Switching from free zone to mainland company formation in Dubai

If you’re currently operating within a free zone business structure and considering transitioning to a mainland company, we’re here to assist you. Over 30,000 companies trade from the three largest UAE free zones. Foreign entrepreneurs can also benefit from the conveniences of pre-packaged business inclusions in free zones. However, this model has limitations. While free zone companies serve as an excellent starting point, expanding often requires transitioning to a mainland company. This switch is vital for your business’s growth. With the right UAE national sponsor or company formation specialist, moving from a free zone to the mainland is both a strategic and manageable decision.

Your checklist for setting up a mainland company in Dubai

Your business setup checklist is ready. Together, let’s launch your business successfully!

1. Decide on your business venture.

Prior to establishing a business in the UAE mainland, you should first choose the sector you want to operate in. The Department of Economic Development (DED) has listed thousands of business activities that are allowed. Among these are manufacturing, trade, agriculture, and hospitality. Businesses on the mainland are free to engage in any of the more than 2000 DED-listed activities, in contrast to many free zone businesses that are prohibited from doing so due to their location.

2. Locate the best place for your company in the United Arab Emirates.

Choosing where to operate is the next step after deciding on your business activity. There are no limitations on the locations of businesses on the UAE mainland. Numerous factors, including your chosen business activity and budget, will determine the best location. If your business depends on imports and exports, it makes perfect business sense to locate close to one of the busy ports in the United Arab Emirates, such as Jebel Ali, Mina Zayed, or Mina Khalid. The simplicity of setting up branch offices is another benefit of establishing a mainland company in Dubai. This implies that companies can establish a significant local presence over time and are not restricted to a single location.

3. Ascertain the legal structure of your company.

Legally speaking, foreign business owners can establish a variety of enterprises on the UAE mainland. Limited Liability Companies (LLCs) are the most prevalent business structure on the mainland. Two or more shareholders own an LLC, which is a separate legal entity. To establish a business in the UAE mainland, a company that wants to engage in manufacturing and other commercial or industrial activities under a commercial or industrial license must create an LLC. A local sponsor would be needed for this. On the other hand, establishing a professional services business does not necessitate a foreign sponsor and can be entirely owned by foreigners. Next up, more on this!

4. Find a local service agent or sponsor.

In the past, foreign business owners could only oversee mainland company setup in Dubai by collaborating with a local service agent or sponsor. A local sponsor is necessary if the LLC is operating under a commercial or industrial license. A UAE-based business or a UAE national may serve as your local sponsor. 51% of the company will be owned by the local sponsor in both situations.

To serve as your local partner, GO GULF can offer you a Corporate Nominee. This shields you from all risks and lets you keep complete operational and financial control over the company. Only a local service agent (LSA) is needed when establishing a professional business on the mainland. The LSA will only serve as a representative in all administrative and governmental interactions; it will not own any stock in the company.  

5. Give your business a name.

Deciding on a company trade name that conveys your brand and professional values is one of the most important business decisions an entrepreneur can make. In the UAE, there are several considerations to keep in mind. Offensive language, religious references or inferences to other organisations are all forbidden. Only full personal names can be included in your company trade name. When it comes to your company trade name in different languages, all names must be written as they are sounded out, rather than translated. To know all the guidelines on naming your company, check our Choosing a Company Name in the UAE guide.

6. Apply for a mainland trade licence

Now it’s time to apply for a mainland trade licence with the Department of Economic Development. Several documents are required as part of a trade license application. These include a licence application; memorandum of sponsor arrangements; and ownership percentage among all partners and shareholder visas, just to name a few.

7. Secure your office space

Once you’ve obtained a business trading licence, it’s time to secure an office space. In the UAE mainland, serviced offices are usually owned and maintained by a third party and contain everything you need to move in immediately. Desks, phone and internet access and reception services are some usual inclusions. Your lease payment would usually cover rent, use of office equipment and utility bills. The other end of the spectrum is a ‘shell and core’ type of office space. This usually requires a full fit-out and decoration, with bills on top of rent costs. A middle ground exists too, with office spaces pre-fitted, where the business owner simply provides their own equipment and pays bills separately.

8. Apply for relevant visas

There’s no limit with mainland visa applications for business owners in the UAE mainland. But the number of visas applied for should correspond with the amount of office space required. Usually, 100 sq. ft. of office or warehouse space per visa is the rule. There are circumstances where this may not be applicable. For example, if the business is a domestic cleaning company with 500+ employees working remotely, the office space needs would be decidedly smaller compared to a textiles or manufacturing company. As the owner of a UAE mainland company, you will also be able to sponsor dependents – such as family members and domestic staff (maids or drivers, for example) for their visas as well. Foreign entrepreneurs who establish business on the UAE mainland are also entitled to an investment visa which gives them and their families the right to live and work in the UAE for up to three years.

9. Partner with a Company Setup Consultant

Setting up a mainland company in the UAE requires a deep understanding of the legal and company formation process. Working with UAE-based business setup consultants helps take the stress out of setting up a company for overseas entrepreneurs. A business consultant can collaborate with you and understand your business goals. This will help you feel confident in starting a successful business on the Duabi mainland.