With the growth of online business sectors, today the majority of the corporation is planning to expand their market overseas. The main agenda of such a corporation is to increase their business and market them self in all the popular big cities around in the world. One of the majorly targeted countries is the United Arab Emirates (UAE).UAE is a federation of seven emirates. It has a history of rich Persian culture and is one of the most visited countries in the world. The major cities in UAE such as Dubai, Burj, etc. are home to enormous shopping malls and extraordinary entertainment attractions.
This is the reason why the majority of countries opt for setting up their business in UAE. However, like any other nation, there is a certain set of rules and procedures to be followed in order to set up business in the UAE.
A brief on the overall process of setting up a company in UAE: Before starting a business in UAE it is very important to understand the difference between free zone, offshore and mainland company formation.Depending upon which criteria in which your company falls the necessary license is to be acquired. The license may differ depending upon which services a company wants to offer; different services may need a different license. Once all of this is done foreign countries need to submit all the required business documents, open a corporate bank account and start the visa process.
Meaning: A mainland company is an onshore company which is legally licensed by the department of economic development of the related emirates. Mainland companies are allowed to do business in the local market as well as outside UAE without any restrictions. It has axis to all commercial and professional license.
Ownership rights and structure: To acquire a mainland license having the presence of a UAE national is Mandatory either as a local partner or a service agent. In the commercial license, only 49% of shares are held by the foreign partner while the UAE citizen owns 51% of shares. While in case of professional license the expatriate and the UAE completely own all the shares citizen is appointed as a local service agent. However, the local service agent or partner who is a UAE citizen is responsible for signing all the legal documents related to the government applications whereas the foreign partner is completely responsible all the operations of the company and also the financial undertakings. The local service agent can also get involved in the financial undertakings if he wishes to, but a prior agreement regarding the same has to dowith the consent of both the parties.
Visa for a mainland company: For a mainland company there is no limitation when it comes to visas. The ministry of labor (UAE) issues an electronic quota to every mainland company which displays their visa details. The visa depends upon the office space owned by the company the more the office space; the more is the number of visas given to the company. The eligibility of these visas can also be increased as per the growth in the strength of staff.
Capital requirement and government approvals: The capital requirement for the mainland company may vary depending upon the legal form of the business. Usually the total paid-up capital of business should not be below AED 5 million. In the case of PJSC, the minimum required capital is AED 30million. In case the companies need help with their budget planning or debt management for the same they can take the services of companies like Nationaldebtrelief.com. Coming to the government authorities, a mainland company does not require any standard government approval, but it does require approvals of some external government authorities depending upon the service of business.
Free zone Company
Meaning: A free zone company is a company which is registered to do business only within the assigned jurisdiction of the Emirates and is allowed to carry on business activities only in its assigned jurisdiction or outside UAE. A Free Zone Company cannot carry on local business unlike others as the government has applied certain restrictions on them and know more here Joanna Gaines nationality .
.Ownership rights and structure: In the case of a free zone company the free zone licenses totally owned by the foreign party and there is no need for any local service agent.
Visa for a free zone company:Generally, a free zonecompany is offered two visas as per the smart offers package. Depending upon the various types of free zones the UAE government allows anywhere between 3-6 visas as per smart offers package. In order to gain more visas under free zone license, the companies need to lease more offices.
Capital requirement and government approvals: A free zone company generally does not need any approval of external government authorities as the main purpose of establishment of this companies are for the sake of import and export. However, if any special business activities are to be carried out then at times, it may need the approval of some external authorities.A free zone company can be incorporated with or without any existence of a physical office. Facilities such as “plug in and go” are given to the new ventures in order to save their start-up cost in the UAE. Under this scheme, the foreign companies can use a common business center for a minimum of 5 hours a week.A distributor who owns a mainland license can charge a fee of 5 percent or less in case the free zone companies try to trade directly in the local market which is outside their designated jurisdiction.
The above mentioned are two major types of license and companies needed to start up business in UAE. There are also many offshore companies running in the UAE. However, it is advisable for the business setter to take proper guidance of the business consultants before planning to set up a business in the UAE. Various legal documentation and approvals from different authorities may be needed in case of the nature of the business.