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Setting up Business in Free Zones of UAE : Basics and Procedures

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United Arab Emirates has emerged as the most pursued platform for establishing companies and businesses. The country itself has taken effective steps to make it even more attractive for potential businesses and generate revenues to pave way for diverting its economy away from oil. Undoubtedly, the effort has paid off and countless enterprises are now Setting up business in free zones

To make this easier, UAE has established Free Zones in every emirate. The Free Zones are dedicated business hubs with different laws and taxation systems that are business-centered. In total, UAE has whopping 45 free zones, spread all over UAE to allow entrepreneurs to choose their desired zone and begin their setup where they deem appropriate.

This article outlines the key processes involved in setting up business in free zones of UAE.

1: Type of Business

Determining the type of business is a prerequisite to setting up business in free zone of UAE. The common business types in UAE are LLC (Limited Liability Company), FZE (Free Zone Establishment) and FZ LLC (Free Zone Limited Liability Company).

It is the responsibility of individual free zone to regulate type of business. This depends on several other factors such as:

Investment Obligation

Each free zone dedicates a different minimum requirement of a company’s capital to set up in a free zone. Some free zones have a nominal minimum requirement of AED 1000 whereas some require larger amounts as capital of AED 150,000. Every zone determines the minimum capital as per its own laws.

2: Selecting A Trade Name

The company’s “title”, or trade name, is a key requirement. Separate free zones have laws governing this too. For instance, for TwoFour54, companies are prohibited from adding “United Arab Emirates” or “Abu Dhabi” in their names.

The general rules by DED to authorize a proposed trade name are:

  1. The trade name must not tarnish the moral and public values of UAE
  2. The corporation must fall under one of the dedicated legal corporation category i.e. LLC, FZE etc.
  3. The name must be according to its activities and legal status
  4. The name must not include names of religions or governmental authorities, or names and/or logos of external organizations.

3: Application for License of Business

This step follows name selection. The type of business activity determines the type of license issued. Companies need to submit supporting documents when applying for license.

The free zones allow specific business activities. Applicants can choose their free zone as per the scope of their business. For instance, The DMCC has over 600 business activities available to pick.

Financial businesses such as banks and insurance companies, and wealth management etc., are allowed in DIFC. DIFC also allows non-financial business such as retail stores, restaurants and five-star hotels, art galleries, and academic institutions.

4: Selecting and Office Space

Companies need a physical location and an adequate office space.

Companies can purchase or rent office space. The size of office is determined by the number of workers and the nature of firm.

The DMCC has a vast variety of spaces available; from a flexi desk of 20 – 30 sq. m., to offices totaling up to 2,000 sq. m. are all available at DMCC.

There are three types of office packages available in the DAFZ. Office Packages, Smart Desk Office Packages, and Executive Office Package.

The Hariyah Free Zone Authority offers approximately 100 executive office suites with conference and internet access.

5: Pre-Approvals, Registration and Licensing

Companies based in free zones are subject to the rules of the free zones in which they operate. You must apply with the required documentation in order to obtain the relevant permissions. The list of papers varies according on the sort of commercial activity, the type of firm, and the free zone authority’s criteria. The actions and documentation required for approvals are listed below as a basic guideline.

5.1 Approval

You must obtain first permission. You must give the following information:

  • Completely filled application form
  • A devised business strategy
  • A copy of business license or registration certificate (in case the business already exists. Applicable for local company only)
  • Colored copies of passport of the company’s shareholder(s) and the company’s chosen Manager or Director
  • Sample of signatures of the company’s shareholder(s) and designated Manager or Director
  • 2 years of audited financial records for business or a letter of recommendation from individual shareholder’s personal bank NOC from existing sponsor (for individuals)
  • Deed of title to the unit
  • RIC (Registry Identification Code Form)

5.2 Registration

You must pay registration and license costs after receiving first clearance. The cost of obtaining a license is determined on the type of license required. Then you must provide the following:

  • Registration application
  • Name of Manager or Director appointed by a Board Resolution (Authenticated and attested)
  • Name of Manager or Director who has been given the power of attorney (Authenticated and attested)
  • Articles of Association and Memorandum (Authenticated and attested)
  • Sample of signature of the appointed Manager or Director (Authenticated and attested)
  • Passport size photo of the Manager or Director on a white backdrop
  • Information about the capitalization of the company

5.3 Licensing

  • The authorities prepare license agreement
  • Issuance of trade license
  • Beginning of visa processing

Conclusion

Once all steps are duly completed, a company is successfully set up in UAE free Zone. However, in many instances, applicants require professional assistance pertaining to legal documents and other requirements. Bader Saleh Auditing of Accounts helps in such matters with detailed assistance and professional services.

Feel free to contact us:

  • Office # 0641, Tamani Arts Offices, Business Bay, P.O. Box 111390, Dubai, UAE
  • +971 4 570 7357
  • +971 58 108 5690
  • info@bsauditing.com

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