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What is the Procedure for Company Formation in Dubai

Author: Izrar Ulhaq
by Izrar Ulhaq
Posted: May 29, 2019

Dubai Mainland is famous for its business friendly infrastructure and facilities. Dubai mainland company formation is still the first preference by most of the establishments when establishing their business in Dubai. Company Formation in Dubai Mainland is very interesting and time consuming task; we provide best PRO services in Dubai offers the best services for Dubai Mainland company setup.

So why is mainland such a lucrative area to set up in Dubai?

Dubai Mainland is the total geographical area which is permitted by the DED (Dubai Economic Department) to all the private business entities and their representative to operate commercial business functions. These are prime locations where a foreign business owner can work, for example, international chains of food, luxury goods, car makers, etc.

As per the Business Incorporation laws of UAE, a Foreign Owner can hold only up to 49% of the business, if set up is in Mainland and a UAE national mandatory holds 51% of total equity except in the following cases:

  • Activities with 100% GCC ownership
  • Instances where GCC companies enter into a partnership with UAE National
  • Where the law requires 100% local ownership.
  • Businesses located in Free Zones

Requirements for Dubai Mainland Business Setup

A verified office address from Dubai Municipality is required when setting up business in Dubai. The requirement of office space for Mainland company setup in Dubai, can be varied based on the type of license the investor is looking for and it is investor’s responsibility to ensure a valid tenancy contract for an office is available at the time of applying for the license of Dubai mainland company.

There are 6 main steps involved in Dubai mainland company setup. However, there are some activities which Mainland setup requires special approval from some specific Government departments. The main 6 steps involved for company formation in mainland are:

  • Business Activity Selection and Name Approval
  • Selection of Local Partner or Service Agent
  • Apply for Initial Approval for Mainland company setup
  • Preparation of Court Notarization and MOA
  • Get Office Space and Tenancy Contact
  • Final Submission for Mainland company formation in UAE

The professional consultants at Business Link support our clients to select the most appropriate decision in business setup and guide them through complete procedures of Dubai Mainland company formation and Dubai Economic Department company registration.

What are the Types of Business Licenses Available in Dubai?

The Department of Economic Development (DED), Dubai is the main licensing authority that issues licenses for all sorts of business activities in Dubai. A major prerequisite for all business licenses is to choose the suitable license category from the following 3 categories of licenses:

Dubai Commercial License

Dubai Commercial License includes all kind of trading activities. It is a type of Limited Liability Company (LLC). As per Article 22 of the Companies Law, specifies that there should be minimum 51% shares of the UAE National. This commercial license will have a local Emirati (Dubai Local Sponsor) who will hold 51% shares in the company and for which Local Emirati will be paid annually. The local sponsor can either be an individual or a corporate sponsor.

Dubai Professional License:

It is a type of Sole Establishment or a Civil Company depends on No of investors/partners. The license holder is permitted 100% foreign ownership. In order to obtain this license a UAE national must be appointed as Local Service Agent but he will not hold any share in the company. The sponsorship fee is paid on a yearly basis.

Dubai Industrial License

For setting up a manufacturing or industrial activity

What is the Procedure for Company Formation in Dubai?

  • Choose the Name of the Company

Choosing the name of the proposed company is the first step when it comes to company formation in Dubai. Every company will select a trade name before its formation. This trade name must be unique and according to rules and regulations of DED. This name has to be approved by DED (Department of Economic Department)

  • Choose the right business activity.

You must be aware of your business activity as if you are conducting trading business you need to setup a commercial license and in case of services you need to setup a professional company.

  • Hire the Local Sponsor

A local sponsor (Local Emirati) is required for Dubai mainland company formation (except for those with professional license where local Emirati will be act as a local service agent). Local sponsor will hold 51% shares of a company against an annual fee.

Local service agents are required in case of professional license. The UAE national will not hold any company shares in professional company.

  • Select the office Location

Selecting appropriate location and making a tenancy contract is also necessary for registration of company in Dubai. You can also choose virtual office in any of the business centers but it depends on the business activity.

  • Preparation of the M&A

The next step is to prepare MOA (memorandum of association) of the new company.

  • Final Submission

License application, MOA, tenancy contract and several other documents will also be required for final submission according to the type of company and jurisdiction selected for your business.

Benefits of Company Formation in Dubai

  • Complete repatriation of profits and capital for all types of companies
  • 100% foreign ownership for free zone companies, offshore company and (professional license holder) mainland companies
  • No need of local sponsor for free zone companies and mainland companies with professional license
  • Offshore companies and several free zones are completely tax free. Very small tax on other business jurisdictions
  • Relatively cheaper, easily available and competent labor and staff
  • World class infrastructure (offices, warehouses, roads etc.) and proximity to important airports and seaports
  • Flexible bank account opening and maintenance with availability of multi-currency bank accounts
  • 3 year visas for investor, family members and staff
  • Company registration process is simple and quick due to use of modern technology
  • Best residential and commercial structures with state of the art telecommunication and reliable utility system
About the Author

We are Corporate Advisory firm with a broad range of expertise in business setup in Dubai Offshore company formation, LLC company setup, professional Company Formation and PRO Services.

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Author: Izrar Ulhaq

Izrar Ulhaq

Member since: Apr 07, 2017
Published articles: 24

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