Freedom to grow your company and team
    • Ability to deal with the UAE or GCC governments
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