Dubai is one of the most dynamic and business-friendly cities in the world, attracting entrepreneurs and investors from all over the globe. With its strategic location, world-class infrastructure, and supportive business environment, Dubai offers unparalleled opportunities for business growth and success. If you’re considering starting a business in Dubai, one of the options available to you is mainland company formation. In this guide, we will take a closer look at mainland company formation in Dubai, its benefits, and the steps involved.
What is Mainland Company formation in Dubai?
Mainland company formation refers to setting up a business entity in the mainland area of Dubai, which is governed by the Dubai Department of Economic Development (DED). Mainland companies have access to the entire UAE market and can conduct business with both local and international clients. Mainland companies also have the advantage of being able to operate in a variety of sectors, including retail, services, and manufacturing.
Benefits of Mainland Company Formation in Dubai
Mainland company formation offers several benefits to entrepreneurs and investors, including:
Access to a vast market: Mainland companies have access to the entire UAE market, which is one of the fastest-growing economies in the world. This provides ample opportunities for business growth and expansion.
No restrictions on business activities: Mainland companies can operate in a wide range of sectors without any restrictions, making it an ideal choice for entrepreneurs and investors looking for flexibility.
Local and international business opportunities: Mainland companies can conduct business with both local and international clients, giving them a competitive edge.
Full ownership and control: Mainland companies allow entrepreneurs and investors to have full ownership and control over their businesses, without the need for a local partner.
Access to government contracts: Mainland companies have access to government contracts, which can be a lucrative source of revenue for businesses.
Steps for Mainland Company Formation in Dubai
The following are the steps involved in mainland company formation in Dubai:
Step 1: Choose a Business Activity
The first step in mainland company formation is to choose the business activity that you want to engage in. You will need to obtain a trade license that is specific to your business activity.
Step 2: Choose a Legal Structure
The next step is to choose the legal structure for your company. You can choose from several options, including sole proprietorship, limited liability company (LLC), and branch office.
Step 3: Choose a Company Name
You will need to choose a unique company name that complies with the DED’s naming guidelines. You will also need to reserve the name with the DED.
Step 4: Prepare the Memorandum of Association (MOA)
The MOA is a legal document that outlines the company’s activities, shareholders, and capital. You will need to prepare the MOA and have it notarized by a public notary.
Step 5: Obtain Initial Approval
You will need to obtain initial approval from the DED for your company formation. This involves submitting the required documents, including the MOA, and paying the necessary fees.
Step 6: Rent an Office Space
You will need to rent an office space that meets the DED’s requirements. The office space should have a physical address and be located in a commercial building.
Step 7: Obtain Final Approval and Trade License
Once you have obtained initial approval and rented an office space, you can apply for final approval and the trade license. This involves submitting the required documents, including the tenancy contract, and paying the necessary fees.
Step 8: Register for VAT
If your company’s annual turnover exceeds AED 375,000, you will need to register for VAT with the Federal Tax Authority (FTA).
Requirements for Mainland Company Formation in Dubai
- To form a mainland company in Dubai, you will need to meet the following requirements:
- A minimum of two shareholders and a maximum of 50 shareholders
- A minimum share capital of AED 300,000 for LLCs (although the actual amount may vary depending on the business activity)
- A physical office space that meets the DED’s requirements
- An approved business activity and a trade license specific to that activity
- A Memorandum of Association (MOA) that complies with the DED’s guidelines
- A local service agent for some types of businesses, such as professional firms
Mainland Company Formation Process vs. Free Zone Company Formation Process
Mainland company formation and free zone company formation are two different options available to entrepreneurs and investors looking to set up a business in Dubai. While both options offer several benefits, there are some key differences between the two.
One of the main differences is the ownership structure. In mainland company formation, a local service agent is required, and the foreign investor can only own up to 49% of the shares. On the other hand, free zone company formation allows 100% foreign ownership without the need for a local partner.
Another key difference is the business activity. Mainland companies can operate in a wide range of sectors, while free zone companies are limited to specific sectors based on the free zone’s focus area.
The process for forming a mainland company and a free zone company also differs in terms of the regulatory authority. Mainland companies are regulated by the DED, while free zone companies are regulated by the respective free zone authority.
Mainland company formation in Dubai offers several benefits, including access to a vast market, no restrictions on business activities, local and international business opportunities, full ownership and control, and access to government contracts. However, the process can be complex and time-consuming, requiring entrepreneurs and investors to navigate several legal and regulatory requirements.
By following the steps outlined in this guide and working with a reputable business setup consultant, entrepreneurs and investors can successfully navigate the mainland company formation process and start a successful business in Dubai.