MAINLAND COMPANY SETUP MADE SIMPLE: NAVIGATING THE RULES AND PROCESSES IN THE UAE

COMMERCIAL COMPANIES LAW 2021 PERMITS THE INCORPORATION OF THE FOLLOWING TYPES OF MAINLAND COMPANIES IN THE UAE:

1. Joint Liability Company – General Partnership Company
2. Simple Limited Liability Partnership Company
3. Limited Liability Company (LLC)
4. Public Joint Stock Company
5. Private Joint Stock Company

The Commercial Companies Law 2021 provides that if a company does not adopt any of the above-mentioned forms, it will be null and void. Therefore, it is vital that you seek the correct advice when setting up a Dubai company.

In addition to the above structures, foreign companies or entities registered in free zones can also set up a Dubai branch or a representative office within mainland UAE. However, the business activities of the branch must be identical to the business activities of the parent company.

THE IMPORTANT DOS

As per the aforementioned provisions, the following are some of the requirements for investors setting up business in Dubai mainland:

• Discuss and negotiate the terms of the shareholder agreement.
• The foreign shareholder must enter the UAE at least once at the time of the initial approval.
• Ensure the company meets the minimum number of shareholders and directors. 
• The company’s total number of shareholders, directors or manager does not exceed the limit.
• Any changes in the shareholding, the MoA, and other company documents will require formal amendments.

The following are some of the main benefits of an onshore / mainland company:

• No restrictions on doing the business throughout the UAE and globally.
• No foreign exchange control, quotas, or trade barriers.
• Low import duty.
• No stipulation for yearly audits.
• A wide range of license type and activities.
• No personal tax.
• 100% repatriation of capital and profits.
• No limitation in obtaining employee visas.
• Ability to get affordable space with flexible rent or lease for office anywhere in the UAE.

THE IMPORTANT DON’TS

Companies that are set up in mainland Dubai should be aware that:

• The law does not permit the use of certain words within the trade name of a company. The company name should not include the name of a country, government, or religious words etc.
• A company that is registered by the DED is only permitted to perform those activities which are stated in the company trade license. Any other additional activities outside of the scope where the business wishes to perform should not be undertaken without prior permission.
• A branch of a foreign company should not undertake any trading activities. The branch must operate as per the parent company business activities.
• A representative office can not undertake any trading activity. Representative offices are meant only to act as a marketing arm of the parent company.
• A company that is established in mainland UAE is governed by the UAE Commercial Companies Laws and therefore should not undertake any action against the public policy or morality of the state.

To conclude, setting up a company in mainland Dubai can be lucrative for business owners that want to target the UAE market for selling their products and services. Most importantly, for those that are starting a company in mainland Dubai or Abu Dhabi, the UAE Commercial Companies Law does not prescribe a minimum share capital.

At Creation Business Consultants, we will ensure your mainland company is established for success by ensuring your trade license has the maximum number of business activities. Our team of Corporate Structuring experts will leverage our experience to help understand the latest changes and the details needed to run your company in Dubai. Contact our corporate structuring team to learn more about setting up a company in the UAE and Saudi Arabia, email us at [email protected], or call UAE at +971 4 878 6240.

Scott Cairns,
Managing Director