Mainland Company Formation
United Arab Emirates (UAE) established on 2nd December 1971 had 6 emirates at the time, namely Abu Dhabi, Dubai, Sharjah, Ajman, Umm Al Quwain & Fujairah. On 10th Feb 1972, Ras Al Khaimah also joined the UAE, thus making the famous 7 emirates of UAE. Each emirate has a separate ruler and together they jointly form the Federal Supreme Council.
UAE, located in western Asia on Persian Gulf and having Saudi Arabia, Iran, Qatar and Oman as its neighbors, is centrally located between Asia, Europe and Africa, making it extremely sought-after trading hub internationally.
Arabic is the official language and Islam is the official religion of UAE. UAE is considered to be 7th largest oil rich country globally and Late His Highness Sheikh Zayed, the first President of UAE, along with members of Supreme Council has turned the oil economy in to a diverse trading, business, real estate and tourism driven economy, thus reducing the reliance on oil income.
There is zero income tax in UAE, one of the prime reasons for international investors MATES TALENT GLOBAL to the nation. However, 5% VAT (Value added tax) has been implemented from January 2018.
UAE’s wealthy international profile has made it a regional power center and attraction for worldwide entrepreneurs to establish businesses in UAE.
The World Bank has ranked UAE at the 26th position based on its economy and regulatory system in its “Doing Business 2017 Report”. UAE is the second largest economy in the GCC region.
Currently UAE enjoys high volume of tourists from all over the world and the number is expected to go up significantly due to upcoming Expo 2020.
UAE primarily allows business entities to be registered either as a mainland company, a free zone company or an offshore company. All seven emirates have separate departments of economic development, several other Government departments and federal authorities. UAE also has several free zones across all seven emirates having their own controlling single window administrative Government authority
UAE Mainland Business Setup
It is necessary to understand what it means by the term Mainland Company in order for an entrepreneur to take a decision to register a Mainland Company in UAE.
Following are the facts about Mainland Companies in UAE.
- These companies are regulated under Federal Law No. 2 of 2015 which came in to effect on 1 July 2015
- No expatriate can own more than 49% in any commercial limited liability company
- GCC national can own 100% shares in any company
- GCC companies or individual GCC national can make partnership with UAE national
- For certain business activities, by law only UAE national can own 100% shares
- Business activities covered under professional category can be 100% owned by foreigners but it is mandatory have UAE national as a service agent.
- It is considered as on shore business entity
Permissible Legal Structures Available To Conduct Business on Mainland UAE
Businesses can function their operations under different legal structures available according to their business plan and activities. Mainly those are as following. All these licenses are primarily issued by Department of economic Development in each emirate of UAE along with different departments/ ministries depending on various special approvals.
- Limited Liability Company popularly known as LLC. This structure is applicable for commercial activities and in general to any trading activity. It is must for a UAE National to own 51% of shares. Maximum 50 shareholders are allowed in this type of legal structure. Company’s financial liability is limited to company share capital and assets only. Company’s day to day management is handled by manager/managers appointed under notarized MOA. Share holder must to be physically present once in order to establish this type of company.
- Professional sole establishment or professional civil company. This structure is applicable to companies offering professional services. It is must to appoint UAE national as a shareholder.
- Branch of a foreign company. These licenses are only issued after an approval from ministry of economy. The proposed activity of the branch company should be in the same domain of the parent company.
- Representative office of a foreign company. These companies are not allowed to practice any business activity or issue any invoices.
- Public share holding companies
Documents Required For Mainland Company Formation in UAE:
Following are in general documents required to be submitted.
- Passport copies of share holders
- Attested degree certificate if required
- CV if required
- Attested parent company documents if it is a branch or representative company
- AUD ( American university ) exam certificate if it a consultancy firm on Dubai mainland
- NOC if shareholder is on residence visa
- Ejari as a proof of rented office premises
Attestation has to be done by foreign affairs ministry of home country and UAE embassy in Home country and MOFA in UAE.