Benefits of mainland company formation in Dubai

There are many benefits to establishing a mainland company. This company structure ensures a prosperous future in your professional ventures. Mainland companies offer a broad scope of trade, 100% ownership and location flexibility. These are some of the reasons why entrepreneurs look to establish a mainland company in the UAE.

Location flexibility and zero trade restrictions

A UAE mainland company has no restrictions on trade between other businesses and has no limits on location. Mainland companies can also offer services to the government, or trade directly with consumers from anywhere in the UAE. Forming a mainland company also allows businesses to open multiple branches, building a strong presence throughout the Emirates.

Broad working scope

Mainland businesses are also in a position to undertake a wide scope of work. When you’re wanting to diversify your offering within the mainland, simply re-register the new business activity with the DED and you’re ready to trade freely.

Access to lucrative government contracts

Any incentive for mainland company formation in Dubai is that government tenders are big business in the UAE. In recent years, the Abu Dhabi Executive Council approved AED 17.5bn (USD 4.76bn) of spending on government projects, including over AED 4bn on infrastructure. Approximately AED 2bn was allocated for education and a combined AED 1.2bn on upgrades to governmental and social facilities. As an established mainland company in Dubai, you’ll be well positioned to take advantage of such lucrative government contracts.

100% ownership control

Traditionally, 100% foreign ownership of a UAE company was only possible under two circumstances:

• When setting up in a free zone or
• When establishing a professional services company in the mainland (Sole Establishment or Civil Company) 

In recent years, HH Sheikh Mohammed bin Rashid Al Maktoum has allowed 100% foreign ownership of mainland companies in the UAE. This has been a welcome change for prospective overseas investors looking to conduct business in the Emirates. This is great news for international investors new to the Emirates. 100% foreign ownership means business owners can get straight down to business, without the need to canvass for an Emirati company or individual to act as a partner.  100% foreign ownership of mainland UAE business provides incredible potential for the UAE’s growth-machine economy to foreign investors. However, certain strategic sectors, such as oil and gas, still require a local partner. 

Switching from free zone to mainland company formation in Dubai

If you’re currently set up within a free zone business structure and considering the leap to forming a mainland company, we’re here to help. Over 30,000 companies currently trade from the three biggest UAE free zones.  Foreign entrepreneurs can set up in a free zone and enjoy the conveniences of pre-packed business inclusions. Yet there are limitations on this model for business owners. While free zone companies form an ideal starting point for UAE businesses, when it’s time to expand, it’s time to make the switch to a mainland company. Switching to a mainland company is crucial for business prosperity. With the right UAE national sponsor or company formation specialist, moving from a free zone to the UAE mainland is a shrewd and manageable move.

Mainland company formation checklist

It’s time for your business setup checklist. Let’s get your venture off to a successful start!

1. Choose your business activity

The first thing to decide before you set up a company in the UAE mainland is the industry in which you will trade. There are thousands of permitted business activities as listed by the Department of Economic Development (DED). Some of these include trading, agriculture, hospitality and manufacturing. Unlike many free zone businesses that are restricted from certain activities based on their location, mainland businesses are free to trade in any of the 2000+ DED-listed activities.

2. Find your ideal location

Once you’ve decided your business activity, the next step is to decide where you wish to operate. Businesses in the UAE mainland incur no restrictions on where they can set up.  The right location will depend on many factors such as budgeting and your chosen business activity.  Should your company rely on imports and exports, then setting up near one of the UAE’s busy ports – Jebel Ali, Mina Zayed or Mina Khalid – makes perfect business sense. Another advantage of mainland business setup in Dubai is the ease of opening branch offices. This means businesses are not limited to one location and can build a large local presence over time.

3. Determine your business legal structure

From a legal standpoint, there are several types of businesses that can be set up by foreign entrepreneurs on the UAE mainland. The most common mainland business structure is a Limited Liability Company (LLC).  An LLC is an independent legal entity owned by two or more shareholders. A business wishing to trade under a commercial or industrial licence (including industrial and manufacturing activities) must form an LLC to set up a company in the UAE mainland. This would require a local sponsor.  By contrast, setting up a professional service company does not require a foreign sponsor and can be 100% foreign-owned. More on this next!

4. Obtain a local sponsor or local service agent

Previously, foreign entrepreneurs could only manage mainland company formation in Dubai by partnering with either a sponsor or local service agent. If trading under a commercial or industrial licence as an LLC then a local sponsor is required. Your local sponsor can either be a UAE national or a UAE-based company. In both cases, the local sponsor will own 51% of the business. 

Masar Al Ameen can provide you with a Corporate Nominee to act as your Local Partner. This allows you to retain 100% operational and financial control of the business and protects you against any risk. When setting up a professional company in the mainland, only a local service agent (LSA) is required. The LSA will not own any share of the business and will only act as a representative in all administrative dealings and with the government.  

5. Name your company

Deciding on a company name that conveys your brand and professional values is one of the most important business decisions an entrepreneur can make. In the UAE, there are several considerations to keep in mind. Offensive language, religious references or inferences to other organisations are all forbidden. Only full personal names can be included in your company name. When it comes to your company name in different languages, all names must be written as they are sounded out, rather than translated. To know all the guidelines on naming your company, check our Choosing a Company Name in the UAE guide.  

6. Apply for a mainland trade licence

Now it’s time to apply for a mainland trade licence with the DED.  Several documents are required as part of a trade license application. These include a licence application; memorandum of sponsor arrangements; and ownership percentage among all partners and shareholder visas, just to name a few.

7. Secure your office space

Once you’ve obtained a business trading licence, it’s time to secure an office space.  In the UAE mainland, serviced offices are usually owned and maintained by a third party and contain everything you need to move in immediately. Desks, phone and internet access and reception services are some usual inclusions. Your lease payment would usually cover rent, use of office equipment and utility bills.  The other end of the spectrum is a ‘shell and core’ type of office space. This usually requires a full fit-out and decoration, with bills on top of rent costs.  A middle ground exists too, with office spaces pre-fitted, where the business owner simply provides their own equipment and pays bills separately.

8. Apply for relevant visas

There’s no limit with mainland visa applications for business owners in the UAE mainland. But the number of visas applied for should correspond with the amount of office space required. Usually, 100 sq. ft. of office or warehouse space per visa is the rule.  There are circumstances where this may not be applicable. For example, if the business is a domestic cleaning company with 500+ employees working remotely, the office space needs would be decidedly smaller compared to a textiles or manufacturing company. As the owner of a UAE mainland company, you will also be able to sponsor dependents – such as family members and domestic staff (maids or drivers, for example) for their visas as well.  Foreign entrepreneurs who establish business on the UAE mainland are also entitled to an investment visa which gives them and their families the right to live and work in the UAE for up to three years.

9. Partner with a Company Setup Consultant

Setting up a mainland company in the UAE requires a deep understanding of the legal and company formation process.  Working with a UAE-based consultant helps take the stress out of setting up a company for overseas entrepreneurs. A business consultant can collaborate with you and understand your business goals. This will help you feel confident in starting a successful business in the UAE mainland.