Setting up a Mainland company in the UAE is a popular choice for businesses that want to operate freely in the local market and have access to government contracts and other opportunities. A Mainland company is established under the UAE Commercial Companies Law, which allows for full operations within the UAE’s domestic market and international trade. Here’s a detailed guide to setting up a mainland company in the UAE:
1. Types of Mainland Companies
- Limited Liability Company (LLC): The most common mainland company structure, where the liability of the shareholders is limited to their shares in the company. Requires at least two partners and a maximum of 50 shareholders.
- Sole Establishment: A company owned by a single individual. The owner has unlimited liability and must be a UAE national or GCC national.
- Civil Company: Typically used for professional services such as legal, medical, and consulting businesses. The business is owned by professionals and doesn’t require a local sponsor.
- Branch Office: An extension of a foreign company in the UAE. It allows the foreign company to operate under the same name and legal structure but may be subject to certain restrictions.
2. Key Requirements for Mainland Company Setup
- Local Sponsor: For most mainland company setups (except for professional services and certain other activities), a UAE national or a UAE-owned company must act as a local sponsor. This sponsor holds 51% of the company’s shares, while the expat or foreign shareholder retains control of 49%. For professional services, 100% foreign ownership is allowed.
- Business Activity: You must define the business activity and ensure it complies with the categories specified by the UAE’s Department of Economic Development (DED). The UAE allows a wide range of business activities, including trading, manufacturing, consultancy, IT, and services.
- Company Name: You must choose a unique company name that follows the UAE’s naming conventions (e.g., no offensive language, no abbreviations).
- Office Space: A physical office space is required for mainland company formation. The space must meet the size and zoning regulations set by the local authorities, and the lease agreement must be submitted during the application process.
- Share Capital: The minimum share capital for an LLC in the UAE is usually not specified by law, but it must be sufficient to cover the business operations. However, certain sectors may have a capital requirement.
3. Steps for Mainland Company Setup
- Choose the Business Activity: Define the nature of your business (e.g., trading, professional services, manufacturing, etc.) and check if the activity requires any special permits or licenses.
- Find a Local Sponsor (if required): Identify a UAE national partner or sponsor (for LLCs) who will hold the majority of the shares.
- Choose a Company Name: Ensure the company name adheres to the guidelines provided by the Department of Economic Development (DED).
- Prepare Documentation: Submit the necessary documents, which typically include:
- Passport copies of the shareholders and manager.
- Proof of address.
- UAE residency visa (for foreign nationals).
- No Objection Certificate (NOC) from the current sponsor (if applicable).
- Lease agreement for office space.
- Apply for the Trade License: Submit your application to the Department of Economic Development (DED) along with all the required documents. DED will review and issue your trade license.
- Register with the Chamber of Commerce: After the DED issues the trade license, register your company with the local Chamber of Commerce for official recognition.
- Obtain Additional Approvals (if needed): Depending on your business activity, you may need additional approvals from regulatory bodies such as the Ministry of Health, Ministry of Education, or others.
- Open a Corporate Bank Account: Once your company is registered, open a business bank account with a UAE bank to handle financial transactions.
- Visa and Employment Process: Apply for residency visas for the business owner, employees, and dependents if needed.
4. Advantages of Mainland Company Setup
- Access to Local Market: Mainland companies can trade directly with the UAE market without the need for a local distributor or agent.
- Government Contracts: Mainland companies are eligible to bid on government contracts, which can be a significant business opportunity.
- Flexibility in Business Activities: Mainland companies can engage in a wide variety of business activities, making them more flexible than companies set up in free zones.
- No Limit on Number of Local Employees: There are no restrictions on hiring UAE nationals or foreign employees.
- Ability to Operate Anywhere in the UAE: Mainland companies are not restricted to operating in specific free zones or areas, and they can set up their offices anywhere in the UAE.
5. Challenges of Mainland Company Setup
- Local Sponsor Requirement: For most types of businesses, having a local sponsor who holds 51% of the shares can be a challenge for foreign investors. However, the UAE government has introduced changes to allow 100% foreign ownership in certain business sectors (e.g., technology, consulting).
- Higher Costs: Mainland setups tend to have higher operational and office space costs compared to free zones.
- Complexity in Licensing: Some business activities require additional approvals from regulatory bodies, which can slow down the setup process.
6. Recent Changes in Regulations (for 100% Foreign Ownership)
- As of 2021, the UAE introduced a new law that allows 100% foreign ownership of mainland companies in specific sectors, including certain professional, technical, and industrial activities. This has opened up more opportunities for foreign entrepreneurs to set up businesses without needing a local sponsor in industries like technology, e-commerce, consultancy, and more.
7. Costs of Setting Up a Mainland Company
The cost of setting up a mainland company in the UAE depends on several factors, including:
- Trade license fees: The cost of a trade license varies depending on the business activity.
- Office space rent: The cost of renting commercial office space in the UAE is a significant factor, especially in prime locations.
- Sponsor fee: If applicable, the local sponsor might charge an annual fee for holding 51% of the company shares.
- Government fees: Includes fees for obtaining permits, trade licenses, registration, and other approvals.
8. Support from Alyah Audit for Mainland Company Setup
Alyah Audit, as a professional firm based in Dubai, can assist with the entire mainland company setup process, providing the following services:
- Business Consultancy: Offering advice on business structure, legal requirements, and industry-specific guidelines.
- Local Sponsor Identification: Helping identify a reliable and trustworthy local sponsor, if required.
- Document Preparation: Assisting with the preparation and submission of required documents to the Department of Economic Development (DED).
- Office Space Selection: Guiding businesses to choose suitable office space that meets regulatory requirements.
- License Application: Handling all procedures for obtaining trade licenses, including necessary approvals.
- Bank Account Setup: Assisting with opening a corporate bank account.
- Visa Processing: Handling employee and business owner visa applications, as well as residency permits.
By working with Alyah Audit, you can ensure a smoother and more efficient process for establishing your mainland company in the UAE.
If you are interested in setting up a mainland company in the UAE, Alyah Audit can provide tailored support and guidance throughout the entire process, ensuring that your business complies with local laws and is set up for success.