What is Mainland Company Formation in the UAE?
The UAE has two main types of company formations: mainland and free zone. A mainland company is registered with the government and can operate anywhere within the country, while a free zone company is restricted to the free zone.
Key Features of Mainland Companies?
- Unlimited Market Access: Mainland companies are not restricted to any geographical location and can conduct business anywhere in the UAE.
- No Restrictions on Activity: Mainland companies can engage in almost any business activity, from trading and manufacturing to consultancy and services.
- Flexibility in Location: Unlike free zone companies, which are restricted to operating within their designated free zone, mainland companies can establish offices anywhere in the UAE.
- Foreign Ownership: The UAE government has recently relaxed its laws on foreign ownership. Depending on the type of business, a foreign investor can now own 100% of the mainland company, especially in previously restricted sectors.
- Visa Benefits: Mainland companies can sponsor employees and apply for UAE residence visas, making it easier for business owners and employees to reside and work in the country.
- Ability to Bid for Government Contracts: Mainland businesses have access to government projects and contracts, which can be a lucrative avenue for growth.
Benefits of Mainland Company Formation in UAE?
- Strategic Location: The UAE serves as a gateway between East and West, providing easy access to regional markets across the Middle East, Asia, and Africa. Its major cities, Dubai and Abu Dhabi are bustling commercial hubs.
- Tax Advantages: The UAE offers a highly favorable tax regime. With the introduction of a 9% corporate tax (as of 2023), the UAE remains one of the most tax-friendly locations for businesses. Additionally, the country does not impose personal income taxes, capital gains taxes, or withholding taxes.
- Ease of Doing Business: The UAE is consistently ranked as one of the easiest places to do business globally, thanks to its simplified registration procedures, supportive legal framework, and modern infrastructure.
- Access to Talent: Setting up a mainland company enables you to recruit top-tier talent from the UAE and abroad, allowing you to build a skilled workforce.
- Reputation and Credibility: A mainland company holds a certain level of prestige, as it is registered directly with the UAE government, which can enhance your company's credibility when dealing with local businesses and governmental entities.
Steps to Set Up a Mainland Company in the UAE
While the process for forming a mainland company is relatively straightforward, it requires attention to detail and adherence to UAE legal and regulatory requirements. Here are the typical steps involved:
1. Decide on the Business Activity
The first step is determining the business activity you wish to pursue. The UAE government categorizes business activities under various licenses, including trading, professional, and industrial. Understanding the appropriate category is crucial, as it will determine the required documents and the business's legal structure.
2. Choose a Business Name
The next step is to select a business name for your company. The name should align with the business activity and adhere to UAE naming conventions. Certain words and terms (such as those related to religion or politics) are prohibited.
3. Choose the Legal Structure
In the UAE mainland, businesses can operate under various legal structures, including:
- Limited Liability Company (LLC): The UAE hubs.
- Sole Proprietorship: A business owned and operated by a single individual.
- Civil Company: A structure typically used by professionals such as doctors, lawyers, and accountants.
- Branch Office: A foreign company can establish a branch office in the UAE to conduct business in the local market.
4. Obtain a Local Sponsor (if required)
Many business types may require a UAE national sponsor or partner, especially in specific sectors. In an LLC, the local sponsor generally holds 51% of the company's shares, but the foreign investor retains complete control over operations and profits through a contractual agreement. However, recent reforms now allow 100% foreign ownership in many sectors, making the need for a local sponsor optional for certain business activities.
5. Register with the Department of Economic Development (DED)
The company must be registered with the Department of Economic Development (DED), an Emirate government entity that issues licenses and ensures compliance with local laws and regulations. You'll need to submit various documents, including the business plan, copies of the shareholders' passports, and a tenancy contract for the business premises.
6. Lease a Commercial Space
A mainland company is required to have a physical office in the UAE. You must secure a commercial lease in the emirate where your business is registered. This office will serve as the official business address.
7. Obtain Necessary Licenses and Approvals
The DED will issue a trade license once your business activity and legal structure are confirmed. Additional approvals may be required for specific industries, including healthcare, education, and media. Once you receive all necessary approvals, your business will be officially registered.
8. Apply for Visas
Once your company is established, you can apply for employee, investor, and family visas. The number of visas you can sponsor depends on the size of your office and the nature of your business.
- Commercial License: For trading and retail businesses.
- Industrial License: For manufacturing or industrial activities.
“Mehar Business Solution Mainland Company Formation Services in UAE The UAE offers a strategic location, a favorable business environment, Corporate Tax advantages, and world-class infrastructure, making it an attractive destination for starting a business. We provide a comprehensive guide to forming a mainland company and discuss its entailments, benefits, and steps.”
Mehar Business Solution LLC
Some FAQ About This Service
A mainland business in the UAE refers to a company registered with the Department of Economic Development (DED) in the respective emirate and authorized to operate within the local market without limitations. Such businesses can trade directly with the UAE market and operate in any emirate except free zones.
Benefits include full access to the UAE market, the ability to engage in business across various sectors, zero restrictions on the number of employee visas (depending on your office space), and the opportunity to have an office in a prime location.
The minimum share capital required varies depending on the business activity and the emirate in which you are setting up. Generally, most activities have no fixed capital requirement, whereas specific activities may require a minimum capital investment.
To establish a business in specific sectors, you need a Local Sponsor (a UAE national) who will hold at least 51% of the shares. However, certain business activities and conditions now allow 100% foreign ownership.
The process typically involves the following steps: selecting a business activity and determining the legal structure, choosing a trade name, drafting and notarizing the Memorandum of Association (MoA), applying for a license through the DED, and obtaining any additional approvals that may be required.
The setup process can take anywhere from a few days to several weeks, depending on the complexity of your business, the requisite approvals, and how quickly you can gather the necessary documentation.
Commonly required documents include copies of passports for shareholders and managers, a business plan, a lease agreement, approvals from relevant authorities (if applicable), and a No Objection Certificate (for expatriates).
