Mainland FAQs

How much does it cost to set up a mainland company in the UAE?

The costs will vary depending on where you choose to establish your license. Setting up your business in a Free Zone offers key advantages such as; 100% foreign ownership, zero personal and corporate tax as well as zero import duties, complete repatriation of profits, confidentiality and control of your assets plus more.

As per UAE governed law, mainland establishments are required to have a local sponsor who will own 51% of the company’s shares and the foreign partner will own the remaining 49%. The most common form of a mainland business is a Limited Liability Company (LLC) which requires a minimum of 2 shareholders whose liability is limited to the share capital of the company shares. Just like Free Zone companies, the cost of setting up a mainland business depends upon various factors, including; business activity, number of employees and commercial space.

Why do I need a UAE local partner? What are my options?

As per UAE law, if you wish to set up onshore, you will require a local partner. Sovereign PPG can act as a corporate nominee shareholder in the case of setting up as an LLC, or a corporate national service agent (NSA) in the case of Foreign Branch or Establishment. As a corporate partner or agent we provide full security and effective ownership and management rights to the foreign party.

What are the office requirements for a mainland company?

A commercial lease agreement is a requirement to incorporate and operate a trade license under the Dubai Department of Economic Development (DED) as well as an Ejari (Dubai) or Tawtheeq (Abu Dhabi) – the municipality lease agreement. This is normally required as part of the company set up process in order to obtain your DED Trade licence (there are some licences that allow companies to set up without a lease). Specific regulations regarding minimum size, location, and suitability apply - for example in Dubai the minimum office size is of approximately 200 sq. ft. for Office Spaces, Business Centres, and Shops and 500sq.ft. for a warehouse, In Abu Dhabi the requirement in 14 sqm. The office must have an external door, correct signage is will be inspected by DED before the trade licence is issued.

Can I use an ADGM Special Purpose Vehicle (SPV) as a shareholder for a UAE mainland company?

An ADGM SPV is a well recognised corporate entity often used as a Holding company – it can be used to hold assets, shares, IP, as well as to secure positions and share risk amongst individual and companies. An SPV is not an operational company and cannot invoice for operational business activity.

The ADGM SPV can as such hold shares in mainland UAE LLLCs for example. Depending on who the Ultimate Beneficiary Owner (UBO) of the ADGM SPV will determine the shareholder percentage that is possible in the mainland LLC.

Under UAE Commercial Companies law 51% of shares in a mainland LLC have to be held by a UAE National or UAE Company, unless under special circumstances.

If the UBO of the ADGM SPV is a foreign shareholder, then a maximum of 49% of the shares in an mainland UAE can be held.

The main advantages of using an ADGM SPV are:

• There is no limitation on number of shareholders
• Avoiding declaration to the DED who the Ultimate Beneficiary owner is. This means that if this shareholder has a current job in UAE then no NOC is required
• ADGM uses 100% English Common Law. In case of disputes this is reassuring that English law will be the precedent.
• Adds a layer of protection to the LLC. Side agreements use ADGM court jurisdiction and a share pledge can be registered in ADGM
• Relatively inexpensive – no extra office is required and attestation of documents is not required
• Protects the UBOs from the LLC activity

Please note that any corporate services within ADGM will be delivered through a third party ADGM registered Corporate Service Provider (CSP). Sovereign PPG is not a CSP within ADGM.

Can I outsource my PRO services in UAE (Dubai, Abu Dhabi and/or Northern Emirates)?

Yes - outsourcing to a trusted PRO Service Company with experience and extensive knowledge across the UAE to handle the legal obligations of your company, is not only cost effective but means that you save time and avoid any complications or risks that can occur for example risk of fines if deadlines are not met.

You may wish to outsource PRO Services on a case by case basis, or if you have a large volume of staff, licences and transactions you may want to consider a monthly retainer to cover all your requirements.

Outsourcing PRO services to consider include:

• Labour and Immigration Cards
• Labour Quota applications
• Staff Employment UAE Resident Visas
• Investor Visas
• Family Visas
• Offshore & Security Passes (CICPA)
• Emirates ID Cards
• LLC Company and Branch formation
• Annual Licence renewals and updates
• Changes to Trade Licences and share transfers
• Regulatory approvals and NOC letters
• Notarisation / Attestation of Legal Documents
• Liquidation and Deregistration of Companies or Branches
• Trademark applications
• Legal Translation and document support
• HR services
• WPS and Payroll services
• POA and authorised signatory services
• Secure Local Nominee Partner or National Service Agent Service

If you need assistance and advice on setting up and the fees to Outsource your PRO Services and for further information on any other related company set up, local partner or PRO service matter in the UAE and wider Gulf do get in touch with us on +971 (0)4 456 1761 for Dubai or +971 (0)2 448 5120 for Abu Dhabi, email us at SovPPG@SovereignGroup.com or complete the contact form below and we will be delighted to assist you.

How do I set up a Foreign Branch office in the UAE?

Foreign companies wishing to retain 100% ownership can register a foreign branch or representative office in the UAE. Local companies are also able to set up branches within the UAE, in the same or a different Emirate. Branches can either be setup in the mainland UAE or in a UAE Free Zone. There are over 50 Free Zones in the UAE so the options are significant. The decision on where to open the branch should be based on several factors including your budget and the activity of the company; note that the activities should mirror those of the parent company. To open up a branch office in the mainland UAE you will require a National Service Agent (NSA) or Local Service Agent (LSA). Sovereign PPG can assist with the formation of your branch and can act as your NSA / LSA if required.

For more details on setting up a Foreign Branch office in the UAE, including the steps, documents and requirements please see our detailed article here:

www.propartnergroup.com/blog/2020/01/setting-up-a-branch-uae/

Sovereign PPG is available to support you though the process to set up your company or branch correctly in Abu Dhabi, Dubai and the wider UAE, Oman and Qatar. If you need assistance on this on any other related company set up, restructuring or local partner matters do get in touch with us on +971 (0)4 456 1761 for Dubai or +971 (0)2 448 5120 for Abu Dhabi, email us at SovPPG@SovereignGroup.com or complete the contact form below and we will be delighted to assist you.

How do I set up a Representative office in the UAE?

Foreign companies wishing to retain 100% ownership can register a Representative office in the UAE. The Representative office (Rep Office) is useful in promoting a foreign company and introducing products and services to UAE companies as a non-trading ‘shop-window’. Representative offices can either be setup in the mainland UAE or in a UAE Free Zone. There are over 50 Free Zones in the UAE so the options are significant. The decision on where to open the Representative office should be based on several factors including your budget and the activity of the company; note that a Representative Office does not engage in sales, services or any type of commercial activity but only promotes/markets the activities of its parent company, gathering information and soliciting orders and projects to be performed by the head office of the parent company. To open up a Rep office in the mainland UAE you will require a National Service Agent (NSA) or Local Service Agent (LSA). Sovereign PPG can assist with the formation of your branch and can act as your NSA / LSA if required.

For more details on setting up a Representative office in the UAE, including the steps, documents and requirements please see our detailed page here:

https://www.propartnergroup.com/services/company-setup/trade-representation-office/

Sovereign PPG is available to support you though the process to set up a Representative office correctly in Abu Dhabi, Dubai and the wider UAE, Oman and Qatar. If you need assistance on this on any other related company set up, restructuring or local partner matters do get in touch with us on +971 (0)4 456 1761 for Dubai or +971 (0)2 448 5120 for Abu Dhabi, email us at SovPPG@SovereignGroup.com or complete the contact form below and we will be delighted to assist you.

What are the risks of having a local partner in UAE?

The requirement for foreign investors to setup a mainland LLC in UAE is to have a 51% Local Shareholder. The main concern for this requirement to an investor is how much involvement the sponsor will have; it could mean that the Local Sponsor could potentially get involved in operations of the business, request a percentage of profits and possibly make it difficult for future exit of the foreign investor. Another risk to consider is who the successor would be to replace the Local Sponsor should unexpected death or early retirement occur, which could cause disruption to the business.

Key things to look out for when choosing a local partner in Dubai / Abu Dhabi / UAE?

When setting up a local company as per the UAE Companies Law and UAE Civil Law, the expatriate shareholders are required to nominate a Local Service Agent or a Local Partner (Sponsor), who must hold the majority share of 51%, when establishing a company.

The key consideration is short and long term security:

1) What are the specific requirements from the relevant governmental departments? Such as ADNOC, Dubai Municipality, DED.

2) Is your partner a true investor?

3) Is your partner an Individual or a corporate service provider?

4) What happens in the event of succession?

5) What Agreements are there? And are they valid?

6) Where is your sponsor located?

7) Exit Clauses – can you change sponsor easily in the case of a disagreement?

8) Reliability of your sponsor?

9) WPS blocks and mitigating your risk to over exposure to other firms under the same sponsorship

10) What happens if your sponsor is not available for signings?

For full considerations on whether to choose an individual or corporate sponsor please take a look at the following article I wrote on this key subject:

https://www.propartnergroup.com/blog/2019/03/company-sponsorship-in-the-uae

Does an LLC need to be financially audited in the UAE?

As per the new UAE Commercial Companies Law, Federal Law No. 2 of 2015, Article 27, every company shall appoint auditors for auditing their books of accounts by a licensed auditor registered under Ministry of Economy in the UAE.

How do I protect myself as a foreign shareholder in the UAE?

To protect their minority interests, it is advisable for foreign shareholders of LLCs to include terms addressing the following in the memorandum of association (MOA) (often the first point of reference in the event of any disagreement):

• a list of matters which require a super majority (for example 75%) to pass as resolution effectively giving the foreign shareholder veto rights.
• a profit share distribution regime which permits the foreign shareholder to benefit from profits exceeding the number of shares held by the foreign shareholder (while being careful not to deprive the local shareholder of the right to participate in the profits). Notaries in different Emirates will approve of different profit share distribution ratios;
• the right of the foreign shareholder to select and appoint a general manager of the company.

Foreign shareholders should also supplement the MOA with a shareholders’ agreement which contains further provisions addressing the relationship between the shareholders and their respective rights and obligations.

Most important of all, careful selection of a local shareholder partner can provide the foreign shareholder with autonomy to carry out and operate the business of the LLC within the parameters of the law but without problematic interference.

What is the difference between a Branch office and a Rep office in UAE?

A Representative office is a branch established by the parent company which is useful in promoting a foreign company and introducing their products to UAE companies. A Representative Office cannot export, import or sell in the UAE. A Representative Office may practice only promotional business for the products and services provided by the parent company. A Branch office on the other hand can conduct business in the UAE other than for just promotional purposes.

• Activities – A representative office does not engage in sales, services or any type of commercial activity but only promotes/markets the activities of its parent company, gathering information and soliciting orders and projects to be performed by the head office of the parent company. A Branch office , however can engage in commercial activities.
• Sponsor/National Service Agent – Similar to a Branch, each Representative office requires a local sponsor or National Service Agent (NSA). The NSA has no equity participation or liability to the business.
• Bank Guarantee – Also similar to a Branch, a Representative Office will require a refundable deposit bank guarantee of AED50,000 for the duration of your licence and this cannot be withdrawn or used as working capital.

How do I import goods into the UAE, can I do this from a freezone as well as a mainland LLC?

There are two types of jurisdictions in UAE. Freezones and Mainland UAE. A Freezone trading company can import goods (depending on their business activity) to the Freezone area however they are not permitted to import into the mainland area of the UAE without a valid LLC licence.

As goods can only be imported into the mainland by an LLC entity the options available are as follows:

1. Incorporate a DED mainland LLC with the relevant trading activity. The activity is dependant on the type of goods being imported.
   - Relevant approvals maybe required in some cases such as Dubai Municipality approvals for food, MOHAP approval for medical supplies etc.
2. Use a Distribution agent to purchase the goods within the Freezone and therefore the distribution agent would physically import the goods under their name and then own the goods. There are positives and negatives by doing it this way.
3. Appoint a commercial agent. This agent can import the goods from an external country. The commercial agent will have control of the goods.

There are considerations to take into account. Feel free to contact PPG for more information.

Can I outsource my PRO services?

Yes - outsourcing to a trusted PRO Service Company with experience and extensive knowledge across the UAE to handle the legal obligations of your company, is not only cost effective but means that you save time and avoid any complications or risks that can occur for example risk of fines if deadlines are not met.

You may wish to outsource PRO Services on a case by case basis, or if you have a large volume of staff, licences and transactions you may want to consider a monthly retainer to cover all your requirements.

Outsourcing PRO services to consider include:

• Labour and Immigration Cards
• Labour Quota applications
• Staff Employment UAE Resident Visas
• Investor Visas
• Family Visas
• Offshore & Security Passes (CICPA)
• Emirates ID Cards
• LLC Company and Branch formation
• Annual Licence renewals and updates
• Changes to Trade Licences and share transfers
• Regulatory approvals and NOC letters
• Notarisation / Attestation of Legal Documents
• Liquidation and Deregistration of Companies or Branches
• Trademark applications
• Legal Translation and document support
• HR services
• WPS and Payroll services
• POA and authorised signatory services
• Secure Local Nominee Partner or National Service Agent Service

If you need assistance and advice on setting up and the fees to Outsource your PRO Services and for further information on any other related company set up, local partner or PRO service matter in the UAE and wider Gulf do get in touch with us on +971 (0)4 456 1761 for Dubai or +971 (0)2 448 5120 for Abu Dhabi, email us at SovPPG@SovereignGroup.com or complete the contact form below and we will be delighted to assist you.

How do I choose the right local partner in Dubai / Abu Dhabi / UAE / Oman / Qatar?

Choosing the right Local Sponsor can be challenging, there are some considerations to check before deciding which sponsor will be most suitable for your business.

1. You must ensure the Local Sponsor is a UAE national, and in some cases the emirate they are from can help to get certain approvals required to obtain a mainland Trade Licence. For example to work with ADNOC in Abu Dhabi you will require Supreme Petroleum Council (SPC) Approval. This kind of approval would require an Abu Dhabi born Local Sponsor.
2. Corporate VS Individual Local Sponsor - you may want to think about whether you would like to choose an Individual or Corporate Local Sponsor. To avoid potential risks and ensure you maintain control of your business and profits you could consider a Corporate Local Sponsor. The main advantages being that a Corporate Sponsor will not get involved in your business, they allow the 49% shareholder to retain 100% profits and provide an easy exit clause. To ensure the agreements are met, legally binding side agreements are prepared to ensure full protection for all parties.

What is an E-Trader License?

The new E-Trader Licence allows UAE residents to set up a Licence without the requirement of a Local Sponsor or National Service Agent and at significant reduced cost.

This is a new development and an ideal cost-effective solution for single business owners looking to setup a licence to sell professional services and products through their social media.

The E-Trader Licence does not require an office space meaning business owner can work from home. There are some limitation however in regards to trading of physical products/goods (this type of activity is available for GCC nationals only.)

Benefits :

• You own the company 100% yourself – this is a ‘sole trader’ structure
• No Local Sponsor or National Service Agent is required
• No office space is required
• You can obtain up to 3 employment visas if required

Limitations :

• The Licence offers a variety of activities, however trading related activities (for example selling physical goods or products) are available for GCC nationals only.
• A maximum of 3 x visas are available with this licence.
• Applicant must have a valid passport, UAE residence visa and Emirates ID.
• Must be able to provide an Ejari and Makani number from the Emirate of Dubai.

What are my options for setting up a branch in the UAE?

Foreign companies wishing to retain 100% ownership can register a foreign branch or representative office in the UAE. Local companies are also able to set up branches within the UAE, in the same or a different Emirate. Branches can either be setup in the mainland UAE or in a UAE Free Zone. There are over 50 Free Zones in the UAE so the options are significant. The decision on where to open the branch should be based on several factors including your budget and the activity of the company; note that the activities should mirror those of the parent company. To open up a branch office in the mainland UAE you will require a National Service Agent (NSA) or Local Service Agent (LSA). Sovereign PPG can assist with the formation of your branch and can act as your NSA / LSA if required.

For more details on setting up a Foreign Branch office in the UAE, including the steps, documents and requirements please see our detailed article here:

https://www.propartnergroup.com/blog/2020/01/setting-up-a-branch-uae/

Sovereign PPG is available to support you though the process to set up your company or branch correctly in Abu Dhabi, Dubai and the wider UAE, Oman and Qatar. If you need assistance on this on any other related company set up, restructuring or local partner matters do get in touch with us on +971 (0)4 456 1761 for Dubai or +971 (0)2 448 5120 for Abu Dhabi, email us at SovPPG@SovereignGroup.com or complete the contact form below and we will be delighted to assist you.

Is it better to set up a company to Import goods or shall I use a commercial agent?

If you are looking to sell products in the UAE, it is possible to use a Commercial Agent which allows you to use their licence to sell goods. Using an Agent can avoid the set-up procedure of a licence, however there is a drawback that once you have a contract with the Agent they will have control over your product and it may be difficult to withdraw from the agreement. Therefore, to avoid any possible disputes and have full control you may want to consider setting up mainland company allowing you to have full control of the products you wish to sell to UAE. If however you do not wish to set up an entity , Sovereign PPG can offer a Nominee Commercial Agent to allow the foreign party to protect their product in the UAE Full effective ownership, control and termination is given to the foreign party whilst allowing them to make multiple partnerships with Distribution Partners to sell products.

What is the difference between a Local Partner and a Local Service Agent in the UAE?

Local Sponsor – 51% Partner

A Local Sponsor is a 51% shareholder in a Limited Liability Company also known as an LLC. In Mainland UAE a foreign investor can only hold 49% of the company shares and the remaining 51% of the shares must be held by a local Emirati. The legal structure of an LLC requires the local partner to be named as a shareholder on the Trade licence as well as in the Memorandum of Association (MOA) which is a constitutional document for the LLC and is signed in front of and notarized by a Public Notary. However, to enable the foreign investor to manage and operate the company with autonomy the local partner will waive their rights to the business including the profit within the MOA in return for an annual fee.

Local Service Agent

A Local Service Agent is required for all Foreign Branch, Representative or Professional licences in mainland UAE. The Local Service Agent is not a partner in the company and the ownership of the company lies 100% with the foreign investor. The role of the Local Agent is to be the representative of the company within the Governmental departments and to facilitate registrations with the various municipalities.

How do I list my products with the Chamber of Commerce in Abu Dhabi?

The Abu Dhabi Chamber of Commerce and Industry has announced the launch of its “Customer Happiness Digital Platform” The platform offers a number of services to the Chamber’s members including Certificates of Origin (individuals and corporations),

To apply for certificates of origin , the company should register at COC portal and having user name and password https://digital.abudhabichamber.ae/portal/#/login , then apply for certificates of origin by filling the application on portal chose the currency, product type , shipping type, receiver name and details once approve the government fees will be 90 AED per application

What are the different types of company licence options in the UAE?

There are many options to consider when you are establishing your business. One of the most important factors is to understand the differences between Freezone and Mainland, the limitations and capabilities of each, as well as the advantages and disadvantages.

If you are operating locally, looking to secure Government contracts or require external approvals, then the best option is to register onshore, under the Department of Economic Development (DED), which is the main licencing body in the UAE.

In Dubai there are over 2,500 activities to choose from which are grouped into six different licence categories.

1. Industrial
2. Commercial
3. Professional
4. Tourism
5. Agriculture
6. Craftsmanship - also known as Occupational

For more information on choosing the best location and the right activity and licence type to set up business in Abu Dhabi, Dubai, the wider UAE, Oman or Qatar please contact us - visit our website www.propartnergroup.com, email us at SovPPG@SovereignGroup.com or call us on +971 (0)4 456 1761 for Dubai or +971 (0)2 448 5120 for Abu Dhabi.

Can Manpower and Recruitment Companies in mainland UAE be 100% Foreign owned?

The Department of Economic Development (DED) Abu Dhabi and Dubai have newly reported the release of two activities to enable 100% foreign ownership.

The two activities:

1. Manpower or On Demand Labour Supply (temporary employment) - which includes specialised firms engaged in supplying various professionals on a temporary basis to other companies.

1. Recruitment - includes third-party recruiters specialised in listing employment vacancies and referring or placing applicates for employment.

These two activities previously had to be 100% UAE owned companies but have now been added to the list of activities that are allowed to be 100% foreign owned in the UAE mainland jurisdictions.

For any company engaging or operating in these activities that want to convert to 100% foreign ownership can now do so. New companies can now also set up in Mainland UAE with these activities under 100% foreign ownership. Approvals and thresholds set by the Ministry of Human Resources and Emiratisation (MOHRE) are still required.