Setting up a business in the UAE offers numerous opportunities due to its strategic location, excellent infrastructure, and business-friendly environment. However, steering the legal requirements is vital for a successful establishment. Here’s an inclusive guide to the legal requirements for setting up a business in UAE.
Choose the right business structure:
Mainland company: A mainland company allows you to operate anywhere in the UAE. It typically requires a local sponsor or service agent holding at least 51% of the shares, except for professional services where 100% foreign ownership is permitted.
Free Zone company: Free zones offer 100% foreign ownership, tax exemptions, and full repatriation of profits. However, businesses are restricted to operating within the free zone or internationally, with limitations on direct trade within the UAE mainland.
Offshore company: Offshore companies are ideal for businesses looking to conduct international trade without a physical presence in the UAE. They provide benefits like tax exemptions and confidentiality.
Obtain the necessary licenses:
Trade license: A trade license is mandatory for all businesses. The type of license depends on the nature of your business: commercial (trading), industrial (manufacturing), or professional (services).
Initial approval: Before obtaining a trade license, you must receive initial approval from the Department of Economic Development (DED) or the respective free zone authority. This approval indicates that the UAE government has no objection to your business.
Reserve a trade name: Choose a unique trade name that complies with the UAE’s naming conventions. The name should not violate public morals or order, must not have been previously registered, and should be appropriate to the nature of the business.
Draft a memorandum of association (MOA): For mainland companies, drafting a memorandum of association (MOA) is essential. The MOA outlines the business activities, capital structure, and share distribution among partners. It must be notarized by a public notary.
Secure a physical office space:
Mainland requirements: Mainland companies must have a physical office space to obtain a trade license. The office must meet the municipality’s regulations regarding size and location.
Free zone requirements: Free zone companies must lease office space within the free zone. Options range from flexi-desks to full-scale offices, depending on the business’s needs.
