It is important to select the appropriate type of business structure when setting up a company in the UAE. This choice affects your company's legal ownership and operational flexibility.
A mainland company is an onshore entity that operates within the UAE and internationally. It is registered with the relevant Emirate's Department of Economic Development, which issues its trade license. Mainland companies have no restrictions on commercial activities; they may, however, require a local sponsor or UAE national partner for specific business activities. No minimum capital requirement exists, and the number of visas issued depends on the size of the office space.
Mainland companies can trade across the UAE and participate in government contracts. All mainland companies must maintain a register of their Ultimate Beneficial Owners (UBO) and submit this information to the relevant registrar or licensing authority. There is, however, no public registrar of directors, shareholders or UBOs.
While incorporating a company on the mainland, you can select the following legal structures aligned with your intended business activities.
1. Limited liability company (LLC)
A limited liability company (LLC) is the most common type of business structure. It requires at least two partners (with a maximum of 50). Each partner's liability is limited to their share in the capital, and negotiable instruments do not represent these shares. LLCs can operate anywhere in the UAE and the Gulf Cooperation Council (GCC).
2. Public joint-stock company (PJSC)
A public joint-stock company (PJSC) requires at least five shareholders. Its capital is divided into equal, negotiable shares. Founders initially receive a portion of these shares, while the remaining shares are offered to the public. Shareholders' liability is limited to their investment in the company's capital. A PJSC allows for the buying and selling of shares, making it ideal for businesses seeking to raise capital from the public. This type of company suits larger firms, including those wishing to list on a stock exchange.
3. Private joint-stock company (PrJSC)
A private joint-stock company (PrJSC) in the UAE allows shares to be privately bought and sold among a limited number of shareholders, capped at 200. The company's capital gets divided into shares of equal nominal value. If one person owns a PrJSC, it is called a ‘private joint-stock company – single ownership’. In this structure, the owner's liability is limited to the capital specified in the company's Memorandum of Association.
4. UAE foreign branch office
A foreign branch office is an extension of the parent company that can perform contracts and other specified activities locally. This setup allows businesses to retain 100% foreign ownership. The branch operates under the same name and business activities as the parent company but must lease office premises.
While a branch doesn’t have capital requirements, a UAE bank guarantee of AED50,000 must be deposited in a UAE bank licensed by the Central Bank of UAE. The bank guarantee must be deposited during or within 30 days of license issuance. The foreign branch must maintain the bank guarantee untouched until the branch is de-registered.
5. UAE representative office
A representative office in the UAE functions primarily as a cost centre and focuses on marketing and promotional activities for the foreign parent company. It is restricted to gathering information, conducting market research, and soliciting orders or projects for the parent company. The business registration process and requirements for establishing a representative office are like those for a branch office, ensuring alignment with local regulations.
A sole proprietorship in the UAE allows a single individual to own 100% of the business. Although the business is registered as a separate legal entity from its owner, the owner is personally liable for all financial obligations and liabilities incurred by the business.
The UAE has more than 45 free zones with unique registration requirements. These zones offer an alternative to onshore setups, allowing 100% foreign ownership. Each free zone operates under its own regulatory authority, which issues licenses and governs business activities.
These licenses also allow businesses to engage with customers outside the zone. They can be registered with a single shareholder and director, who may be a foreigner and not a resident of the UAE. Free zone entities must secure office or industrial space within the zone.
While incorporating a company in the free zone, you can choose the following legal structures aligned with your intended business activities.
1. Free zone establishment (FZE)
A legal entity incorporated/registered by a single shareholder, who can either be an individual or a corporate entity.
2. Free zone company (FZCO)
A legal entity incorporated/registered with at least two shareholders, who can be individuals or corporate entities.
Companies not intending to conduct business within the UAE can establish an offshore entity. These entities often serve as holding companies and do not engage in commercial activities. They can open a UAE bank account but cannot obtain a tax residency certificate.
They are typically used for international trading, consulting, or owning assets. There is no minimum share capital requirement for these entities. They cannot sponsor visas, import/export products, or invoice UAE clients.
