Starting a business in Dubai offers many opportunities, especially through mainland company formation. Unlike businesses in free zones, mainland companies can operate anywhere in the UAE and access a broader market. With recent reforms allowing 100% foreign ownership in several sectors, Dubai has become an attractive destination for entrepreneurs.
This blog, “Understanding the Legal Structure and Licensing Requirements for Mainland Companies in Dubai” explores the benefits of establishing a mainland company formation in Dubai, the steps to get started, and the legal requirements involved. Whether you’re looking for market access, flexible business activities, or government contract opportunities, Dubai’s mainland business setup could be the ideal solution for your company’s growth.
What is a Mainland Company in Dubai?
A mainland company in Dubai means a company registered under the UAE’s Department of Economic Development (DED). These companies can operate in UAE and internationally without any restrictions on the areas they can trade, unlike free zone companies. Mainland company formation in UAE is suitable for those who want to tap into the UAE’s vast economy which includes sectors like retail, services, manufacturing and technology.
In the past mainland companies had to have a local Emirati partner who would hold at least 51% of the company’s shares. But now with recent reforms foreign investors can own 100% of the company in many sectors, making Dubai more attractive to international investors and entrepreneurs. This along with other business friendly policies makes Dubai a great place to setup a mainland company.
Benefits of Incorporating Mainland Company in Dubai
1. Unrestricted Access to the UAE Domestic Market
The most prominent advantages of incorporating a mainland company in Dubai, obviously, lie in the freedom of access it provides to the entire domestic UAE market. In contrast, mainland companies are free from all the restrictions that free zone companies face regarding selling their goods and services in the local market. This access is critical for corporations willing to reach and tap into the upscale booming economy of Dubai. Moreover, mainland businesses can get access to virtually any sectors such as retail, manufacturing, and professional services.
2. Flexibility in Business Activities
Mainland companies are not tied up by specific activities and can allow the widest latitude in business operations. Whether it is a trade, industrial or profession license, flexibility in activities allows business owners to adapt and expand their operations. This is not possible for free zone businesses, which can specialize only in the permitted activity of their zone.
For example, a mainland business could operate a retail store and a service-based consulting firm under one license.
3. Ownership Reforms
Foreign investors were also mandated to have a local partner who happens to be a UAE national and owned 51% of the business for many years. However, the UAE government has liberalized the laws recently and now allows 100% foreign ownership in mainland companies across a wide variety of sectors. This has made it easier for entrepreneurs from other countries to completely retain full control of their businesses hence upholding their confidence and welcoming more international investors to set up operations in Dubai.
4. Access to government contracts
Mainland companies can participate in government tenders in Dubai, which might be very lucrative. The UAE government constantly issues tenders for a wide range of projects involving construction, infrastructure, healthcare, and tourism projects. Since these companies are not restricted by the geographical constraints of free zones, they have a chance to avail themselves of the opportunities offered by government tenders, which allows huge growth and expansion.
5. Flexibility in Office Locations
Companies from the mainland are not limited to specific free zones. They can establish offices anywhere in Dubai or the rest of the UAE. This provides significant location flexibility, with opportunities for businesses to choose high-quality properties in accessible locations for clients and employees. Flexibility can be a strong competitive advantage in such sectors as retail, professional services, and technology.
6. No Minimum Capital Required to Open
Unlike other free zones that require some minimum capital for setting up the business, mainland companies can operate without having any minimum capital to form a business. This saves the SMEs in the UAE from having to dedicate a large amount of their capital to securing set-up capital in advance so that they can focus on operations growth.
Steps in Setting Up Your Mainland Company in Dubai
Opening a mainland company in Dubai depends on the following steps:
1. Define Your Business Activity
Setting up a mainland company should first start by determining the type of business you would like to operate. Dubai offers a wide portfolio of business activities, which include commercial, industrial, and professional services. The license that you need to apply for is going to depend on the kind of business activity that you choose. You should ensure that your selected activity is in line with the Department of Economic Development’s regulations.
2. Determine Your Legal Form
The second step is to determine the legal structure of your company. In Dubai, the most usual types of mainland companies are LLCs, sole establishments, and civil companies. Given their facility to have many shareholders, LLCs are very popular. Sole establishments are best for individual entrepreneurs. The selection of the legal structure determines the number of shareholders, liability, and control over operations of the company.
3. Register a Trade Name
After deciding on your business activity and legal structure, the next step is to choose and register a trade name for your company. The name must be unique and must not violate any of the UAE’s naming conventions. It should also reflect the nature of the business activity. Once registered, the trade name will be reserved for your use during the formation process.
4. Seek Preliminary Approval
To initiate the license application process, you will seek preliminary approval from the DED. This is a precursor step, which confirms that there are no objections to the business activity or trade name under which you plan to operate. With such preliminary approval in hand, you can now submit a full application for a business license.
5. Acquire Office Space
A mainland company requires a physical office. Rules of DED dictate that the office must be in conformity with them. The size of the office may depend on the number of employees and business activity. You will require obtaining a tenancy contract to confirm that you obtained the office space before applying for the business license.
6. Obtain Business License
Submission of documents and application for the business license: This will include the first approval certificate, trade name registration, tenancy contract, and the Memorandum of Association of the company. After approval of the application, the DED will issue your business license to begin your operation officially.
Legal Compliances
To establish any mainland company in Dubai, legal compliance is as follows:
- Business License: It has to be obtained validly from the DED according to the nature of the business you want to get involved in. Office: A physical office is essential, and the area must be apt according to the space and operational requirement of the DED Ownership Documentation The details about the shareholders and managers would need to produce valid documents that include their passport, visa, and ID proof.
- MOA: The Memorandum of Association has to be stamped and notaried showing the structure and ownership of the company along with its main activities.
- External Approvals: With certain kinds of businesses, other government agency approvals may also be required.
By following these steps and meeting the legal requirements, entrepreneurs can succeed in establishing a mainland company in Dubai. Access to the local market, flexibility in operations, and opportunities for growth in one of the most dynamic economies in the world are some of the benefits presented by this business model.
If you are looking for well-established business setup consultants in Dubai, connect with Damaar and we will take care of everything you require.