U.A.E. has become one of the major business hubs in the Middle East, hosting dynamic and diversified economy as well as providing a large number of businesses with great infrastructure. It is located strategically to serve as the biggest production and import-export designation for the world.

U.A.E. is famous for its business-friendly infrastructure and facilities. Mainland company registration is still the first preference by most of the organizations when establishing their business. A trading company in the mainland cannot have 100% ownership. It needs to have a UAE national to be as a local sponsor and the foreign individual/enterprise can get a maximum 49% ownership. A company in the mainland gives access to the local market of U.A.E. To setup a company in the Mainland, a UAE national sponsorship is mandatory, with zero involvement in the company operations or profit sharing.

Mainland business setup in UAE is registered with the Department of Economic Development (DED). This would fit those who are planning to set up a company locally. A local sponsor (U.A.E. citizen) who will be a co-owner of the business, or a local agent who will not own shares, but will be your gateway to the local market, is required in order to open a Mainland company. Some of the main advantages in setting up business in mainland UAE are:

• Direct access to local UAE market.
• No limitations on activities.

A verified office address is required; hence it is the investor’s responsibility to ensure a valid tenancy contract be arranged before obtaining/applying for the Mainland Company License. Below mentioned are the procedures:

• Business Activity Selection and Name Approval.
• Selection of Local Partner or Service Agent.
• Apply for Initial Approval for Mainland company setup.
• Preparation of requisite documents with legalization and notarization as per UAE law.
• Obtain Office Space and Tenancy Contact.
• Final Submission for Mainland company formation in UAE.

A U.A.E. national has to hold at least 51% of total equity in any commercial company, except in the following cases:

• Activities with 100% GCC ownership.
• Businesses located in the Freezones.
• Instances where GCC companies (wholly owned) enter into a partnership with UAE national.

United Arab Emirates (UAE) is one of the most popular trading environments in the Gulf and an ideal location for mainland company setup due to its strategic location (situated midway between Africa and CIS countries, and Europe and the Far East)

There are many advantages of mainland company incorporation in UAE, these are:

• Ease of getting office space at affordable rates with flexibility to rent / lease office anywhere.
• Flexibility to do business in any part of the UAE.
• No restrictions in processing legal documents.
• No yearly auditing.
• No limitations in getting employment visas and easy recruiting process.
• Not mandatory for local sponsor to avail Professional Licenses.

Any investor planning to establish a mainland company in UAE, can setup their business establishments in any of the following ways:

• Branch of Foreign Companies.
• Professional Firms.
• Limited Liability Company (LLC).
• Representative Offices.
• Public Shareholding Companies.

Branch of Foreign Companies

The branch will be considered as headquarters of a foreign company in U.A.E. and its activity should be according to the U.A.E. law. A Branch can conduct freely the same activities for which it is licensed. Manager must be appointed to represent the company; the manager must have an approved motion by the Board of Directors to open the branch.

• Type of business practiced should be stated.
• Proposed business activity for a branch of foreign Company should be within the domain of the activities performed by the parent company.
• Branch Companies are permitted to enter into contracts and conduct local business.

Professional Firms

In a professional firm, 100% foreign ownership & sole proprietorship are permitted. Such firms may engage in professional activities. A UAE national must be appointed as Local Service Agent.The local service agent’s role is to assist in obtaining license, visas, immigration card and labor card of the company. Under professional license; trading, purchase or sales of goods, transport, banking and finance etc., are not permitted. A foreign company can be a partner in a civil company as long as they are engaged in the same line of business in home country.

• These are also known as civil companies.
• Minimum of 1 and maximum of 50 shareholders are allowed.
• In order to carry out professional practice in the UAE, foreign investors can set up a partnership firm / professional company.
• Unlike LLC companies, there is no restriction of 51% local equity to establish professional firms.
• 100% ownership.
• Appointment of a UAE national as your local service agent.
• The local service agent will not be having any direct involvement in the business.
• Local service agents are paid an annual basis or a percentage of profits or on turnover as agreed.
• Only non-commercial activities are allowed.

Limited Liability Company (L.L.C.)

The Limited Liability Company formation is the most general type of business setup in the U.A.E. This is the most popular form of company to do the business in UAE. Expects can have 49% stake in the business as per the UAE commercial law.GCC nationals are allowed to own 100% share capital of L.L.C. setup in U.A.E. but if GCC national has an expert partner in the company then 51% of company must be owned by an Emirate shareholder. An investor is able to setup a L.L.C. by sharing 51% of the company with a local sponsor (UAE National). Under this formation, the local sponsor will be paid an annual sponsorship fee in return.

• L.L.C. is the most common form of business in U.A.E.
• L.L.C. can be established with a minimum of 2 and a maximum of 50 partners.
• The percentage of individual's share in the capital decides the power to each partner.

For the L.L.C. formation process the investor should reserve a trade name and get initial approval from the DED (Department of Economic development). Documents required for getting an initial approval are:

• Application for Dubai company formation and license, along with reserved trade name.
• Passport copy of the foreign investor.
• Copy of no-objection certificate from current sponsor if the applicants have a residence Visa.
• Copy of passport of local sponsor along with family book.
• Copy of Emirates ID (for UAE nationals only).
• Copy of passport of proposed directors and general manager

Post the initial approval, sign the Contract of Establishment before a notary and submit the same to the D.E.D. for the final approval. The agreement of LLC formation should have:

• Details related to the trade name.
• Business activity.
• Office address.
• Name of shareholders.
• Their permanent address and nationality.
• Place of residence.
• Profit/loss sharing details.
• Capital investment
• Complete address of the office managers
• Notification method to be initiated in the office.

Documents required for final approval:

• A copy of initial approval issued from the DED.
• A set documents submitted for initial approval.
• Copy of office lease agreement called Ejari, including the address of the plot
• Memorandum of Association duly signed by a notary in local court.

Formalities and registration processes related to L.L.C formation is generally determined by each Emirate. There can be slight variations in the procedures however the documents to be submitted are always the same.

Benefits of a L.L.C Formation:

• It permits you to do local trade and services
• It is the most popular form of establishing a commercial company in U.A.E.
• The investor has the option to launch branches in any Emirate.
• Easy to open and operate bank accounts and avail credit facilities.
• Warehouse and office facilities can be availed.

Representative Offices

• U.A.E. Commercial Company Law allows foreign companies to open Branch/Representative offices without any shareholder.
• Representative Offices are not allowed to perform trading or manufacturing activity and cannot even invoice as these are essentially the parent company's marketing arms.

Public Shareholding Companies

• Companies performing public shareholding, financial, banking or insurance activities are known as public shareholding companies.
• For a public shareholding company, it is suitable for large projects or operations as the capital requirement is high.