Types of companies in the UAE

There are three types of companies in the UAE: Mainland, Free Zone, and Offshore. Each type has specific features that are important to consider before starting the registration process.

Mainland Companies

• Can operate within the emirate where they are registered.
• For most business activities, 100% foreign ownership is allowed. However, for certain strategic activities, a UAE national founder is required, holding at least 51%.
• For companies registered as a civil company or sole establishment, a local agent is required. This agent signs a service agreement but does not hold equity.
• Shareholders must either sign incorporation documents in person before a notary or issue a notarized power of attorney to representatives.
• A rented office of at least 13 m² is required. For some business activities, a virtual office may be allowed.

“A Mainland company is registered with the government authority of a particular emirate. In Dubai, this is the DED (Department of Economy & Tourism), which issues the business license and Memorandum of Association (MOA). Mainland companies are subject to federal law and the specific laws of the emirate.” Anton Karpenko Project Lead

Free Zone Companies

• A Free Zone company is registered in a special economic zone (Free Zone). There are more than 45 Free Zones in the UAE, each with its own regulations and registration requirements.
• Subject to certain conditions, Free Zone companies may qualify for a 0% corporate income tax rate.
• 100% foreign ownership is allowed. Founders may be either individuals or legal entities.
• Registration is usually possible remotely.
• Some Free Zones are classified as Designated Free Zones. This means that import/export transactions within the Free Zone and outside the UAE are exempt from VAT and customs duties. Example: DAFZ.
• Free Zone companies cannot directly conduct business in Mainland UAE (e.g., cannot sell goods directly to consumers). However, they may provide services to Mainland companies. In some Free Zones, companies can obtain a dual license, allowing operations throughout the UAE.
• A company’s office must be located within the Free Zone of registration.

“UAE law applies only partially to certain Free Zones. For example, the DIFC financial Free Zone is not subject to the Federal Virtual Assets Law, since DIFC has its own regulations for virtual assets and cryptocurrencies.” Alexandra Kurdiumova Co-founder

Offshore Companies

• An Offshore company is registered in an offshore jurisdiction of the UAE and usually operates outside the UAE.
• No office requirement.
• Shareholder register is closed: information about founders is not publicly disclosed. However, the company must file and update data in the Ultimate Beneficial Owner (UBO) register.
• Offshore companies cannot issue visas for shareholders or employees.
• Opening a corporate bank account in the UAE is more difficult.
• Registration usually requires a special agent, who represents the company before the offshore authority.

“There are several offshore jurisdictions. For example, Ras Al Khaimah International Corporate Centre (RAK ICC) and Jebel Ali Free Zone (JAFZA). Offshore companies are typically used for holding purposes (ownership of shares in other companies) and for real estate ownership.” Anton Karpenko Project Lead