The types of Business Licenses issue in United Arab Emirates (UAE) are professional, commercial, industrial and tourism. The professional license covers services offered by professionals, artisans and craftsmen; the commercial license covers all trading and commercial activities performed with an intention of making profit.The industrial license covers all industrial and manufacturing activities. The tourism license covers all activities related to hospitality & tourism. The type of license depends on the business activity of the company or enterprise.
In UAE, a company can be formed in any of the following three jurisdictions: Mainland, Free Zone and Offshore. The licensing authority in mainland is the Department of Economic Development of the respective emirates. In Free Zones, the relevant Free Zone Authority will be the licensing authority and respective Offshore Authority in the case of Offshore jurisdiction.
A mainland company is an onshore company and license to establish the entity is issued by the Department of Economic Development (DED) of the respective emirate. A mainland business is allowed to do business in the local UAE
market as well as outside UAE without any restrictions. It is necessary to understand the term “Mainland” as per DED’s definition in order for an entrepreneur to take a decision to register a Mainland Company in UAE. Different
types of license under mainland are:
For all licenses, the UAE now allows 100% of shares to be owned by expat individuals. As indicated in the latest decree.[1]
Following are the facts about Mainland Companies in UAE.
The common legal forms of business in Mainland, Free zone and Offshore formation in the UAE are:
Under Law of UAE, there are five types of business establishments applicable to foreign entities interested in establishing their presence in the UAE. UAE government has implemented wide range of economic and administrative
policies which has made UAE an attractive business destination.
A company can create a permanent establishment, create an entity in any of the UAE free zone, enter into a commercial agency agreement, establish a branch office, create a civil company (currently possible to establish
a company in Dubai, Sharjah and Ajman).
A Limited Liability Company (LLC) is the most common type of registration in the UAE and is recommended where the purpose of the entity is to make sales within the region. However, 100% foreign ownership of such
an entity is not permitted. Under the UAE Commercial Companies Law (CCL), foreign investors are permitted to hold up to 49 per cent equity ownership in UAE companies and 51 per cent of the equity must be held
at all times by one or more UAE nationals.
In accordance with Article (218) of the CCL a Limited Liability Company can be formed by a minimum of 1 (as per Article 8 of the Federal Commercial Company Law of 2015) and a maximum of 50 shareholders whose liability
is limited to their shares in the capital of the company. Recent amendments to Article (217) of the CCL that came into force in June 2009 removed the requirement for minimum share capital (previously AED 300,000
in Dubai and AED 150,000 in other Emirates) allowing founders of a limited liability company the freedom to determine the company’s share capital which could be less than the earlier prescribed bottom line.
A LLC must appoint a minimum of one manager and up to a maximum of five managers for the business. Managers must be appointed by a Memorandum of Association or by a management contract, for a fixed term or an unlimited
term. Unless the Memorandum of Association states otherwise, the manager has full powers of administration and management of the LLC. LLC is not allowed to practice its activities in the UAE without a Trade
License and Commercial Registration Certificate.
A branch office has the same legal identity as its parent company and conducts business under the name of its parent company. A branch office may only be engaged in activities similar to those of its parent company
but it is not permitted to carry on the business of importing the products of its parent company, a function reserved for local trade agents. In some cases the Branch of a foreign company are required to obtain
an additional license from UAE Ministry of Economy.
Representative office, on the other hand, is limited to promoting its parent company’s activities i.e. gathering information and soliciting orders and projects to be performed by the company’s head office.
A UAE national must be appointed as a ‘service agent’ for the branch or representative office.
A civil company is a business partnership for professionals like doctors, lawyers, engineers and accountants. A civil company is 100% owned by the professional partners (except for engineering civil company), however,
a UAE National Local Service Agent is normally required. A foreign company can be a partner in a civil company, as long as the foreign company is in the same field as the civil company.
