Mainland Company
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Overview
The licensing authority for a mainland company is the Ministry of Economy, through its Departments of Economic Development (DED) in the respective Emirates (Abu Dhabi, Dubai, Ras Al Khaimah, Sharjah, Ajman, Fujairah, and Umm Al-Quwain).
A mainland company (also known as an onshore company) is key to unlocking comprehensive business opportunities within the UAE and globally.
Administered by the UAE’s Ministry of Economy through the respective Department of Economic Development (DED) in the relevant Emirate, this license allows businesses to operate without geographical or operational constraints.
A significant reform of the UAE’s Companies Law has been established with the newly adopted UAE Federal Commercial Companies Law No. 32 of 2021, which permits 100% foreign ownership in mainland companies (previously, 51% of the share capital had to be held by a UAE national). This change has broadened opportunities for expatriates wishing to fully own their businesses in the UAE.
Key Features of a UAE Mainland Company
- Full Foreign Ownership: Entrepreneurs from abroad can now own 100% of their business ventures.
- Business Activities: Over 1,000 business activities are available to mainland companies, as published on the Dubai Economic Department website.
- Visa Privileges: Extended visa durations simplify residency concerns.
- Competitive Corporate Tax: The UAE’s corporate tax rates are among the lowest globally, offering a favorable fiscal environment.
- Absence of Withholding Tax: Earnings are not taxed at the point of distribution.
- Support and Financing: Numerous avenues are available for financial and advisory support in setting up your company.
- Robust Infrastructure: The UAE boasts world-class infrastructure and a pro-business climate, aiming to lead globally in GDP.
Benefits of Mainland Business Setup
Opting for a mainland setup in the UAE offers numerous strategic benefits:
- Wider Operational Scope: Conduct business freely within the UAE and beyond.
- Flexible Business Activities: Enjoy the liberty to select from a broader range of business operations.
- Location Independence: Choose your office location anywhere within the Emirate to best suit your business needs.
- Government Projects Access: Eligibility to participate in government tenders and projects.
- Visa Flexibility: Obtain visas for foreign employees without restrictions.
- No Currency Constraints: Enjoy the freedom of capital and profit repatriation.
- Streamlined Registration: Benefit from a straightforward and efficient setup process.
Setting Up Your Mainland Company
The journey to incorporating a mainland company involves:
- Identify Your Business Activity: This shapes the licensing needs and other requirements.
- Choose the Right Location: Consider access, cost, and the strategic fit for your business.
- Secure Initial DED Approval: Typically, this approval is swift, paving the way for your license application.
- Apply for the Mainland License: Following initial approval, proceed with your license application.
- Finalize Documentation and Payment: Upon approval, submit all required documents and settle the licensing fee.
Legal Forms for Mainland Company Registration
A mainland company may be incorporated in the form of a:
- Sole Establishment (Muasasat Fardia)
- Civil Partnership (Shirkah Al-Madaniya)
- Limited Liability Company (Shirkah Zat Masouliyah Mahduda)
- Private Joint Stock Company (Shirkah Al-Musaham Al-Khasa)
- Branch of Foreign Company (Fare Sharikat ‘Ajnabia)
The most common legal forms of business setup in the UAE are Sole Establishment, Civil Partnership, Limited Liability Company, Private Joint Stock Company, and Branch or Representative Office of a Foreign Company.
Sole Establishment
A Sole Establishment is established in the UAE by a single individual with a trade or professional license issued in their name. The owner of a Sole Proprietorship is personally liable for all financial obligations of the business.
Civil Partnership
A Civil Partnership is a professional company formed between two or more individuals to perform a profession or provide a service such as medical, legal, engineering, or accounting. It may also be formed to operate businesses such as restaurants, beauty salons, or hairdressers.
The partners do not enjoy limited liability and are jointly liable for any losses or debts that arise from the partnership. The company may be managed by one or more partners according to the articles of incorporation. Alternatively, it can be managed by a third party appointed by the partners, who will be held liable for mismanagement.
A Civil Partnership Agreement must be signed by the partners and notarized in Dubai. This partnership is governed by the UAE Civil Transactions Law No. 5 of 1985, as amended.
Limited Liability Company (LLC)
An LLC can be established with a minimum of one (1) shareholder and a maximum of fifty (50) shareholders, whether individual or corporate. Shareholders are responsible for the company’s liabilities/debts up to the extent of their shareholding in the company’s capital.
The company name must reflect its business activities or the name of one or more shareholders, and must be followed by ‘L.L.C.’ or, in the case of a single shareholder, ‘With Limited Liability’ (‘Company of the One Shareholder’).
A standard/brief Articles of Incorporation must be signed before a Notary Public to regulate the rights and obligations of the shareholders. It is highly recommended that shareholders also enter into a separate legal document, a Shareholders Agreement, detailing the company’s operational structure.
Normally, a Shareholders Agreement includes details such as each shareholder’s role/responsibilities, business expansion, profit distribution, management structure, sale of shares events (e.g., Tag Along/Drag Along), company termination/liquidation, death of a shareholder, and dispute resolution mechanisms.
No minimum share capital is required, but it must be adequate to fulfill the business activities of the company. The company must be managed by one or more managers appointed/dismissed by the shareholders. The manager has full authority to manage and operate the company but must indemnify the shareholders against losses or expenses arising from mismanagement or non-compliance with the terms of their mandate, articles of incorporation, or the law.
A general assembly of all shareholders must be convened at least once a year to discuss and approve the financial statements, audit report, and manager(s) operational report.
Private Joint Stock Company (PJSC)
A Private Joint Stock Company in the UAE has two or more shareholders, with capital divided into shares of equal nominal value. Shares must be fully paid up and cannot be offered for public subscription.
A company may have a single shareholder if it is a legal entity. Shareholders are liable only to the extent of their share in the company’s capital. The minimum issued capital for a private joint stock company is AED 5,000,000, though this limit may be modified by a Cabinet decision.
Branch of Foreign Company
A branch of a foreign company (often called ‘Parent Company’) serves as a gateway to the Middle East and North Africa region. It can be registered either in mainland UAE or in one of the Free Zones. A mainland-registered branch can conduct business activities with companies in the UAE and outside, while a Free Zone-registered branch can only operate within the Free Zone but benefits from tax incentives.
A branch will carry the same name as the foreign company (followed by ‘Dubai Branch’) and conduct the same business activities. The foreign company is liable for the branch’s debts and obligations.
The branch must appoint a manager for day-to-day operations and a local service agent (UAE national) to represent it before UAE government authorities. The branch must submit annual financial statements to the registering authority.
Representative Office of Foreign Company
A Representative Office acts as a regional administrative center or conducts market research to support the products/services of the parent company in the UAE. It is not permitted to import products or engage in trade but may have a bank account to cover local expenses.
