United Arab Emirates corporate law regulates the governance, finance and power of corporations in the United Arab Emirates (UAE) through UAE law. Every emirate has its own basic corporate code.
Types of Business License
The types of Business Licenses issue in United Arab Emirates (UAE) are professional, commercial, industrial and tourism. The professional license covers services offered by professionals, artisans and craftsmen; the commercial license covers all trading and commercial activities performed with an intention of making profit ; the industrial license covers all industrial and manufacturing activities. The tourism license covers all activities related to hospitality & tourism. The type of license depends on the business activity of the company or enterprise.
Jurisdiction of the Company
In UAE, a company can be formed in any of the following three jurisdictions: Mainland, Free Zone and Offshore. The licensing authority in mainland is the Department of Economic Development of the respective emirates. In Free Zones, the relevant Free Zone Authority will be the licensing authority and respective Offshore Authority in the case of Offshore jurisdiction.
Mainland Company
A mainland company is an onshore company and license to establish the entity is issued by the Department of Economic Development (DED) of the respective emirate. A mainland business is allowed to do business in the local UAE market as well as outside UAE without any restrictions. It is necessary to understand the term "Mainland" as per DED's definition in order for an entrepreneur to take a decision to register a Mainland Company in UAE. Different types of license under mainland are:
Professional license
Commercial license
Industrial license
Tourism license
For all licenses, the UAE now allows 100% of shares to be owned by expat individuals. As indicated in the latest decree.
Following are the facts about Mainland Companies in UAE. These companies are regulated under Federal Law No. 2 of 2015 which came in to effect on 1 July 2015. Expatriate can now own 100% shares in any commercial limited liability company (LLC) located in the mainland areas. Earlier, they were only allowed to own 49% GCC national can own 100% shares in any company. GCC companies or individual GCC national can make partnership with UAE national. For certain business activities, as per law only UAE national can own 100% shares. Business activities covered under professional category can be 100% owned by expat / foreigners but it is mandatory to have UAE national as a service agent. It is considered as on shore business entity in UAE
Free Zone Company
Establishing a business entity in one of the UAE's many Free trade zones (FTZs) can be an attractive option for foreign investors. UAE has over 35 FTZs of which more than 20 are located in Dubai. The main attraction for setting up a company in a free zone is that there is no UAE national shareholding required. All free zones in UAE offer the following incentives: 100% foreign ownership of the enterprises 100% cent import and export tax exemptions 100% repatriation of capital and profits No currency restrictions Corporate tax exemption for 15 years, renewable for an additional 15 years No personal income taxes
UAE Free Zone companies can only operate within the free zone boundaries and are generally limited to performing solely those activities listed in their license(s).
It is mandatory for every company registered in the Free Zone to lease minimum office space within that particular Free Zone. If the number of employees are few - the company can also lease a co-working space which is located within the freezone. However, if the no. of employees are higher - they would be required to lease a dedicated office space within the freezone. A Free Zone Company can obtain UAE residence visas for the director, shareholder and also employees of the company through the Free Zone where it is registered.
Offshore Company
UAE Offshore company registration is a very popular method of doing business in the Middle East region. In UAE there are three offshore jurisdictions – Dubai (Jebel Ali Offshore Company) Ras Al Khaimah and Ajman. They offer similar services but serve different strategic goals of offshore company registration. The Jebel Ali Offshore Company is an International Business Crown/holds the only offshore vehicle that is permitted to own / hold real estate in the Emirate of Dubai. JAFZA Offshore operated under JAFZA Free zone.