Business Activities and Licensing
The nature of the economic activity identifies the legal form of the company and the type of license that may be required. There are six types of license, which may include more than one business activity:
Within each license there are more than 2000 various economic activities to select from. It should be noted that the legal form or company structure must be consistent with the economic activity. For the requirements of each economic activity and its legal form, investors should consult the following, which can be provided on request:
Onshore Company Structures
Made up of a maximum of 50 members and a minimum of two members. The most popular form of incorporating onshore in the UAE.
In this structure, shares are held privately, with a required minimum of three founding members, and a minimum capital of AED 2 million.
A company whose capital is divided into publicly subscribed shares. This structure requires a minimum capital requirement of AED 10 million, and a minimum of 10 founding members.
An association between a minimum of two partners, one of whom must necessarily be licensed in the UAE. Business is conducted in the name of one partner and partners share in the profits and losses as per a contractual arrangement. This structure allows a foreign investor to hold a share in the capital of the company and be involved in operational and managerial decisions, while simultaneously benefitting from the advantages that are enjoyed by local entities. The foreign investor would be exempt from obtaining the necessary permits and licenses, as the local partner has the necessary permits and licenses in place.
The types of activities allowed are dependent on the licensing rules and the list of activities approved by the Department of Economic Development of each emirate. Branch Offices offer investors an opportunity to enter the market and conduct initial scoping studies and build relationships in advance of market entry.
Owned by an individual who controls all operations and receives 100 percent of all profits. This entity must necessarily be owned by an individual, and not by a company. While a sole proprietorship for professional services can be owned by an individual of any nationality, the same is not true for carrying out industrial or trading activities, where such sole proprietorships can only be owned by UAE or GCC nationals.
Before obtaining initial approval and taking the next step towards starting your business, some additional approvals might be required:
Additionally, further approvals may be needed in certain sectors after initial approvals are granted:
Being part of the Business Community
After a company is registered and has received all relevant approvals, membership of the chamber of commerce of the relevant emirate might be required before proceeding with carrying on the economic activity.
Where to Start?
Get in touch with the Invest Emirates team! Or, if you know your requirements, the Federal Government provides ‘Basher’, a service for establishing businesses online. Basher is an integrated e-Service which enables investors to establish companies in the UAE through an online platform which is linked with the local and federal government entities concerned with licensing of economic activities. Basher gives investors a fast, easy and safe procedure to begin their investment journey, without being required to visit any government authority.
Offshore Company Structures
Free Zone Establishments (FZE) are akin to onshore Limited Liability Companies. FZEs may be established with one shareholder who may be either an individual or a legal entity.
The main distinction between an FZE and a Free Zone Company (FZCo) is with respect to the number of shareholders. An FZCo is an entity similar to an FZE with two or more shareholders who may be either individuals or entities. Some free zones impose a maximum number of shareholders.
Branch Offices set up within a free zone are similar to those found onshore, where the branch is merely an extension of the parent company and does have not its own legal identity. One advantage of a free zone Branch Office is that it is not required to appoint an agent to carry out its business activities. However, it cannot carry out business within the UAE's domestic 'onshore' market.