Mainland Company Formation

Mainland company formation refers to the process of establishing a business entity in the mainland area of a country. In the context of the United Arab Emirates (UAE), mainland company formation involves setting up a business outside of the designated free zones. It offers several advantages and opportunities for entrepreneurs and businesses looking to operate within the local market and engage in commercial activities.

One of the key benefits of mainland company formation is the ability to conduct business within the local market. By establishing a mainland company, businesses can cater to the needs of the local population, interact with other mainland companies, and access a larger customer base. This provides opportunities for growth and expansion, especially in sectors that primarily serve the domestic market, such as retail, hospitality, and professional services.

Another advantage of mainland company formation is the absence of any geographical limitations. Unlike free zones, where businesses are restricted to operating within the boundaries of the respective zones, mainland companies have the freedom to establish their presence anywhere in the country. This flexibility allows businesses to strategically choose their location based on factors such as proximity to customers, suppliers, and key business hubs.

Mainland companies also benefit from the absence of share capital requirements. Unlike free zones, which often impose minimum share capital requirements for company formation, mainland companies do not have such obligations. This enables entrepreneurs to start their businesses with more flexibility in terms of capital investment and allocation.

Furthermore, mainland companies have the advantage of unlimited business activities. Unlike free zones, which have specific industry-focused zones, mainland companies are not limited to specific sectors or activities. This means that businesses can engage in a wide range of commercial activities without restrictions, subject to obtaining the necessary licenses and approvals from the relevant authorities.

In terms of ownership structure, mainland companies require a local partner or sponsor. This requirement is specific to certain business types, where a UAE national or a UAE-owned company holds a certain percentage of ownership. The local partner/sponsor acts as a local service agent, facilitating the company’s operations and ensuring compliance with local laws and regulations. It is important to note that the local partner/sponsor does not have any direct involvement in the management or financial aspects of the business.

Mainland company formation also provides access to a larger pool of skilled labor. As mainland companies operate within the local market, they have the opportunity to recruit talent from the local workforce. This can be advantageous in sectors that require specialized skills or knowledge of the local market dynamics. Additionally, mainland companies can also hire expatriates, subject to obtaining the necessary work permits and visas.

Moreover, mainland companies have the potential to tap into government contracts and participate in public tenders. As the government implements various initiatives and infrastructure projects, mainland companies are well-positioned to secure government contracts and contribute to the country’s development. This can provide significant business opportunities and contribute to the growth and success of the company.

Process

Setting up a mainland company in the UAE involves several steps and adherence to specific regulations. Here is a detailed process to guide you through establishing a mainland company

Determine Business Activity

Identify the business activities you intend to undertake. Certain activities may require approval from specific government departments or regulatory bodies.

Choose a Business Structure

Decide on the legal form of your company. Common options include Sole Establishment, Civil Company, Limited Liability Company (LLC), or Public Joint Stock Company (PJSC). To know more about the business structure you may Read Here

Select a Local Partner or Sponsor

In General Majority of business activities are now 100% available for foreigners and you no longer need a Local Sponsor or Local Service Agent to establish company in the mainland, Yet there are still few Business Activities that are still need equire a local partner or sponsor

Choose a Business Name

Select a unique and appropriate business name that complies with the UAE’s naming conventions. Ensure that the chosen name is available for registration. To know more about the business names you may Read Here

Initial Approval and Trade Name Reservation

Apply for initial approval from the Department of Economic Development (DED). Simultaneously, reserve the chosen trade name through the DED’s online portal.

Draft Memorandum of Association (MOA)

Prepare the Memorandum of Association, specifying the company’s details, business activities, share structure, and other essential information. This document must be notarized.

Office Space

Lease an office space meeting the criteria set by the DED. Having a physical office is a mandatory requirement for mainland companies

Submit Documents to DED

Submit the required documents, including the initial approval, MOA, local partner agreement (if applicable), office lease agreement (ejari) and other relevant documents to the DED for further review.

Payment of Fees

Pay the necessary fees for license issuance, registration, and any other applicable charges. Fee structures may vary based on the business activity and location.

Final Approval and License Issuance

After fulfilling all requirements and settling the fees, the DED will issue the final approval and the trade license. This license authorizes the company to conduct business in the UAE.

Open Bank Account

Open a corporate bank account in the UAE. Banks may require documentation such as the trade license, MOA, and proof of address.

Visa and Employment

If you wish to apply for Investor or partner visa & Employement Visas then MOHRE Registration and GDRFA Registrations are mandatory

Register Company Under General Directorate of Residency and Foreigners Affairs (GDRFA)

Register company under GDRFA for Company immigration Card and apply for the residence visa applications for the Investors

Register Employees with the Ministry of Human Resources and Emiratization (MOHRE)

Register employees with the MOHRE, obtain employment visas, and adhere to labor regulations.

Register with the General Authority of Social Insurance (GASI)

Enroll the company and its employees in the social insurance program administered by GASI.

After Company formation as a local company, to execute the business transactions/operations you are required to adhere to the relevant government bodies such as

VAT Registration

If applicable, register for Value Added Tax (VAT) with the Federal Tax Authority (FTA) to read more about VAT registration please Click Here

Obtain Additional Approvals (if required)

Depending on the nature of your business, you may need approvals from specific authorities, such as the Ministry of Health, Dubai Municipality, or other regulatory bodies.

Customs Registration

If you are company that is involved in Trading activities then this is one of the essential registration that is needed to be done inorder to conduct import and export of tangible goods.

Corporate Tax Registration

Corporate tax is a levy imposed on the profits earned by companies or corporations. It is a direct tax charged by the government on the income generated by businesses from their operations, investments, and other activities. To read more about corporate tax Click Here

Commence Operations: Once all approvals are obtained, commence your business operations in compliance with local laws and regulations.

Inchub is well versed with the local laws and regulations, we can assist in navigating the regulatory landscape and ensuring a smooth setup process for your mainland company in the UAE.

Features of Mainland Company

Setting up a mainland company in the UAE offers several benefits, making it an attractive option for businesses. Here are some key advantage

Access to the Local Market

Mainland companies have the flexibility to conduct business across the entire UAE market without any geographical restrictions. This enables them to tap into diverse consumer bases and explore business opportunities throughout the country.

Potential for Unlimited Trade

Mainland companies can engage in import, export, and trade activities without restrictions. This is crucial for businesses involved in trading goods and services internationally.

Access to Skilled Workforce

Mainland companies can easily hire skilled professionals from the local and international labor pool. The availability of diverse talents is essential for businesses seeking specific expertise.

Direct Business Relationships

Mainland companies can establish direct business relationships with other local companies and government entities. This facilitates smoother communication and collaboration.

No Currency Restrictions

Mainland companies can transact in any currency without restrictions. This flexibility is beneficial for businesses engaged in international trade and finance.

Full Ownership for Certain Activities

In certain sectors, mainland companies can achieve 100% foreign ownership without the need for a local partner. This is particularly advantageous for businesses operating in professional services, consulting, and specific industries.

Network Expansion

Being part of the mainland business environment allows companies to establish a physical presence, network, and build relationships within the local community. This can lead to enhanced business visibility and credibility.

Potential for Larger Office Spaces

Mainland companies can opt for larger office spaces compared to those available in free zones. This is beneficial for businesses with extensive operations or those requiring substantial office facilities.

Local Sponsorship and Partnership Opportunities

Mainland companies have the option to enter into local sponsorship or partnership agreements, which can be advantageous for certain business activities and industries.

Government Contracts and Tenders

Mainland companies are eligible to participate in government contracts and tenders, providing them with opportunities to secure projects from various government entities.

Access to a Wide Range of Business Activities

Mainland companies have the freedom to engage in a broad spectrum of business activities. This flexibility allows entrepreneurs to diversify their business operations and adapt to market demands.

Strategic Location

Access to Skilled Workforce

The UAE's strategic geographical location serves as a gateway to the Middle East, Africa, and Asia. Mainland companies can leverage this advantageous position for regional expansion and trade.

Ability to Bid for Government Projects

Mainland companies are eligible to bid for government projects and contracts, providing access to a significant market segment and potential revenue streams.

While mainland companies offer numerous benefits, it’s essential to carefully consider the specific requirements and regulations associated with the chosen business activity and industry in the UAE. Seeking professional advice and assistance during the setup process is advisable to ensure compliance and a smooth establishment of the business.

Mainland Company Registration for Businesses that are looking to provide services in UAE

A mainland company in the UAE can be utilized for various business activities across different sectors. Here are some possible uses of a mainland company

Local Trading

A mainland company is ideal for local trading activities in the UAE, allowing businesses to sell products and services within the domestic market. This setup provides unrestricted access to local customers and facilitates the establishment of a strong presence in the region.

Manufacturing and Production

Mainland companies are instrumental for establishing manufacturing facilities, supporting businesses in the production of goods. This setup provides entrepreneurs with the necessary infrastructure and regulatory framework to engage in manufacturing and production activities.

Hospitality and Tourism

Operating in the hospitality and tourism sector is a key utilization of mainland companies. This structure allows businesses to establish and manage hotels, restaurants, travel agencies, and other tourism-related services, contributing to the vibrant tourism industry in the UAE.

IT and Technology Services

Offering information technology services is a significant use of mainland companies. This structure facilitates businesses in providing software development, IT solutions, and technology services, contributing to the technological advancement of the UAE.

Media and Advertising

Operating in the media and advertising industry is a prominent use of mainland companies. This structure facilitates the establishment of media companies, advertising agencies, and production studios, contributing to the diverse media landscape in the UAE.

Oil and Gas Services

Participating in the oil and gas industry is a strategic use of mainland companies. This structure allows businesses to provide services and support to the oil and gas sector, contributing to the energy landscape of the UAE.

Pharmaceuticals

Establishing pharmaceutical companies is a crucial use of mainland companies. This structure supports businesses in the production and distribution of medicines, contributing to the healthcare sector in the UAE.

Retail Operations

Mainland companies are well-suited for retail operations, enabling entrepreneurs to open stores and outlets to cater directly to the local consumer base. This approach fosters direct engagement with customers and contributes to building a robust retail presence.

Construction and Contracting

Engaging in construction projects and contracting services is facilitated by mainland companies. This structure enables businesses to participate in diverse construction ventures, contributing to the growth and development of the construction industry in the UAE.

Healthcare Services

Establishing healthcare services is a crucial application of mainland companies. This structure supports the operation of clinics, hospitals, and medical centers, playing a vital role in enhancing the healthcare infrastructure in the UAE.

Logistics and Transportation

Mainland companies are crucial for businesses in the logistics and transportation sector. This setup supports activities such as shipping, freight, and courier services, contributing to the efficient movement of goods within and outside the UAE.

Financial Services

Providing financial services is a key application of mainland companies. This structure supports businesses in offering banking, insurance, and investment services, contributing to the robust financial sector in the UAE.

Renewable Energy

Engaging in renewable energy projects and services is a forward-looking application of mainland companies. This setup supports businesses in contributing to sustainable energy solutions, aligning with the UAE's commitment to renewable energy.

Research and Development

Conducting research and development activities in various fields is a strategic application of mainland companies. This setup allows businesses to contribute to innovation and technological advancement, fostering growth in research and development in the UAE.

Professional Services

Mainland companies are pivotal for offering professional services such as consulting, legal, accounting, and auditing. This structure allows service providers to operate seamlessly within the regulatory framework of the UAE, serving the diverse needs of clients.

Real Estate Development

Mainland companies are pivotal for real estate development projects, allowing businesses to participate in property development and management. This setup is essential for those looking to contribute to the dynamic real estate landscape of the UAE.

Educational Institutions

Mainland companies play a pivotal role in the establishment and operation of educational institutions. This includes schools, colleges, and training centers, providing a platform for quality education and contributing to the development of the educational sector in the UAE.

Event Management

Organizing events, conferences, and exhibitions is a dynamic application of mainland companies. This structure allows businesses to play a key role in the event management industry, contributing to the vibrant cultural and business events scene in the UAE.

Professional Training

Offering professional training and development programs is a valuable use of mainland companies. This setup enables businesses to provide training services, enhancing the skill set of professionals in the UAE.

Manufacturing and Export

Manufacturing goods for local and international markets, with the potential for export, is a key utilization of mainland companies. This structure supports businesses in producing and distributing goods, contributing to both local and global trade.

The flexibility and versatility of mainland companies allow businesses to operate across a wide spectrum of industries, contributing to the diversity and dynamism of the UAE’s economy. It is essential for companies to carefully consider their business objectives, industry regulations, and market demands when determining the most suitable usage for their mainland company.

What are the advantages & Disadvantages setting up company in Mainland?

Setting up a company in the mainland of the United Arab Emirates (UAE) offers several advantages and disadvantages. Here are some key points to consider

Advantages

1

Access to Local Market

One of the primary advantages of a mainland company is its unrestricted access to the local UAE market. You can conduct business with both local and international customers throughout the emirate where your company is registered.
2

Broad Business Activities

Mainland companies have the flexibility to engage in a wide range of business activities, including commercial, industrial, professional, and service-oriented activities. This allows for diversification and expansion opportunities.
3

Government Contracts

Mainland companies have better access to government contracts and public tenders. Many government projects are exclusively open to mainland companies, providing potential opportunities for business growth.
4

Local Presence and Reputation

A mainland company provides a local presence, which can enhance your company’s reputation and credibility among local clients, partners, and suppliers. It demonstrates your commitment to the local market.
5

Flexibility in Office Locations

Mainland companies have the freedom to choose their office locations within the emirate where they are registered. This allows you to strategically position your business in areas that align with your target market or industry.

Disadvantages

1

Higher Setup and Operating Costs

Compared to free zones, mainland company setup and operating costs can be relatively higher. There are various fees, including licensing fees, visa fees, and office rent expenses. Additionally, the requirement to lease office space can increase initial expenses.
2

Potential Cultural and Language Differences

Operating a mainland company in the UAE mainland may involve dealing with cultural and language differences. It is important to understand and adapt to local customs, business practices, and regulations.
3

Compliance and Regulations

Mainland companies are subject to UAE federal and local laws, which may involve complex compliance requirements. This includes maintaining proper accounting records, adhering to labour laws, filing annual financial statements, and complying with taxation regulations.
4

Potential Competition

Setting up a mainland company exposes you to a potentially higher level of competition, as there are more businesses operating in the local market. This requires careful market analysis and strategic planning to differentiate your company and attract customers.
5

Limited Tax Benefits

While mainland companies enjoy access to the local market, they may have limited tax benefits compared to free zone companies. Mainland companies are subject to corporate tax and may also have Value Added Tax (VAT) obligations.

It’s crucial to carefully consider these advantages and disadvantages in relation to your specific business needs, industry, target market, and long-term objectives. Our experts can provide valuable guidance in making an informed decision about setting up a mainland company in the UAE.

Local sponsor or Local Service Agent is a must to setup mainland company?

It is not mandatory to have a local sponsor or local agent to set up a company in the mainland of the United Arab Emirates (UAE). However, it’s important to note that this depends on specific business activities and ownership structures. Here are some scenarios where a local sponsor or local agent may not be required

Professional and Consulting Activities

Certain professional activities, such as legal, accounting, engineering, and consultancy services, may not require a local sponsor or local agent. In these cases, the company can be 100% owned by foreign shareholders, known as a "professional license."

Branch of a Foreign Company

If you are establishing a branch of a foreign company in the UAE mainland, a local sponsor or local agent may not be required. The foreign company acts as the parent company, and the branch operates under its name and legal structure.

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UAE National as a Partner

In some cases, if a UAE national or a UAE-owned company becomes a partner in the mainland company with a shareholding of at least 51%, a local sponsor or local agent may not be necessary.

It’s important to carefully review the regulations and requirements of the specific emirate where you plan to establish your mainland company. The rules can vary slightly between emirates, and certain activities may have different ownership requirements. Contact us to provide accurate guidance based on your specific business activities and requirements.

Legal types available in the mainland company

In the mainland of the United Arab Emirates (UAE), there are several legal forms available for setting up a company. The specific legal forms may vary slightly between different emirates, but here is a list of common legal forms for mainland companies

Limited Liability Company (LLC)

The LLC is one of the most common legal forms in the UAE mainland. It requires a minimum of two shareholders and allows for the flexibility of profit distribution and management structure.

Public Joint Stock Company (PJSC)

A PJSC is a legal form used for larger companies that intend to offer their shares to the public through an initial public offering (IPO). It requires a minimum of 10 shareholders and has more stringent regulatory requirements.

Branch of a Foreign Company

A branch is an extension of a foreign company in the UAE mainland. The foreign company retains its legal identity, and the branch operates under its name. It must appoint a local service agent to act as a representative.

Sole Establishment

A sole establishment is a legal form where a single individual owns and operates the business. The owner is fully responsible for all aspects of the company and its liabilities.

Private Joint Stock Company (PrJSC)

A PJSC is similar to a PJSC but does not offer its shares to the public. It requires a minimum of three shareholders and has more flexibility in terms of management structure and shareholder requirements.

Representative Office

A representative office is similar to a branch but has limited activities. It serves as a liaison office for the parent company and is not allowed to conduct commercial activities or generate revenue.

Civil Company

A civil company is typically used for professional activities such as legal, accounting, engineering, consultancy, and other similar services. It involves partnerships between professionals who share the profits and liabilities of the company.

Partnership Company

A partnership company allows for partnerships between individuals or entities. It can be a general partnership where partners share the profits and liabilities, or a limited partnership where there are both general partners and limited partners.

It’s important to note that the specific requirements, procedures, and regulations for each legal form may vary between the emirates in the UAE. It is advisable to consult with us to guide you on the most appropriate legal form based on your business activities, ownership structure, and long-term objectives.

In a Nutshell

Mainland company formation in the UAE offers several advantages for businesses looking to establish a presence within the local market. The ability to operate anywhere in the country, access a larger customer base, engage in unlimited business activities, and tap into government contracts are key benefits of mainland company formation. While it may involve certain requirements such as the need for a local partner/sponsor, mainland company formation provides entrepreneurs with the opportunity to establish a sustainable and thriving business in the UAE’s dynamic and rapidly growing economy.