DUBAI LIMITED LIABILITY COMPANY (LLC)

A Limited Liability Company (LLC) is where the liabilities of a company are limited to its shares. LLC company formation in Dubai is the most popular company structures. To establish an LLC two to fifty shareholders are required. Companies looking to setup in Dubai may wish to consider whether the LLC structure is best for their business and shareholders.

About LLC in Dubai

A Limited Liability Company (LLC) defines the liabilities of the company and it is limited to its shares. This is one of the oldest and most popular structures in the international market. A Limited Liability Company can be formed by a minimum of 2 and a maximum of 50 shareholders. The LLC is the most common business structure in Dubai since it offers a good blend of flexibility and protection. It’s a separate legal entity, which means the company takes on the risk—not the individual owners. If something goes wrong, the shareholders are only liable up to the amount they’ve invested.

To incorporate this type of entity, it used to be mandatory to have a UAE national (corporate or individual) owning a minimum of 51% shares and the remaining 49% of shares allotted to the other shareholder in the company. However, since the update the UAE Commercial Companies Law (CCL) in July 2021, it is now possible to own a LLC in the mainland 100% with the vast majority of activities.

You can set up an LLC in either a free zone or on the mainland. Free zones often appeal to businesses focused on international trade or digital services. They offer full foreign ownership and simplified setup, but they come with trade restrictions outside the zone. Mainland LLCs, on the other hand, give you access to the UAE market without limitation and can work with government clients. Most sectors now allow 100% foreign ownership, though some still require a local partner or agent.

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An LLC also comes with a few built-in advantages. It tends to carry more weight with banks, landlords and investors. It makes it easier to hire staff, apply for visas, and grow beyond a one-person setup. It can also hold assets, open a bank account in the company name and apply for multiple business activities under one licence.

Benefits of a Dubai LLC

100% ownership control

Freedom to trade across Dubai and the UAE with no restrictions
Personal asset protection
Flexibility to trade internationally
Able to expand presence
Freedom to grow your company and team
Diversify offerings
Ability to do business with UAE or GCC governments
Easier to attract partners or investors

Requirements for an LLC company in Dubai

1. Overview of Business:

A mainland registered entity is allowed to carry out its business activities throughout the UAE market, It can work with anyone inside or outside the UAE and not restricted to just working within its freezone.

2. Ownership Structure

Previously, 51% of shares needed to be held by a UAE National and only 49% of shares were able to be allotted to the expatriate partner. However, since the update the UAE Commercial Companies Law (CCL) in July 2021, it is now possible to own a LLC in the mainland 100% with the vast majority of activities.

3. Office Space

For every mainland license, there is a minimum requirement of 200 square foot office space needed. Only once an Ejari (Dubai) or Tawtheeq (Abu Dhabi) has been presented to the Department of Economic Development, will they release the license.

4. Visas Eligibility

There is no limitation on the visa eligibility for a mainland entity, An Electronic Quota is issued to every company by the Ministry of Labour(MOL) which shows their visas eligibility and this can be increased by increasing the size of your office space. Per 80 square foot of office space gives you the allocation of 1 visa. If you also have staff who are not in the office, like sales, PRO’s and drivers then you can apply for a separate quota for them and this will not affect your office space quota.

5. Governing body approvals

a) A mainland license does require standard approvals for the license. For example, Department of Economic Development (DED), Dubai Municipality (DM), Ministry of Labour (MOL), Ministry of interiors or Immigration (MOI).

b) In some cases, there are also third party governing approvals that will be needed, depending on your business activities: Knowledge and Human Development Authority(KHDA) for all Education related activities, Dubai Health Authority(DHA), Health Authority Abu Dhabi(HAAD) for all medical related business activities, Food Control Department of Municipality for all food-related license, Civil Defence for all security-related activities, Real Estate Regulation Authority(RERA) for all real estate regulated business activities.

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Dubai LLC FAQs

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 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 will be inspected by DED before the trade licence is issued.

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 a branch office in the mainland UAE you may 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. The requirement for an NSA / LSA has changes with the updated Commercial Companies Law (CCL) in July 2021, and a number of activities no longer need an NSA – please ask us for advice on this.

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.

Industrial
Commercial
Professional
Tourism
Agriculture
Craftsmanship - also known as Occupational

What is the difference between a Free Zone and Mainland Company in the UAE?

Mainland Company:

A mainland establishment is an onshore setup, licensed by the Department of Economic Development (DED). An onshore establishment is permitted to conduct business in the local market as well as outside the UAE, without any restrictions.

Free Zone Company:

A Free Zone business is incorporated within a designated jurisdiction of a certain emirate where the company is only allowed to conduct business inside the same Free Zone or outside of the UAE. For commercial trade licences and trading of physical goods, the Free Zone company cannot conduct local mainland UAE business directly. For Freezone companies to trade with the UAE mainland they must do so through a mainland distributor or agent and by must pay 5% import duty on local invoices. A Free Zone business cannot work legally outside of its designated jurisdiction.

Requirements for a Mainland Licence in Dubai

Some specific industries and business types require a local sponsor in the UAE. A local sponsor is someone (or an organisation) of Emirati nationality who will own at least 51% of the shares in your company. The local sponsor is paid an annual fee or given a set share of company profits.

However, this partner does not necessarily have to be engaged in decision making. Usually, a power of attorney is signed, giving the foreign investor full autonomy over the business.

Since the update the UAE Commercial Companies Law (CCL) in July 2021 it is now possible to own a LLC in the mainland 100% with the vast majority of activities – speak to a member of the Sovereign PPG team to find out more on this.