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Business incorporation in UAE requirements | Start a business

News & Blog

Business incorporation in UAE requirements | Start a business

The United Arab Emirates (UAE) has become a hub for global business, attracting entrepreneurs from around the world with its strategic location, developed infrastructure, and business-friendly regulations. If you’re looking to set up a company in the UAE, this guide will walk you through the key requirements and steps for business incorporation.

Business incorporation in UAE requirements

While the exact requirements may vary depending on the specific structure and activities of your company, these are the typical key elements you’ll need to incorporate a business in the UAE:

  • Business Licenses: You’ll need to obtain the relevant trade licenses for your business activity from the Department of Economic Development (DED) or relevant free zone authority. This confirms you have approval to conduct your intended business activities.
  • Business Registration: You must formally register your company with the DED or free zone authority by submitting your license application along with other documents like shareholder agreements and memorandums of association.
  • Appoint a Local Service Agent: Onshore companies in the UAE mainland are required to appoint a local service agent (individual or company) to assist with government-related transactions.
  • Business Premises: Your company will need to maintain a physical office or workspace, whether in a commercial building or a flexi desk in a coworking space. Virtual offices are generally not acceptable.
  • Shareholder and Director Details: Shareholder and director details, including copies of passports/emirates IDs, must be provided as part of the registration process. Shareholders can be individuals or corporate entities.
  • Minimum Capital Requirement: Mainland companies require minimum capital of AED 300,000 while free zone companies have varying minimum capital requirements starting from AED 50,000 or less.
  • External Approvals: Approvals from relevant government entities are required for certain business activities, such as food services, education, healthcare, etc. Your local sponsor can advise you on any approvals needed.

See: Pro and visa service 

Step-by-Step Process for Company Formation in the UAE

While each emirate and free zone have their own unique procedures, the typical steps are:

  1. Identify business activity and location – Will you be onshore or in a free zone? This impacts procedures.
  2. Select a business name and reserve it with the registrar.
  3. Obtain required licenses from DED or free zone authority. Local sponsor will apply on your behalf.
  4. Draft memorandum and articles of association with required shareholder and director information.
  5. Submit license application and required documents to the registrar to establish the company.
  6. Appoint a local service agent if required (for onshore companies).
  7. Once approved, obtain trade license and establish an office or workspace.
  8. Register for taxes, social insurance, visas, and other relevant requirements. Open bank accounts.
  9. Order company seal, letterhead, PRO services, etc. to start operations.
  10. Renew licenses annually and maintain company compliance.

See: How to set up business in UAE

Key Points and Requirements to Keep in Mind

When establishing your business, some key things to be aware of include:

  • Onshore vs Offshore: There are pros and cons to setting up in free zones compared to on the UAE mainland. Consider tax implications, ownership rules, and costs.
  • Local Sponsorship: Onshore companies require a local sponsor who holds 51% shares. Sponsorship is not required in free zones.
  • Business Ownership: Onshore, foreigners can only own up to 49% of a company unless it’s located in a free zone. Different free zones have varying foreign ownership rules.
  • Company Type: Common structures include LLCs, sole proprietorships, civil companies, etc. Each has different shareholder and capital requirements.
  • Professional Help: Hiring a local business setup consultant can help navigate rules and requirements in the UAE.
  • Government Fees: There are costs associated with licenses, visas, office leasing and more. Factor these into your budget.
  • Ongoing Compliance: Renewing licenses, filing taxes, adhering to rules etc. are crucial to avoid fines. Stay legally compliant.

Setting up a company in the UAE involves careful planning and preparation. Following the step-by-step process while meeting all requirements will ensure your new business is properly established in the eyes of the law. Consult experts like Makateb to make business incorporation smooth and seamless.

SEE: Service company formation 

FAQ About Starting a Business in the UAE

here FAQ on Business incorporation in UAE requirements

What are the main steps to register a company in the UAE?

The key steps are choosing a location and activity, reserving a name, obtaining licenses, appointing a local sponsor if required, submitting registration paperwork, establishing an office, and completing post-registration procedures.

What are the minimum capital requirements in the UAE?

For mainland LLCs the minimum capital requirement is AED 300,000. For free zones, it starts from AED 50,000 or less. The amount varies by free zone.

How long does it take to form a company in the UAE?

It typically takes 4-6 weeks to establish an onshore company and 2-4 weeks for free zone company formation. With professional assistance, the process can be expedited.

Can a foreigner fully own a company in the UAE?

Yes, foreign entrepreneurs can own 100% of a company in a UAE-free zone. On the mainland, foreign ownership is limited to 49% unless the company is located in a free zone.

What are the annual renewal requirements for an existing company?

Key renewals include trade & operating licenses, immigration cards, visas, and leases. There may also be tax and annual report filing requirements.

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