Company Incorporation Laws in Dubai, both in Mainland and Freezone for Foreign Nationals

By Antabikhya Gogoi, Legal Intern at EMKAY SOLUTIONS and a 3rd Year B.A. LL.B.(Hons) Student at NLU Assam.

INTRODUCTION

Dubai is the capital city of the Emirate of Dubai, one of the seven emirates which form the United Arab Emirates (UAE hereinafter). It is an international trade and business hub with thousands of entrepreneurs from around the world wishing to incorporate their companies in the Emirate. Its sui generis geographical location connecting the European Countries and East Asia along with the Government’s legislations favouring company formation by foreign nationals makes it an ideal country for the same. The Federal Law No. (2) of 2015 on Commercial Companies governs company formation in the UAE. This was further amended in 2020 which gave more freedom to foreign nationals in owning full ownership of their companies which earlier required a major Emirati shareholder. There are three types of jurisdiction to be considered when planning to incorporate a company in the country by foreign nationals- mainland, freezone and off-shore. The different jurisdictions offer different requirements along with distinct advantages and disadvantages. In this article, the focus will be on mainland and freezone company formation by Non-Emirati in Dubai.

Incorporation of Company by Foreign National in Mainland Dubai

The process of forming a Mainland LLC has been simplified, with the elimination of required Emirati partners for the majority of enterprises, except for those classified as "Strategic Impact" activities. Additionally, the Mainland establishment is perfect for complete access to the UAE market and for securing government contracts.

Process of Company Incorporation

There are several key steps that a company needs to follow in order to have a successful and smooth business opening in Dubai:

1. Choosing Company Structure

   There are various types of company structures, each with its own advantages and disadvantages. A Limited Liability Company (LLC) offers limited liability protection, shielding personal assets from business liabilities, but comes with higher establishment expenses and regulatory requirements. On the other hand, Sole Establishments are simpler and more cost-effective, but they place the owner at full risk for liabilities.
   

2. Choosing Company Name

   The Company name must be unique and follow the requirements of the UAE government. It must not be offensive to any religion, the government or the region.
   

3. Licensing

   It involves acquiring licenses from appropriate government authorities depending on the type of the business and the industry its part of.
   

4. Registered Office Address

   For a company to be incorporated in the Emirate, it must have a physical registered office in the mainland and this must be submitted.

   
   

5. Submitting Notarised and Translated Documents

   Further submit other relevant documents which must be notarized and translated into Arabic.

   
   

6. MOA

   Draft a Memorandum of Association containing the structure and regulations of the Company.
   

7. Open Corporate Bank Account and Deposit share capital

   The company must have its own bank account where it must deposit the initial share capital.

   
   

8. Comply with Tax Laws

   The company must have its own bank account where it must deposit the initial share capital.

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Incorporation of Company by Foreign National in Freezone Dubai

Establishing a Free Zone is beneficial, offering affordable licensing options, specialized infrastructure for various sectors, and tax advantages. Certain businesses within Free Zones may be eligible for benefits regarding Corporate Tax, VAT, and customs duties under specific regulations. Free Zones feature top-notch facilities and tailored infrastructure, such as JAFZA for trade and DIFC for financial services. Additional advantages include complete ownership, unrestricted fund transfers, tax relief, exemption from import and export duties, operational flexibility around the clock, and available ready-made warehouses, office spaces, and factories.

Process of Company Incorporation

1. Choosing Company Structure

   Unique and must comply with the Govt. rules. Cannot be offensive to religion, government and the Country.
   

2. Trade license

   This involves getting a UAE Trade license from the appropriate government authority. This also depends on the type of business the company will be engaging with.
   

3. Submit Other Relevant Documents

   Other necessary documents must be submitted as well, this may involve the identification of the owners, Business plan, application, MOA, AOA (Article of Associations) etc. Since different free zones are governed by different freezone laws, in Dubai Freezone, Dubai Freezone laws will apply.
   

4. Registered Office

   The Office of the Company needs to be registered. It must be a physical office which can be either on lease or be bought. For this, you must choose a location in the Freezone.

   
   

5. Visa Application

   After initial approval by the government which is known as pre-approval after the documents are verified, license is granted after which the final registration will take place for which you have to pay a registration fee. The subsequent step will be getting a Visa.

   
   

6. Corporate Bank Account

   A corporate bank account is necessary for managing a business in Dubai Freezone.

Conclusion

Dubai makes it easy for foreign entrepreneurs to set up businesses, whether in the mainland or free zones. Thanks to recent legal changes, full foreign ownership is now possible in most sectors, making it an even more attractive destination. With its strategic location, investor-friendly policies, and thriving economy, Dubai continues to be a top choice for global businesses looking to expand. If you want full access to the UAE market and government contracts, the mainland is the way to go. On the other hand, free zones offer tax breaks, 100% ownership, and specialized infrastructure. Both have their perks—it all depends on your business goals.