How to Set Up a Company in a Dubai Free Zone?

Free zones in Dubai offer many lucrative benefits to businesses incorporated there. These include 100% foreign ownership, 100% repatriation of capital and profits, developed business communities, sophisticated infrastructure and much more.

To benefit from these, you can set up your company in a Dubai free zone by following these simple steps.

1. Determine your business activity

It is important to decide the domain in which you would like to set up the business. This plays a crucial role in choosing the right free zone and the company structure later on.

‍2. Choose the right free zone

There are approximately 26 free zones in Dubai as per the Ministry of Economy, UAE. These are categorized into 2 major types - mixed-use or category-specific. 

• The mixed-use free zones offer a greater level of flexibility and adopt a live-work-play model. These zones have commercial office spaces, convention centers, hotels, and retail outlets. You can choose a mixed-use free zone for your business if you prioritize flexibility, comprehensive facilities, and diverse networking opportunities.
• The category-specific free zones offer infrastructure that cater to a specific business domain. These specific categories can range from healthcare, e-commerce, finance, technology to media. A category-specific free zone is appropriate for businesses offering specialized services and can benefit from industry-specific expertise.

Another factor that could affect selection of a suitable free zone is the minimum capital requirement. This varies across different free zones. Some free zones such as ‘twofour54’ have no minimum capital requirement while others have non-zero thresholds for minimum capital.

3. Choose a company structure

The legal structure for your company depends on the nature and requirements of the business, and capital. You have 2 choices for the legal structure of your business in the free zone - free zone establishment and free zone company/ limited liability company. Furthermore, a foreign or UAE company can register one of its branches in free zones.

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• A free zone establishment is a limited liability company with a single shareholder. This is ideal for an entrepreneur seeking sole ownership.
• A free zone limited liability company is a multi-shareholder limited liability company with a minimum of 2 shareholders. Furthermore, the shareholders can either manage the free zone company by themselves or appoint a manager.
• A foreign company that decides to set up its branch in a free zone can retain 100% ownership of the branch under the parent company. 

4. Select a business name

The trade name for a business must not contain any elements (names or logos) related to religion, governing authorities or external bodies and must not violate public morals and values. The chosen name must be followed by the legal structure of the company (LLC, FZE, etc.) and must not have been previously registered. 

‍5. Apply for initial approval

After selecting the legal structure for the business and a trade name, you must submit documents to the governing authorities of the free zone concerned for initial approval. Although the documents required can vary across free zones, a common list of documents that would be required include - 

• Fully-filled application form
• Business plan
• Coloured passport copies and specimen signature of company’s shareholders and the appointed manager/ director
• 2 years’ audited financial reports for corporate entity or reference certificate from a personal bank for the individual shareholder
• Unit title deed
• Letter of intent
• Registry Identification Code (RIC) for manager/ director (both original and notarised)
• No-objection certificate form current sponsor (for individuals)
  

Freelancers require fewer documents, namely application form, bank reference letter, Registry Identification code (RIC) and CV.

‍6. Apply for license

After receiving initial approval and deciding the office space, you must obtain a license to carry out business operations in the chosen free zone. The free zones offer different types of business licenses depending on the nature of business activities you intend to carry out. The major categories of licenses include -

• Commercial license - some text
  • Trading license - This allows the holder to import, store, distribute, sell and export goods specified on the license contract.
  • General trading license - This falls under the broader category of commercial license offering greater flexibility to trade any commodity within the UAE.
  • E-Commerce license - This allows holder to trade goods and services over electronic network
• Freelance permit license - This allows individuals to operate a freelance professional under their own name rather than operating under a brand/ company name.
• Industrial license - This license allows the company incorporated in the UAE to engage in manufacturing and production activities.
• Service license -This license allows the holder to provide services including consultancy services as listed in license contract clause.
  

You must apply for the license applicable for your business activities.

‍7. Secure an office space

While waiting for initial approval, you can consider securing your office space in the free zone. You can either buy or lease office spaces from the website of the respective free zone’s governing authority if you want to work offline. Different free zones offer different packages for rental office spaces. These packages vary with the area of the office space, number of employment visas offered, degree of furnishing and whether or not license support is offered. Other common features provided to office spaces include IT infrastructure, housekeeping services, reserved parking spaces, and licensing, registration and visa support. However, if you are a freelancer, you can choose to operate from a virtual workspace.

‍8. Complete the registration process

After getting initial approval and deciding the type of license, you must pay the registration and license fees (depending on the type of license required). To complete the registration process, you must submit a list of documents which include

• Fully-filled registration form
• Board resolution for appointing manager/ director (notarised and attested)
• Power of attorney given to manager/ director (notarised and attested)
• Memorandum and Articles of Association
• Specimen signature of manager/ director
• Colour passport-size photo of manager/ director against white background
• Share capital information

After submitting the documents for registration, the authorities concerned will prepare lease agreements, issue licenses and start the visa processing.

And now you're all set! Once the business is up and running, you just need to ensure compliance and adherence to the rules and regulations of your free zone and watch out for any regulatory change. You also need to renew your license before expiry annually to ensure continuity of legal practice. This can be done online.