Telephone Numbers
Telephone Numbers
Setting up a company in Dubai, United Arab Emirates
For detailed information +90 542 381 3868 'Call.
The legal system of the UAE is primarily based on civil law principles, influenced by Egyptian and French law. This structure is also inspired by Islamic Sharia rules. While Sharia law is the primary source, especially in areas like family law, inheritance, and some criminal cases, commercial transactions are largely conducted within the framework of civil laws. This dual structure allows for the presence of both Sharia courts and civil law courts in the country. However, the most significant distinction for international investors arises in the financial free zones. The Dubai International Financial Centre (DIFC) and the Abu Dhabi Global Market (ADGM) have adopted the English Common Law system. These zones have their own independent courts, and all legal proceedings are conducted in English, which offers a familiar and secure legal ground for foreign investors.
The UAE is a federation consisting of seven emirates. The Constitution grants specific powers such as foreign affairs, defense, and federal finance to the federal government, while allowing the emirates extensive autonomy to establish their own local governments, set their economic policies, and ensure their internal security.
From a business setup perspective, the UAE has three main jurisdictions:
One of the biggest advantages of establishing a company in a free zone is that 100% foreign ownership is generally permitted, and they are often exempt from policies like "Emiratisation" (the mandatory hiring of local workforce). On the mainland, while 100% foreign ownership is now permitted for most activities outside of "strategic" sectors, local partner requirements may still exist for some activities.
What is it? It is the simplest business structure where a single individual operates under a trade license issued in their own name. Legally, it is considered an "establishment" rather than a "company."
Who is it suitable for? It is generally preferred by UAE and Gulf Cooperation Council (GCC) nationals. Foreign nationals can also establish this structure but are required to appoint a "Local Service Agent" (a UAE national individual or a company 100% owned by UAE nationals). This agent has no legal or financial responsibility over the business; they merely act as an official representative.
Advantages and Disadvantages: The main advantage is the low cost of establishment and minimal formalities. The most significant disadvantage is that the business has no separate legal identity from its owner. This means the owner is personally liable for all the debts of the business without limitation, using their personal assets.
What is it? A type of partnership where two or more partners are jointly and severally liable for all the debts of the company without limit.
Advantages and Disadvantages: All partners must be natural persons and are liable for debts with their personal assets. This structure offers no practical advantage due to the unlimited liability risk and is therefore rarely used.
What is it? According to Federal Law No. 32 of 2021 on Commercial Companies, this type of company consists of two types of partners:
Advantages and Disadvantages: Since the general partners still have unlimited liability, this structure also carries significant risk and is not commonly used in practice.
What is it? A partnership established for the purpose of providing professional services, such as consultancy, engineering, or medical services. It requires at least two partners, and their liability is unlimited. It is governed by the Civil Code, not the Commercial Companies Law.
Advantages and Disadvantages: While this structure allows for the provision of professional services, its biggest disadvantage is the unlimited liability of the partners. Additionally, foreign partners must appoint a local service agent.
What is it? The most frequently chosen, modern, and flexible company type for foreign investors setting up a business in the UAE. Its structure is similar to the "private limited company" model in the UK. It can have between two and 50 shareholders.
It can also be established as a "One Person Company LLC" by a single natural or legal person.
Advantages and Disadvantages:
Advantages:
Disadvantages:
What is it? A public company whose capital is divided into equal, tradable shares. It is used to raise capital for large-scale projects and is similar to the "public limited company" (PLC) model in the UK. The liability of shareholders is limited to the value of their shares.
The minimum share capital requirement is AED 30 million.
Advantages and Disadvantages: Its greatest advantage is the ability to raise significant capital through a public offering (IPO). Also, activities like banking and insurance can only be carried out by PJSCs. The disadvantage is that its formation and operation are very complex, require numerous official formalities, and are strictly regulated by the Securities and Commodities Authority (SCA).
What is it? It has fundamentally the same structure as a PJSC but is not publicly traded. The differences are:
Advantages and Disadvantages: It is a more popular option among foreign investors than PJSCs. However, it still requires extensive corporate and regulatory procedures, including pre-approvals from the Ministry of Economy. Its formation process is largely similar to that of a PJSC.
What is it? A legal extension of a foreign parent company without a separate legal identity. The name and activities of the branch must be the same as the parent company. It is mandatory to obtain a license from the relevant DED or free zone authority.
Branches on the mainland cannot engage in trading activities such as importing, exporting, or distributing the parent company's products. An LLC or a free zone entity is usually preferred for such activities.
To establish a branch on the mainland, it must be registered with the Ministry of Economy (MOE), provide a bank guarantee of AED 50,000, and appoint a local auditor. The parent company is 100% liable for all debts and obligations of the branch.
Advantages and Disadvantages: Opening a branch allows a foreign company to operate under its own brand in the UAE, conduct marketing, and consolidate its global presence. Since it has no separate legal personality, its financial statements can be consolidated with the parent company. It provides no tax advantage within the UAE, as both LLCs and branches are subject to the same tax regime.
The two most popular methods for a foreign company to operate in the UAE are to establish a new Limited Liability Company (LLC) or to open a Branch.
Under the new regulations, an LLC to be established on the mainland can be 100% foreign-owned, provided that the activity to be carried out is not considered "strategic". In free zones, 100% foreign ownership is the standard rule.
A branch is generally used to promote the parent company's activities, market its services, or deliver its services. A branch does not need its own memorandum of association as it is a direct legal extension of the parent company.
A foreign company can sell its products in the UAE without establishing a physical presence by appointing a commercial agent or through a local distributor.
Advantages/Disadvantages: A foreign company cannot use its branch on the mainland to directly buy, sell, and distribute goods. Therefore, the most suitable method for such commercial activities is to open a branch in a free zone for re-export purposes or to establish an LLC on the mainland.
What is it? A foreign manufacturer or trader can enter into an agreement with a local commercial agent to import and distribute its products in the UAE market. These agents can be registered or unregistered.
Legal Requirements: According to federal laws, a "registered" commercial agent with the Ministry of Economy (MOE) can only be a UAE national or a company wholly owned by UAE nationals. However, there is no obligation to use such a registered agent for most products. Parties can enter into standard distribution agreements that are not registered with the MOE. In this case, it is possible for the distributor to be a 100% foreign-owned company.
Advantages/Disadvantages: The advantage of a registered commercial agency agreement is the strong legal protection it offers the agent; the contract cannot be terminated without the consent of both parties or for a very valid reason. This can also be a disadvantage for the foreign company. Unregistered distribution agreements offer more flexibility to the parties.
Joint ventures (JVs) are quite common in the UAE, both among local companies and between foreign and local companies. Foreign companies often prefer this route to benefit from a local partner's market knowledge and expertise.
The most common method is for two or more parties to come together to form a new legal entity, usually an LLC. This new company carries out the activities of the joint venture.
Parties can also enter into a contractual agreement for a specific project or purpose without forming a new company. In this structure, the rights and obligations of the parties are determined entirely by the joint venture agreement.
Regardless of the structure chosen, it is critically important to have a Joint Venture Agreement that regulates all details between the parties. This agreement should cover the management structure, profit and loss sharing, responsibilities, termination clauses, and all other important matters.
Yes, with the Federal Decree-Law No. 19 of 2020, the institution of trusts has been given a legal framework on the UAE mainland. Trusts can be for charitable purposes or private (for asset management and investment). A trust structure can offer advantages such as:
In addition, financial free zones like the DIFC have their own well-established trust laws.
An LLC to be established on the Mainland is licensed by the Department of Economic Development (DED) of the relevant emirate and is subject to the Commercial Companies Law (CCL). An LLC to be established in a free zone is subject to the rules and regulations of the respective free zone authority. Depending on the company's field of activity, additional approvals from ministries or institutions may also be required.
The concept of selling "shelf companies" does not exist in the UAE. Every company is established from scratch.
The process of establishing an LLC on the mainland generally includes the following steps:
The primary legal document of an LLC is its memorandum of association. This document is generally not public. For companies on the mainland, it is prepared in both Arabic and English and is notarized. In free zones, English is usually sufficient. The MoA must contain at least the following information:
In addition, it is common practice for shareholders to enter into a separate "shareholders' agreement" to regulate the roles and rights of the local partner, especially in cases where 100% foreign ownership is not possible.
It is a legal requirement for the accounts of LLCs on the mainland to be audited by a locally registered auditor. Although the law requires these audited financial statements to be submitted to the DED, in practice this is not always strictly enforced. However, in free zones, it is mandatory to submit audited financial statements to the respective free zone authority each year, and failure to comply can result in fines. Public (PJSC) and Private Joint Stock Companies must also have their accounts audited. PJSCs are also required to publicly disclose their financial statements on a quarterly and annual basis. All annual financial statements must be prepared in accordance with International Financial Reporting Standards (IFRS).
Since a branch is an extension of the parent company, its financial statements are consolidated with the parent's accounts. However, the accounts of a branch of a foreign company on the mainland must also be audited by a local auditor, and the audited reports must be submitted to the Ministry of Economy (MOE).
The basic requirements are as follows:
In the UAE, notarization is generally not required for the validity of commercial contracts. Contracts can be signed by the company's manager, general manager, or a duly authorized representative. Electronic signatures are legally valid and recognized under Federal Decree-Law No. 46 of 2021.
A standard LLC can have a minimum of 2 and a maximum of 50 partners. However, it is also permitted to establish a "One Person LLC" by a single natural or legal person.
The Commercial Companies Law does not stipulate a minimum capital requirement for LLCs. However, in practice, it is common for many LLCs established on the Dubai mainland to declare a capital of around AED 300,000. The minimum capital requirements for free zones vary from one zone to another.
Yes. Article 80 of the Commercial Companies Law grants existing shareholders a "right of first refusal". When a shareholder wishes to transfer their shares to a third party outside the company, they must notify the other shareholders of this intention and the terms of the sale. The existing shareholders have priority to purchase these shares on the same terms. The process and mechanism for share transfer are usually detailed in the company's memorandum of association, and the transfer must be made through a notarized official document.
The law grants minority shareholders the right to request the company's annual audited financial statements and to inspect the company's commercial books and records. Additionally, minority shareholders can be provided with extra protections, such as veto rights or greater say in management, through a specially drafted "shareholders' agreement". In an LLC, the liability of all shareholders is limited to the capital they have committed to the company.
Yes, the legal minimum requirements are as follows:
Yes, a "special resolution" (i.e., the approval of shareholders representing at least 75% of the company's capital) is required for fundamental corporate changes such as:
In practice, some local authorities may require 100% shareholder approval for some of these actions.
In companies established on the UAE mainland, as a rule, all shares have equal voting rights. However, the memorandum of association or a shareholders' agreement can stipulate that certain decisions require a higher approval rate (e.g., 100%), effectively giving minority shareholders a veto right. In recent years, some free zones have begun to allow the creation of different classes of shares (e.g., Class A, Class B) with different rights, offering more flexible governance structures.
Yes. Some commercial activities require additional approvals from relevant ministries or institutions. For example:
In addition, certain "strategic activities" mentioned below may be completely closed to foreign investors.
The UAE restricts foreign ownership in some sectors defined as "activities with a strategic impact". These activities generally either require majority ownership by UAE nationals or are wholly owned by them. These sectors include:
Outside of these strategic sectors, 100% foreign ownership is permitted for LLCs in many fields on the mainland, including trade, industry, logistics, and consultancy.
There are no currency controls or restrictions on the repatriation of capital or profits from the UAE.
The UAE has strict Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) laws that are in line with international standards. Financial institutions and certain businesses are obliged to report suspicious transactions.
Yes. Foreign nationals can own 100% of real estate only in government-designated "freehold" areas. Ownership in areas outside these designated zones is reserved for UAE and GCC nationals only. This rule applies to all emirates.
The basic requirements for directors of an LLC are:
There are no nationality or gender restrictions for directors. However, banks in the UAE generally require the general manager who will operate the company's accounts to have a valid UAE residence visa. For directors of PJSCs, there are additional restrictions (e.g., not being a director in a certain number of other companies). In case of a conflict of interest, the director must declare it to the board and abstain from voting on the matter. The practice of "corporate directorship" (appointing a company as a director of another company) is not permitted on the UAE mainland.
There is no requirement for LLCs to form a board of directors; the company can be managed by a single manager. For PJSCs and Private Joint Stock Companies, however, a board of directors is mandatory. The board of a PJSC must consist of an odd number of members between 3 and 11. Company employees have no legal right to be represented on the board of directors.
For a company to go public, it must be converted into a PJSC (Public Joint Stock Company).
The UAE's tax system is very attractive to investors. The main taxes are:
There is no concept of "tax residency" in the classic sense in the UAE. However, companies wishing to take advantage of double taxation treaties can obtain a "Tax Residency Certificate" from the Ministry of Finance by meeting certain conditions. With the introduction of Corporate Tax, all companies established or managed in the UAE are required to register with the Federal Tax Authority (FTA) and file a tax return.
No. There is no withholding tax on dividends or profits sent abroad from the UAE.
Yes, with the introduction of the Corporate Tax Law, transfer pricing rules have been introduced, requiring that transactions between related parties and connected persons adhere to the "arm's length" principle.
As part of the Corporate Tax regime, companies in free zones continue to benefit from a 0% corporate tax rate if they earn "Qualifying Income" and meet other specific conditions. This is one of the UAE's most significant tax incentives. In addition, various local and federal programs are available to support specific sectors and SMEs.
Employment relationships in the UAE are governed by Federal Decree-Law No. 33 of 2021 (the new "Labour Law"). This law applies to all private-sector employees (both UAE nationals and foreigners) in the country, except for those in financial free zones like DIFC and ADGM, which have their own employment laws.
A foreign national wishing to work in the UAE must have the following three essential documents:
The entire process is managed by the company that hires the employee (the sponsor). In free zones, these permits are coordinated by the respective free zone authority.
The United Arab Emirates (UAE) is a federation of seven emirates: Dubai, Abu Dhabi, Ajman, Fujairah, Ras Al Khaimah, Sharjah and Umm Al Quwain. The UAE Constitution grants certain powers to the federal government while allowing each emirate to have autonomous control over its internal security and natural resources.
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