Expert Guidance for Setting Up in the UAE Mainland
Why set up your business in the UAE Mainland
A UAE mainland company is also often referred to as an ‘onshore company’ and is registered with the Ministry of Economy and can conduct business within and outside the UAE. The issuing authority is the Department of Economic Development (DED) in the relevant Emirate. The DED issues licenses to operate across the local market and outside the UAE without any restrictions.
Some characteristics of a mainland company include:
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Greater access to the UAE and global market;
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Ability to conduct business across the country without restrictions;
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No restrictions on the number of visas;
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Wider range of real estate options to choose from; and
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Government approvals from several government entities required.
Legal and corporate structure
Corporate structures in the UAE for mainland companies are primarily governed by the Commercial Companies Law, Federal Law No. 2 of 2015 (CCL). There are several types of legal entities that can be established in a UAE mainland:
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Limited Liability Company (LLC);
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Branch office of a foreign company;
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Representative office of a foreign company;
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Civil company; and
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Commercial agents.
Limited Liability Company
An LLC is the most common form of business license for mainland companies and has the total autonomy to carry out its business anywhere in the UAE mainland, including the wider Gulf Cooperation Council (GCC) countries and all the UAE Free Zones. The main feature of an LLC is the restriction on foreign owners who are not allowed to own more than 49% of shares in the LLC. The remaining 51% of the shares are held by a UAE national partner (either individual or corporate), often referred to as a ‘local sponsor’. Each of the partners' liability is limited to their shares in the capital.In an LLC, the day-to-day management may be entrusted to a foreign manager despite the ownership of the foreigner being limited to 49%. The local sponsor usually does not become involved in the day-to-day affairs of the company and the foreign investor can attain a power of attorney from the local partner authorizing him to vote in the general assembly and can act on his behalf.
Civil Company
Civil Company is a legal structure which allows 100% foreign ownership as well as full access to conduct business in the UAE’s local market, but it involves unlimited liability. Whereas the LLC model is governed by the CCL, Civil companies are governed by the UAE Civil Transactions Law, Federal Law No. 5 of 1985 (Civil Code). The difference between the two structures is that the activities carried out by the former are of a commercial nature, whereas in the latter, the activities that may be practiced are more professional skill oriented such as doctors, engineers, accountants and lawyers. Although Civil Companies can benefit from 100% foreign ownership, the requirement of a Local Service Agent (LSA) is mandatory to trade from the mainland. The LSA does not hold any stake in the company and the role of the LSA would be to act on behalf of the company to comply with federal and local departments such as renewal of license, visas and work permits. The LSA’s are paid on an annual fee and do not own any percentage of the shares of the company.
Representative office of a foreign parent company
A representative office is an extension of an existing foreign company. Often confused with a branch, representative offices do not conduct business in the UAE and are limited to promoting the parent company’s activities. Setting up a representative office can be very cost-effective and simple, which allows larger companies to have a presence in the UAE market to facilitate and promote the parent company’s line of business. Essentially, representative offices act as a powerful marketing and promotional tool. However, they do come with some restrictions as to the scope of the activities which a representative office can carry out.
Branch office of a foreign parent company
A branch office of a foreign company retains ownership to the benefit of the foreign parent company and acts as an extension of the parent company which means that the branch office will retain the same identity as the parent company, and thus is not a distinct legal entity on its own. By obtaining a branch license, the foreign parent company is allowed to conduct its business in the UAE through the branch office.
Commercial agents
Previously, commercial agencies were governed under Federal Law No. 18 of 1981. This has now been replaced by Federal Law No. 3 of 2022. The new Federal Law has introduced a provision allowing an international company (even if not owned by UAE nationals) to act as a commercial agent in the UAE to promote and sell its own products, provided that:
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A commercial agent for the relevant products in the UAE is nonexistent; and
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The commercial agent should be new and not previously registered in UAE.
How Solvus can support your Mainland incorporation journey
Solvus can provide end-to-end solutions relating to the establishment of mainland companies in the UAE. We advise on company structure, selection of local partners, exclusive office locations, assist with drafting your business plan, and handle documentation and communication with the respective authorities.
Post-incorporation we provide a various range of services, such as corporate secretarial support, assistance with bank account opening, (regulatory) compliance services, support relating to immigration services, board support and company liquidation.
Choose Solvus for your Free Zone incorporation
Expand your reach with a UAE mainland company. Solvus provides end-to-end support, from selecting the right structure to handling all regulatory requirements. Start your journey today and unlock unrestricted access to local and global markets.
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Contact us today to establish your business in the UAE mainland. With Solvus, your company will gain unrestricted market access and a foundation for limitless growth and success.