The seven considerations for establishing a company in the UAE | BIZ EAZY

Setting up a business in the UAE involves checking various legal realities. Basically, you can make a choice depending on your business plan and the motivation for what you want to do. The number of days required for establishment depends on the mainland, the free zone, the type of company, and the composition of shareholders (individual or corporate). The earliest possible time to establish a company is about two weeks. The establishment procedure can be a troublesome process if not properly considered. Therefore, before taking the legal process, some basic factors of starting a business in Dubai should be considered.

After reading this article…

• Know roughly how to set up a company in the UAE
• Understand the difference between each emirate
• Understand the difference between the Free Zone and the Mainland

１．Activity

In the UAE, there are three types of licenses: commercial, service, and professional.
It will be explained about this in a separate article next time. For now, just read on with the understanding that these exist.
In the UAE, each emirate, including Dubai and Abu Dhabi, certifies activities based on the activities set by the UAE Ministry of Economy.
In other words, it all starts with deciding what kind of business you want to do.

Basically, each Free Zone Agency also certifies activities that are approved by the DED (Department of Economic Development) in each Emirate and that fit their vision in each Free Zone.
We select and propose the activities that best suit our clients’ needs.
Whether you want to trade in any product, open a wealth management company, become a YouTuber, an investor, a freelancer, a service provider, open a restaurant, farm…,
You can choose from a list of over 2100 activities provided by the Department of Economic Development (DED).
However, please keep in mind that certain activities such as food trading, oil and gas business, ornaments trading, legal advice, investment consultancy, etc. require further approval from other government departments.
We will advise you according to your various requests and plans.

２．Free zones and mainland

There are two main types of business licenses issued in the UAE. The UAE Ministry of Economy decides the rules and regulations, but the actual implementation is left to each emirate.
In each emirate, the DED (Department of Economic Development) within its own authority issues licenses in the mainland.
The licenses issued by the Economic Development Department are called mainland licenses. The DED (Department of Economic Development) of each emirate decides on regulations to attract foreign capital and authorizes the free zone authority to issue business licenses within the free zone.
This is called free zones. Based on your business plan, you can decide whether to set up in a free zone or on the mainland. Each free zone has its own rules and regulations, so you must comply with them.

Advantages of free zones：

• Companies can be owned 100% by foreign capital (foreigners, foreign companies)
• Corporate and income taxes are exempt
• Local sponsors are not required
• Capital and profits can be freely remitted to home country
• No restrictions on hiring foreign workers
• Bonded area
• Long-term land lease is possible
• Establishment is fast and procedures are convenient

Advantages of the mainland：

• Retail and wholesale to end users in the mainland is possible
• You can expand your business locally through a network of sponsors
• Business can be done with a special license
• Land and office fees are low, keeping operating costs down

３．Which emirate

The UAE is a federal state.
It consists of seven emirates: the capital Abu Dhabi, Dubai, Sharjah, Ajman, Al Quwain, Fujairah, and Ras Al Khaimah.
Basically, Abu Dhabi is a manufacturing, oil, and agriculture-related city, and there are many companies related to these businesses. Dubai is the center of business in the Middle East and Africa, where all industries are concentrated. Sharjah is a city adjacent to Dubai with slightly lower prices. Ras Al Khaimah is a city with significantly lower prices, and is centered around manufacturing and agriculture.
You need to decide where to expand depending on your business type and activities.
Basically, most companies consider Dubai or Sharjah, and then Abu Dhabi or Ras Al Khaimah if there is a special reason. Dubai is costly, but it is still the most recommended in terms of the Dubai brand and information accumulation.

４．Company Form

The company form, along with the activity, mainland/free zone, and destination, will determine the type of license required.
You can choose from a local corporation (LLC, FDI LLC in the mainland, FZE, FZCO, FZLLC, DMCC, etc. in the free zone), a branch, or a representative office.
Since branches and representative offices are not local corporations, they are subject to restrictions on activities. They are useful when you want to operate them as a foreign corporation’s local office.
Basically, in case of branches and representative offices require the establishment documents of a foreign capital corporation (board of directors’ minutes, articles of incorporation, full history certificate, shareholder certificate, head office bank account balance certificate, etc.).
And also, it requires notarization of these documents, certification of UAE Embassy in Japan, and certification of the UAE Ministry of Foreign Affairs, which takes time to prepare.
Individuals can establish a company with documents such as a passport and bank balance certificate. In the free zone, the articles of incorporation and application documents are prepared by each free zone. In the mainland, you need to prepare documents in English and Arabic.

５．Shareholders

Procedures and regulations vary depending on whether you are an individual or a corporation, a single or multiple, a foreigner or a UAE/GCC national.
If you want to own 100% of your company, you will need to apply in one of the many free zones in the UAE.
Currently, the establishment of 100% foreign-owned FDI-LLC corporations has begun in the mainland.
But there are certain conditions such as a large amount of capital and restrictions on the number of employees you can hire, so please contact us for details.
For example, there are more than 45 free zones in the UAE, and they offer a variety of categories of business, so there are plenty of options to choose from.
If you need to operate locally or need a local license, you will need to obtain a permit from the Department of Economic Development (DED) as a mainland license. The DED permit comes with certain regulations and restrictions on the share of foreign ownership based on the various legal structures under the DED. Basically, there is a 49% foreign ownership limit and a 51% local sponsor is required.

６．Company name

The trade name is an important part of the legal process.
The company name should ideally indicate the nature of the business, unless it is a branch of another company.
Trademark registration is very important to avoid imitation of the company.
The rules regarding trade names are fixed and can be checked in advance, including the desired name.

７．Capital

A minimum amount of share capital must be stated in the Memorandum of Association (Articles of Association) when establishing a company.
In most cases, no minimum capital is required to be paid in at the time of incorporation, but there are cases where a minimum capital is required.
If you are planning a larger business model, you will also need to determine the composition of your workforce and determine your capital accordingly.
Paying into the bank and the licensing process are not fundamentally linked.
After obtaining the company license, or based on the license application documents, you can open a corporate bank account.
Opening a bank account is said to be more difficult than obtaining a license, and in many cases additional documentation is also required.

Finally

Once the above is decided, you can start setting up your company.
Basically, in most cases, an accounting audit is required, but in the case of free zones, branches, and representative offices, it may not be necessary, so please contact us each time.
We will start preparing to hire employees according to your business plan, but there are no specific job types that you must hire by law.
In addition, based on our experience in recruiting in the UAE, GCC, and Middle East and Africa, we can provide a salary survey, so we can advise you on how much budget you need to secure based on your job type and experience level.

As a business hub, Dubai has flexible rules and regulations, making it an easy environment for business person of all nationalities to set up their businesses.

Biz Easy’s company establishment support, overseas expansion support, and business setup services provide all kinds of support for setting up a business in the UAE.
Company registration, license, activity, and document verification are some of our major services. Please contact us for an overview of our company and costs.