Department of Economic Development (DED)
Free zone company formation cannot be used for some business activities in the UAE, such as certain oil and gas related activities, construction firms, and activities that depend on conducting business throughout Dubai. Dubai’s Department of Economic Development (DED) provides businesses with onshore licences to set up businesses in Dubai with legal structures for company formation in Dubai based ‘onshore’, or outside free zones.
Depending on a company’s strategic planning, startup business plan, and various other factors, the type of company formation selected for a DED licence can differ.
Company formation as a sole proprietorship means that the company is solely owned and operated by a single individual and does not require a minimum startup capital. The owner will have full control of operations and profits whilst being 100 percent liable for debts and/or any other financial obligations. The company can have only a single manager, and the trade name needs to be related to the activity. Foreigners can choose to form a sole proprietorship, but only for some professional services, such as certain medical professions. Companies owned by foreigners must have a Local Service Agent who will not have an ownership interest but will receive a yearly fee. Otherwise, this type of licence is limited to UAE nationals or GCC nationals. A qualified business setup consultant in UAE can assist entrepreneurs considering sole proprietorships for company formation in Dubai.
Limited Liability Company
A limited liability company (LLC) allows for company formation anywhere in the emirate (outside of free zones). With an LLC, companies can select business activities from a comprehensive list. LLCs can have anywhere between two and 50 shareholders, with each shareholder liable to the extent of their share in the company. However, foreigners can only own 49% of an LLC’s shares. A UAE national or a company wholly owned by UAE nationals must hold the remaining 51% of shares; however, the shareholders can agree on profit and loss terms separately. With an LLC, companies are required to lease some premises to obtain the licence. Also, the number of available visas for the company is directly connected to the size of the leased premises. Business setup consultants in Dubai and business setup consultants in UAE can help businesses looking at company formation in Dubai understand and complete the DED licence requirements.
Branch of a Foreign Company
A company registered abroad can open a branch in Dubai and the UAE, with the parent company owning 100 percent. However, it cannot import goods on its own and must do so through a local trading firm. This company formation option can be complicated, and professional business setup consultants in Dubai can assist businesses considering establishing a branch in Dubai.