With UAE moving from 16th to 11th position in the ease of doing business index per World Bank’s survey in 2021 and the historic amendment to the New CCL law 2021, which allows 100% foreign ownership in 1000 activities out of 2000+ total economic activities, UAE is expected to reach unprecedented economic growth in the coming years.

While UAE attracts entrepreneurs in the domestic and international market for its ease of doing business and tax exemptions, it can be challenging to keep up to date with the regulations and compliance in the country due to frequent reforms, particularly if you’re a new entrepreneur.

Often entrepreneurs procrastinate and give up on their business plan and months of ideation due obscurity on how to start the business.

There are three zones to set up business in the UAE 1) Mainland 2) Free Zone – Within Free Zone and Offshores

While in Mainland, a company is governed by the DED, In Free zone it is governed by the respective free zone authority and offshores by Federal Tax authority.

1. Identify a business activity

Have a detailed insight of the activities allowed under each type of license (industrial, professional, commercial, agricultural, e-commerce, tourism, general). Remember licensing varies for each business type. You need to obtain a general trading license if you have plans to start multiple businesses.

Carry out a thorough market analysis and identify if your target audience are domestic or foreign; based on this you can set up your business in mainland or free zone respectively. There are also designated zones within free zone, which are VAT exempted under certain conditions.

In mainland there are about 2000+ listed trade and now about 1000 industries allow 100% ownership. If a free zone based business considers moving its operations to the main zone it requires approval from the free zone authority.

2. Select a legal form for your business
There are various factors that determine the company formation structure; business activity type, capital requirement, the scale of activity, number of partners involved etc.

There are numerous forms of business formation and the most common ones are:
– Sole proprietorship/Sole establishment
– Civil establishment (for professional, consultants, doctors etc.)
– Limited Liability Company (LLC)

Sole proprietorship formation is the easiest and the time taken to establish is much lesser compared to other forms of business structure. LLC is the most common form of business structure in mainland and free zone. Also, mostly large-scale businesses follow the Private or Public Shareholding company structure, which requires huge capital investment.

In sole proprietorship and civil establishments, both have unlimited liability towards the company. While in LLC business, the liability is limited and is proportionate to the shareholder’s contribution. Except sole proprietorship all other forms of business have a separate legal entity. Also, a Memorandum of Association is required for all forms of business except for sole proprietorship.

3. Select a local service agent or partner if required for your business activity
While there are 1000 activities that don’t require local partner/sponsor ownership there are still 1000+ activities that require partnering with Local Service Agents who will assist you in your dealing with the government and assists your business to carry out the local activities seamlessly.

4. Register the trade name
You can register your trade name through economic department of each Emirate.
You should choose at least three names for your business that indicates the nature of your business activity before you seek initial approvals. And, DED will approve and register one of the proposed names.

Key requirements of a trade name:

• Must not violate the public morals or the public order of the country
• Trade name to be followed by the legal form of the company, for example (LLC, FZE, DMCC etc.)
• Name that exists already
• Compatible to the type of activity and legal status
• Should not contain names of religion, or governing authority, nor names or logos of any external bodies.

5. Applying for initial approval

The UAE Government gives a no objection certificate and permits the business to process with next steps to set up the business. It is mandatory for foreign investors to get approval from General Directorate of Residency and Foreigners affairs before getting the initial approval.

There are a series of documents and approvals you need before you can apply for your business license.

Certain activities require additional approvals from government entities related to that business. Mostly these include legal and security affairs, financial securities and commodities to name a few.

6. Draft a Memorandum of Association and local service agent agreement (if LSA required for your business)
7. Select a business location (procure the tenancy contract and register on RERA)
8. Get additional approvals if required (for businesses like legal consultancy, fire equipment, alarm and safety systems etc.)
9. Apply for business license and registration

You can reach out to the service center of the economic department in-person or online and submit the below forms:

• Initial approval receipt and all required documents
• Copy of the lease contract attested by the RERA
• Memorandum and articles of association (for all type of companies)
• Approval from other govt. entities if required
• Attested service agent contract (for civil establishment; 100% owned foreigners and other companies that mandate LSA)

Once you receive the business license you can apply for Establishment Immigration Card with General Directorate of Residency and Foreign Affairs. This permits employees to emigrate for work to the UAE. The number of visas issued to a company depends on the location and type of business. While the number of employees that can be hired depend on size of the office space.

Additionally, ensure the business location in free zone or mainland comply with not just requirements of the respective free zone authority or government but also the land planning regulations of the local municipalities.

You can get in touch with Jupiter Business Mentors for any queries with your business establishment process, you can visit https://jupiterbusinessmentors.com and book a free call with our mentor.