Also known as a Mainland license, LLC or Onshore license
A question we are asked often is what is the difference between a Free Zone License or obtaining one through the DED? In a nutshell, a DED license provides you with the option of doing business anywhere in the UAE, as well as with local and government offices. A Free Zone license would restrict you to working within that Free Zone or countries outside of the UAE.
At this moment in time, the law says that to have a Mainland License, you have to have a local partner with 51% of the business share value. This is set to change to some degree… The DED has announced that they will be changing the laws to provide 100% foreign ownership to certain business activities. At present, no details on the categories of business, or the size of business that this will affect have been issued.
Benefits of a DED license
There are lots of benefits of a DED license:
- You can have as many licenses as you need (providing you have the office space)
- You can take an office anywhere in the UAE
- The DED has the definitive list of activities available. If your activity isn’t on there (if it is new to the region or if it is a new technology for example), Bizzmosis have the network of government officials that work with us to help. We have been known to add new activities so that our clients are covered
- More nationalities can hold business ownerships and visas when compared to other alternatives.
There are several licensing options that you can choose from. These are:
A professional license is available for consultancies. To set up this business, you have to meet the eligibility criteria of a professional.
The establishment of entities formed under the UAE Civil Code which are restricted to carrying out “non–commercial” or civic activities. The UAE Civil Code entities (may be an Individual Establishment or a Civil Works Company) include promotion of services, skills, and expertise of the individual(s) conducting the business, as well as other related practices that involve the use or investment of intellectual faculties.
At the moment, professional companies may be 100% foreign owned. However, it is necessary to appoint a “Local Service Agent” or “Local Sponsor.”
Bizzmosis can connect you with local sponsors. The sponsor will provide you with an MOU that will absolve them of interest in your business moving forward, or alternatively, they will work with you to progress your business in the UAE. More details on this can be obtained if you call us on +971 4 381 3934 or +971 4 381 3933
If you are giving ownership to a company, the DED request that in certain business activities, the shareholders of the UAE Company must meet the same criteria as the expat partner/s. They must reflect the same business activity as the parent company.
A commercial license provides physical services or trading activities. It provides you with a Limited Liability Company (LLC) in Dubai. It is also the most used legal entity for businesses with foreign ownership as it often replicates the legal structure that they have in other global areas.
Having an LLC business means that each of the partners shall only be liable to the extent of their share capital when they sign the Memorandum of Agreement (MOA). It is a safety net for the business partners.
That said, under the UAE Companies Law, a minimum of 51% ownership must be held by a UAE National (Local Partner), and 49% ownership will be that of the foreign shareholder. This is still the case. The LLC framework, however, enables the issuance of constitutional documents that are designed to protect the interests of the foreign minority shareholder. These include, but aren’t limited to, the profits distribution, assets entitlement, appointment of directors/managers, powers of administration, and influence in decision making.
Bizzmosis can connect you with local sponsors. They will provide you with an MOU that will absolve them of interest in your business moving forward, or will work with you to progress your business in the UAE. More details on this can be obtained from +971 4 381 3934 or +971 4 381 3933
Branch or Representative Office
Very often, businesses have a Free Zone License already that provides 100% foreign ownership. However, a Free Zone license will only enable businesses to work within that Free Zone. By setting up a branch office, the business is providing a legal extension to the parent company to secure contracts and conduct business activities.
It is stipulated under the UAE Companies Law that 100% foreign ownership is allowed provided that a local service agent is appointed.
A Representative office is primarily used for marketing purposes. It can promote the parent company, however, it may not legally trade or enter into commercial activities. This is not an issue when marketing to other mainland businesses though as they have the freedom to work with the free zone entity if they choose to. All monies will have to be collected by the parent Free Zone business.
It should be noted though, that the number of employees allowed under either a branch or representative office is limited to 4.
If you think you will require more, or want to hear more about a branch/representative office, call us on either +971 4 381 3934 or +971 4 381 3933