Updated on: Oct 17th, 2023
7 min read
Dubai is one of the popular places to establish a company because of its brilliant tax setup. It is a top capital city to conduct business and one of the most desired destinations for global investors.
It is a popular choice for international and local organisations due to its world-class infrastructure, strategic location, and an easily accessible and diversified market offering low operational costs and logistics. Dubai has more than 25 Free Trade Zones (FTZ), thus attracting global business owners to register their companies in Dubai.
The types of companies that can be established in Dubai are as follows:
Free Zone Companies/Establishment
The free zone companies/establishments are situated in FTZs, where special laws related to taxation, ownership, customs, etc., are followed, distinct from mainland Dubai. A foreign entrepreneur can have 100% ownership of the company established in an FTZ. Entrepreneurs can establish two types of companies in an FTZ, i.e., free zone establishment and free zone company.
A single shareholder with limited liability can establish a free zone establishment. A free zone company/LLC has more than one shareholder (up to five). A natural and legal person can establish a free zone establishment or free zone company. The legal requirements for incorporation of a free zone company/establishment are as per the regulations and rules framed by the respective free zones.
Limited Liability Company (LLC)
A minimum of two shareholders can establish a Limited Liability Company (LLC) in Dubai. There can be a maximum of 50 shareholders in an LLC. An LLC’s shareholders are limited to their contributions towards the share capital. An LLC can carry out any business except banking, insurance or monetary investment.
An onshore company is a company established in mainland Dubai. The company is managed by its directors from Dubai. In the case of foreign entrepreneurs, Dubai allowed only 49% ownership, and it had to be established along with a national sponsor or agent.
However, the Dubai government has amended this. Currently, a foreign entrepreneur can have 100% ownership in a Dubai onshore company, excluding companies established for economic activities with a strategic impact relating to seven sectors.
The company business is formed and operated outside the country’s jurisdiction in an offshore company. It is a wholly foreign-owned company registered in Dubai but has a base in another country. Foreign entrepreneurs have 100% ownership of offshore companies.
A branch office is an extension of the parent company. Any foreign company can set up a branch office in mainland Dubai and most FTZs across Dubai. It is a good option for companies to establish a branch office looking to expand in the UAE local markets.
Every entrepreneur/applicant should follow the below procedure to register a company in Dubai:
Decide business structure
An applicant should first decide on the business structure before applying for company registration in Dubai. An applicant can choose to establish a free zone company or free zone establishment in the FTZ, LLC, onshore company, offshore company or a branch office. The selection of the appropriate business structure depends on the number of shareholders, capital requirements and the commercial activities undertaken.
Reservation of company name
The applicant should decide on the company name as per the regulations of the law of the land. It should not be similar to another company name. The applicant should confirm the proposed company name’s availability with the Dubai Economic Department (DED) or the respective Free Zone Authority. The company should undertake its business activities under its approved company name.
The applicant should keep the following points in mind while choosing the company name:
Apply for a business license
After reserving the name, the applicant should apply for a business license as per the business activities the company wishes to undertake in Dubai. The business license is a legal document allowing its holders to conduct business activities mentioned in the license. The DED is responsible for issuing local company licenses. Below are the different types of licenses:
Decide location/jurisdiction of the company
Applicants must choose the location for the office space of the company. Applicants have an option to either buy or lease the land for office. The selection of the office space depends on the chosen business activity, the number of employees and the company budget allocated for the same. The different free zones in Dubai have different office sizes ranging from 20-30 sq.m. to 2000 sq.m. and beyond.
Opening a bank account
After obtaining all the registrations and approvals from the concerned authorities, the company needs to open a corporate bank account to send and receive money relating to the company’s affairs.
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