Procedure for Business in UAE

Free zones are districts arranged by the government to encourage investors and businessmen to do businesses in selected sectors such Dubai Media City, Ras Al Khaimah Creative City….. , with exclusive incentives and privileges for foreign investors. A Business entity established in a free zone must comply with the regulations and follow the procedures of the free zone. For example, a company that intends to be established in Dubai Media City (DMC) must follow the regulations and procedures of DMC.

In contrast, a business entity established outside free zones is treated as a fully Emirati entity and can operate within the jurisdiction of the emirate. They must comply with the regulations of the Federal and local licensing authorities.

Establishing a new business entity outside a free zone in the UAE requires having a local (UAE national) partner or service agent. This depends on the entity's business license (refer to "Types of Business Licenses in the UAE" section). The sponsor national is a silent partner.

Once the Trade Name is reserved, investors and businessmen are then allowed to choose from a variety of forms of business entities that exist under the UAE federal legal system, after complying with conditions and requirements as illustrated in the diagrams. The Federal Commercial Companies Law and the UAE Civil Transactions Law regulate the formation and functioning of professional, industrial and commercial companies. These two codified legislations are applicable throughout the UAE. The most common business forms are shown in the diagram below and explained in more details in terms of ownership, legal requirements, minimum capital levels and incorporation procedures. All foreign business entities wishing to operate in the UAE, in districts other than free zones, must have a local partner or a local sponsor or local service agent depending on the legal form of the business entity. The role of the local partner or agent may vary from a business entity to another (illustrated in the below diagrams when needed).

The definitions of business forms and process of incorporation are almost similar to all emirates. However, the licensing body (refer to "Licensing Authorities section"), third party approvals required and the setting up fees may slightly vary. The below process charts explain those procedures and requirements. More details can be obtained from the competent licensing bodies within the emirates.

By selecting the legal form of the business entity, a business license must be obtained from the same licensing authority. In general, three different business licenses exist in the UAE: commercial, industrial and professional. In addition, a new business license – tourism – was lately introduced by Abu Dhabi and Dubai in order to best organize the business activity. The below diagrams identify these different types and its classifications in terms of documents needed, special requirements and examples of business activities that fall under the respected license type.

As per the procedural steps including submitting the required documents as appropriated forms of the business entities and the general documents section, and paying the fees (for trade name reservation and initial approval). This segregation is needed to best organize the formation of business entities and give investor the different options of incorporating.

Some activities require an approval from a third party, other than the licensing authority of the emirate. The third party could be a ministry, a national department or a relevant local authority. The following step is considered the most important procedure in order to obtain a business activity, keeping in mind that the larger portion of business activities does not need an approval from third parties such as trading.

By selecting the business license and the legal form of the business entity wished to be established in the UAE (outside free zones), investors and businessmen should be aware that some business activities require an approval from third parties such as ministries and other authorities. The chart below lists the most common business activities in the UAE and the third party approval needed for each activity. For a detailed list of third party approval, please refer to the website of the licensing body of the emirate or the web portals of the third parties bodies.

Obtaining a business activity that needs an approval from a third party depends on meeting the conditions set by the authority such as the location of the business, the technical staff requirements, the minimum capital needed, etc. To obtain the procedures, fees and regulations for each activity, businessmen are strongly recommended to visit the websites of the relevant authority.

Commercial Registration is a condition that precedes the operating of the business activity. Within two months from the date of establishment and preceding the commencement of the business of a company, every merchant, branch manager, managers of commercial companies' agents of foreign companies must inscribe their companies in the Commercial Register of the licensing authority in accordance with the terms and conditions determined by the law. Commercial Companies and Branches of Foreign Companies must be inscribed in the Register and Companies that practice professional services are not subject to this inscription.