Dubai has emerged as a global business hub, attracting entrepreneurs and investors worldwide. With its strategic location, business-friendly environment, and tax incentives, Dubai offers ample opportunities for those looking to establish a company. One of the critical considerations for entrepreneurs is whether to set up their business in a free zone or on the mainland. In this guide, we’ll walk you through the process of mainland company formation in Dubai, highlighting the steps involved and critical considerations.
Why Choose Mainland Company Formation?
While free zones in Dubai offer numerous benefits such as 100% foreign ownership, no corporate taxes, and customs privileges, mainland company formation comes with its advantages. These include:
- Access to the Local Market: Companies established on the mainland can conduct business anywhere in the UAE, including within Dubai and other emirates.
- No Currency Restrictions: Mainland companies are not subject to currency restrictions, allowing seamless financial transactions.
- Diverse Business Activities: Mainland companies can engage in a broader range of business activities compared to those in free zones.
- Potential for Government Contracts: Mainland companies may have better access to government contracts and projects.
Steps for Mainland Company Formation in Dubai
Determine Business Activity
The first step in mainland company formation is to determine the nature of your business activity. You must select the appropriate license category based on your planned activities.
Choose a Local Partner
Unlike free zone companies, where foreign investors can own 100% of the business, mainland companies require a local sponsor or partner who holds at least 51% of the shares. Please choose your local partner carefully, ensuring they are reliable and trustworthy.
Reserve a Trade Name
Next, you’ll need to reserve a trade name for your company. The name should be unique and relevant to your business activities. Once approved, the name will be reserved for 60 days.
Draft the Memorandum of Association (MOA)
The Memorandum of Association outlines the company’s objectives, activities, and details of shareholders. It must be drafted in Arabic and registered with the Department of Economic Development (DED).
Obtain Initial Approval
Submit the required documents to the DED for initial approval, including the MOA and passport copies of shareholders. This step involves obtaining the necessary permits and approvals from relevant authorities.
Rent Office Space
Mainland companies are required to have physical office space in Dubai. Lease an office that meets the DED’s criteria for size and location.
Finalize Licensing and Registration
Once you’ve obtained initial approval and leased office space, complete the licensing and registration process with the DED. This involves paying the necessary fees and obtaining your commercial license.
Conclusion
Mainland company formation in Dubai allows entrepreneurs to tap into the local market and expand their business across the UAE. Following the steps outlined in this guide and seeking professional assistance when needed, you can navigate the process smoothly and establish a successful business presence in Dubai.
FAQs
Can foreign investors own 100% of a mainland company in Dubai?
No, mainland companies require a local sponsor or partner who holds at least 51% of the shares.
What are the benefits of starting a business on the mainland instead of a free zone?
Mainland companies have access to the UAE market, no currency restrictions, and the potential for government contracts.
How long does it take to complete the mainland company formation process?
The timeline can vary depending on various factors, but it typically takes a few weeks to a couple of months to complete all the necessary steps.
What are the critical differences between mainland and free zone company formation?
Mainland companies require a local partner, have access to a broader range of business activities, and can operate anywhere in the UAE, while free zone companies offer 100% foreign ownership, tax benefits, and customs privileges.
Is it necessary to have a physical office space for a mainland company?
Yes, mainland companies must have a physical office space in Dubai, which must meet the Department of Economic Development criteria.