All you need to know to setup your company in Dubai mainland.
The definition of the Mainland is the most common terminology this is directed by the Federal Law No.2 of 2015 (the New Commercial Company Law, (NCCL)) which came into effect on 1st July 2015, which replaced the previous Commercial Company Law (CCL) that got initiated in 1984, under Federal Law No. 8 as amended.
The Mainland falls under various government entity such Ministry of Human Resources and Emiratisation (MOHRE) Department of Economic Development (DED), Dubai Immigration Department of Dubai Naturalisation and Residency Department (GRDFA).
DED which is a government body that bears the responsibility to supervise its function and support economic development with the responsibility of the following:
- Dubai Export Development Corporation
- Mohammed Bin Rashed Establishment to support and fund small and medium enterprises where it’s 100% owned by UAE National.
- Dubai Foreign Investment development Establishment
- License Activities Terms And Conditions
- Sales and Promotions
- Consumer right
- Intellectual-property protection
- The commercial compliance and consumer protection sector
- Registration and de-registration
There are many different legal commercial structures in DED and this is based on a few elements such as business activity, trade name, share capital, corporate structure of parent entity for corporate shareholders only…Etc
How to identify the appropriate business structure for your entity ?
We will mention below the available legal structure in DED which will help you to identify your business structure.
- Sole establishment owned by one person only expats in UAE or from abroad who are interested to conduct business in UAE but UAE National is mandatory to act as Local Agent only
Things to know about sole Establishment entity:
A commercial or industrial type sole proprietorship can be owned only by UAE nationals or GCC nationals.
The owner of a consultancy type of sole proprietorship should have a scientific qualification for the activity selected.
A sole proprietorship firm can have only one manager.
A sole proprietorship has no minimum requirement for business capital.
The trade name should be related to the activity.
A sole proprietorship can have branches, which can perform all activities included in the license of the parent firm.
The firm and its branches can be sold but the industrial or commercial type of firm can only be sold to UAE nationals or GCC nationals.
- The one-person company its A limited liability firm owned by an individual or a corporate body is called a one-person company. The difference between a sole proprietorship and this legal form is that the liability is limited to the shares held by the owning entity.
Things to know
A UAE national or GCC national can set up and own this legal form of firm.
A corporate body that is 100 percent owned by UAE or GCC nationals can own such a firm.
The owner is a shareholder and his liability is limited to the value of the shares he holds.
Share capital is as recorded in the Memorandum of Association
The trade name should include owner name, legal form (one person co.) and end with LLC.
- Civil company, this is a partnership for professionals in recognized fields such as doctors, lawyers, engineers, accountants, restaurants, professional services ( Documents clearing, Customs clearance ) and Any other business falls under professional services activity and the UAE national can act only as Local Agent.
Things to know
Partners of any nationality can be involved in this form. If the partners do not include any UAE or GCC nationals, the firms need a local service agent.
If the company is involved in engineering activities, one partner should be a UAE national who owns no less than 51 percent of the business.
If the company is involved in consultancy activities, the firm must be owned by professional partners practicing the same activity, with 100 percent ownership.
- Limited Liability Company LLC A limited liability company has two to 50 shareholders, each of whom is liable only to the extent of his or her share in the company.Things to knowNo professional or consultancy activities can be conducted by this form of the company except banking, insurance or investment.An LLC can conduct any industrial or commercial activity.51 percent ownership should be with UAE nationals, but profits can be accorded in a different ratio.LLC’s require a UAE-accredited auditor.
- Partnership company, the ownership is shared by two or more partners who fall into a general or limited partner category. Also, the minimum age for every partner should be 21. The following information must be shared in the memorandum of association and it’s most common best practice for setup an investments company and for group of a company the investment entity will act as shareholders.
Things to know
UAE nationals must be general partners in a simple limited partnership. Partners of other nationalities must be limited partners.
There is no restriction on the share of ownership of general or limited partners.
Limited partners should not intervene in the management or administrative issues of general partners. If they do so, they can become liable for all the business obligations.
you must also clear about the authorized signatories, their roles and powers. This has to justify the overall management criteria.
- Branch of a foreign company, A company registered abroad can have a branch in Dubai which will be its Dubai headquarters and under the business jurisdiction of Dubai and UAE. No import of goods is allowed by the branch and this should be done through a local trading firm. The branch is under 100 percent ownership of the parent company.
Things to know
UAE nationals are mandatory to act as Local Agent only, This agent can be an individual or a company. But it should be noted that the agent must be a UAE national or, in the case of a company, run by UAE nationals a board of resolution has to issued from the parent company for any changes on company structure such as adding director, revoke power, name changing, changes of UAE national Etc.
- Representative Office, Representative office is not a complete structure business and it’s only permit that allows a branch of a foreign company can conduct their business related matters in UAE mainly It has the authorization to promote and market the parent company’s business but cannot engage in business operations. Such branches must have a local service agent (LSA).
Things to know
LSA – The local service agent is a UAE national and does not have any civil responsibility or financial obligations to the business. His obligation is to ensure the branch is able to continue its business in Dubai but he shall not have any legal interest in the management, business, profits or assets of the branch.
This is a type of company that is established by the parent company in a foreign location to carry out the marketing and non-transactional business operations. They are much easier to establish a branch office as they are not used for core business purposes.
In case of the permit is expired and the owners have failed to renew the permit the Local agent has all the right to terminate the license and sending a legal notice to the owners.
- Branch of a Dubai-based company, A branch of a UAE-based company must undertake one or all of the activities included in the main company license. For a company with multiple branches, each branch can undertake different activities as long as they were all included in the original license for the main company.
Things to know
The permit has to be issued from DED and any additional offices have to be disclosed to DED to issue an additional permit and the company must represent the permit to any inspectors from government body in case it’s required.
It’s also recommended to review housing fees issued by Dubai Municipality annually as it reflects at the payment voucher that generated by DED of the main license during the renewal.
- Branch of free-zone company, If you have a company whose main license was issued in a UAE free zone, you can obtain a branch license from DED to expand your operations to mainland Dubai. If you do not have a local shareholder with at least 51 percent ownership, you need approval from the Ministry of Economy and have a local service agent.
Things to know
LSA – The local service agent is a UAE national and does not have any civil responsibility or financial obligations to the business. His obligation is to ensure the branch is able to continue its business in Dubai but he shall not have any legal interest in the management, business, profits or assets of the branch
This is a type of company that is established by the parent company in a free zone company based in UAE and there are more than 20 Free zone authority and any changes with the company activity, legal structure, revoke of power, assigning new manager Etc. must be initiated from the Free zone entity with a legalized board of resolution stating the type of changes.
- Branch of a GCC based company, A branch of a GCC-based company must undertake one or all of the activities included in the main company license. For a company with multiple branches, each branch can undertake different activities as long as they were all included in the original license for the main company.
- SME license, An SME license can be given to businesses owned 100% by UAE Nationals and can take any legal form.
- Intelaq, This is a license given to UAE nationals to conduct a home-based business in Dubai. The license-holder cannot hire or sponsor staff but can engage contractors,the setup cost is 1060 AED and it’s renewable every year for 1000 AED.
Mainland companies are the most demanded entity in UAE because it covers most of business setup activity and many others, starting a business in Dubai is very easy when you have the right and required paperwork. However, the documents required, the languages of the documents and the process of acquiring them can be yet long and sometimes tricky, therefore; if you are not familiar with UAE rules and preferred language, you might find the formation process difficult. At Global Link, we facilitate the business formation process and save you the hassle.
You can find other useful information by visiting Business setup in UAE
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