Dubai has become a global business hub, attracting entrepreneurs and businesses worldwide. With its strategic location, state-of-the-art infrastructure, and business-friendly environment, Dubai is an ideal location for setting up a company.
Along with these opportunities, there are some complexities in dealing with the various company structures and jurisdictions in Dubai, especially for foreign investors unfamiliar with the legal and compliance requirements.
This article explains the different types of companies in Dubai, their features, the legal framework, and business forms available to foreign investors in compliance with the regulatory requirements.
The experts at Now Consultant help you with business setup, guiding entrepreneurs to secure trade licenses, ensure compliance, and successfully establish their business in Dubai.
Business Jurisdictions in the UAE
Dubai has three main business jurisdictions, with different types of companies and investors. These jurisdictions define the business activities, ownership structures, and compliance regulations for companies operating within them.
1. Mainland Companies:
Mainland companies operate under the jurisdiction of the Department of Economic Development (DED). Mainland licenses allow businesses to interact directly with the UAE market and government projects, giving them access to the local economy.
The new reforms allow 100% foreign ownership in numerous business sectors, making mainland companies an attractive choice for international investors.
Main Features of Mainland Companies:
- Freedom to operate within Dubai and across the UAE without restrictions.
- No limitations on the number of visas issued to employees.
- Opportunities to work with both private and government entities.
- Requirement (in certain industries) to appoint a UAE national as a sponsor.
2. Free Zone Companies
Free Zone companies operate within designated economic areas that attract foreign investment through specific incentives. Each Free Zone in Dubai has its authority and supports industries like IT, media, healthcare, and logistics.
Main Features of Free Zone Companies:
- 100% foreign ownership with no need for a local sponsor.
- Full repatriation of capital and profits.
- Exemption from corporate and personal income taxes.
- Simplified import/export and customs procedures.
- Limited to operate within the Free Zones or internationally.
3. Offshore Companies
Offshore companies are ideal for businesses outside Dubai or the UAE. They cannot conduct business within UAE markets but can hold assets, properties, and bank accounts. Offshore setups are mostly used for tax planning, asset protection, and international trade.
Main Features of Offshore Companies:
- 100% foreign ownership.
- Zero-tax jurisdiction.
- Confidentiality of shareholders and directors.
- Access to international markets through Dubai’s legal framework.
Legal Types of Companies In Dubai
When establishing a business in Dubai, entrepreneurs must choose from various legal structures, each with unique rules and characteristics, as given below:
1. Sole Proprietorship
A sole proprietorship is fully owned and operated by a single individual, suited for entrepreneurs in professional service industries such as consultants, artisans, or freelancers.
Main Features:
- 100% ownership by the individual.
- The owner is fully responsible for the business’s debts and responsibilities.
- They can operate only in specific professional or service-related activities.
2. Limited Liability Company (LLC)
The LLC is the most common business structure in Dubai, often chosen by companies looking to operate in mainland jurisdictions. The recent UAE reforms allow 100% foreign ownership in specific sectors.
Main Features:
- It has 2-50 shareholders.
- Owners are liable only to the extent of their share capital.
- They can access the UAE markets and have the flexibility to run various business activities.
3. Branch of a Foreign Company
International companies can establish a branch in Dubai to expand their business. The branch acts as an extension of the parent company, fully performing its functions and business operations.
Main Features:
- 100% foreign ownership allowed.
- No separate legal identity from the parent company.
- Operations are confined to the activities of the parent company’s license.
4. Free Zone Establishment (FZE) or Free Zone Company (FZC)
Free Zone Establishments and Free Zone Companies are legal structures formed in specific Free Zones. FZEs have a single shareholder, while FZCs can have multiple shareholders.
Main Features:
- It has 100% foreign ownership.
- Exemption from corporate and income taxes.
- They can operate within the Free Zone jurisdiction or international markets.
5. Partnerships – General and Limited
Available for qualified professionals and entities, partnerships enable collaboration on shared business goals.
Main Features:
- General partnerships involve shared responsibility and liability among partners.
- In limited partnerships, one partner takes full responsibility, while others invest money without being directly responsible.
6. Public Shareholding Company
A Public Shareholding Company, also known as a Public Joint Stock Company (PJSC), is a legal entity in Dubai. When incorporating this type of company, the trade name must not include the names of any partnering investors unless the name is a registered patent or trademark owned by a shareholder.
Main Features:
- Can perform industrial, commercial, or professional activities.
- Up to five managers can be appointed.
- Must have at least five UAE national shareholders owning 30%-70% of the capital.
- Can open multiple branches with similar or all licensed activities.
7. Civil Company
A Civil Company is ideal for professionals like doctors, accountants, engineers, or lawyers who wish to practice in Dubai. This type of company allows 100% ownership by partners, and it is limited to professional activities based on intellectual or physical expertise.
Main Features:
- Foreign partners must match the company’s business activity.
- It requires a Local Service Agent (LSA) if owned by a foreign national.
- Open to partners of any nationality.
- For engineering activities, one UAE national must own at least 51%
Business Forms for Foreign Investors
Dubai provides various business structures for foreign investors according to their requirements. These options allow businesses to establish a presence in the region while complying with local regulations.
The options include branch offices, which act as extensions of the parent company, and subsidiaries, which operate independently and are often set up as Limited Liability Companies (LLCs).
Civil companies best suit professionals such as doctors and lawyers, while joint ventures bring local and foreign investors together for specific projects. Shareholding companies, both private and public, are suitable for large-scale operations, with public entities able to issue shares to the public.
Partnerships, including general and limited types, are reserved for UAE nationals and offer flexibility in responsibility-sharing. By choosing the appropriate structure, foreign investors can align their business goals with dubai’s supportive regulatory framework
Legal Framework and Compliance in Dubai
If you are running a business in Dubai, you need to comply with Dubai’s legal frameworks and regulatory guidelines. The legal framework ensures transparency, investor protection, and ease of doing business. The requirements include:
- Trade Licenses: you need to obtain the appropriate license based on business activity (e.g., commercial, industrial, or professional).
- Shareholding Agreements: You must clearly define the roles, responsibilities, and profit-sharing among shareholders.
- Auditing and Reporting: You must maintain accurate financial records and annual audits.
- Visas and Immigration: You must ensure proper visa processing for employees and dependents.
- Tax Compliance: You must adhere to VAT and corporate tax regulations where applicable.
How Can Help You?
At Now Consultant, we help entrepreneurs establish their businesses in Dubai easily. Whether you are setting up a business on the mainland, in a Free Zone, or offshore, our experts provide step-by-step guidance to choose the company type and ensure a smooth and error-free process.
From selecting the right business structure to obtaining trade licenses and fulfilling compliance requirements, we handle every step to help you avoid fines and penalties.
