• Allows for access to the domestic market in select sectors.
• Under the 2018 FDI law, up to 100 percent foreign ownership in a company will be permitted in many sectors.

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:

• Industrial
• Commercial
• Crafts
• Tourism
• Agricultural
• Professional

Emirate-level Authorities

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:

• Abu Dhabi Chamber: Trade Licenses Guide
• Dubai Economy: Start your Business
• Sharjah Investment and Development Authority (Shurooq): Procedures and Requirements
• Department of Economic Development in Ajman: Issuance of economic licenses
• Department of Economic Development in Ras Al Khaimah: Issuance of licenses
• Fujairah Government: Establishing companies in the Emirate of Fujairah
• Dibba Al Fujairah Municipality: Procedures of establishing companies in Dibba Al Fujairah

Onshore Company Structures

• Limited Liability Company (LLC):

  Made up of a maximum of 50 members and a minimum of two members. The most popular form of incorporating onshore in the UAE.

• Private Joint Stock Companies:

  In this structure, shares are held privately, with a required minimum of three founding members, and a minimum capital of AED 2 million.

• Public Joint Stock Companies:

  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.

• Joint Participation (Joint Venture):

  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.

• Branch or Representative Office (Local Agent Required):

  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.

• Sole Proprietorship (Local Agent Required):

  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.

Additional Steps

Before obtaining initial approval and taking the next step towards starting your business, some additional approvals might be required:

• Foreign investors must obtain the approval of the General Directorate of Residency and Foreigners Affairs before obtaining the initial approval.
• Certain activities require additional approvals, such as:
  • Activities relating to legal affairs, which are regulated by the Ministry of Justice.
  • Activities regulated by the Securities and Commodities Authority.

Additionally, further approvals may be needed in certain sectors after initial approvals are granted:

• Ministry of Interior: Approvals for public transportation services, driving centers, fire extinguishing equipment, alarm and protection systems, used cars, spare parts, and car dealerships.
• The Municipality Department in the relevant emirate: Approvals for engineering and architectural activities.
• Telecommunication Regulatory Authority: Approvals for telecommunication activities.
• Executive Council: Approvals for tourism and travel, public services, trading, charter, shipping and marine agencies, car clubs, air transport charter, branches of foreign companies.
• Health Authority in the concerned emirate: Approvals for health related activities.

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.

• Free zones allow for 100 percent foreign ownership in all sectors.
• Each free zone is usually focused on a particular sector or industry.
• All free zones have their unique laws and incentives, which offer additional tax and financial advantages.
• Most free zones have VAT exemption, as well as an exemption on all import and export duties.

Offshore Company Structures

• Free Zone Establishment:

  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.

• Free Zone Company:

  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 Office:

  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.