Skip to main content

Setting up a mainland LLC in the UAE.

Posted in .
Setting up a mainland LLC in the UAE

A limited liability company (LLC) in the UAE combines the advantages of limited liability with operational flexibility, making it an appealing choice for entrepreneurs. This article explores the key takeaways, benefits, requirements, and steps involved in establishing an LLC in the UAE, providing valuable insights for businesses looking to thrive in this growing region.

Key takeaways

  • LLCs in the UAE offer limited liability protection to their members, shielding personal assets from business risks. They also provide operational flexibility, allowing owners to manage the company while adhering to local regulations.
  • Establishing a mainland LLC grants access to the UAE’s local market, facilitating engagement with customers, suppliers, and partners.
  • Setting up an LLC in the UAE requires meeting certain requirements, such as having a local sponsor, minimum share capital, and securing a physical office space.

Benefits of a UAE LLC

Compared to free zones with industry limitations and restricted mainland trade, a UAE mainland LLC offers significant operational advantages. Your company can operate freely throughout the UAE and engage in a broader range of business activities.

A welcome change occurred in November 2020. The UAE government abolished the mandatory 51% local ownership requirement for mainland companies. Now, with exceptions for activities on the Strategic Activity list, foreign shareholders can own 100% of an LLC.

Other benefits of a UAE LLC include:

  • Limited liability protection:  A core benefit of LLCs is limited liability protection. This shields your personal assets from business debts and liabilities. Your financial risk is limited to your investment in the company.
  • Operational flexibility & local market access: LLCs provide operational flexibility, allowing you to manage your company within the framework of UAE regulations. Establishing a mainland LLC also grants access to the vast UAE market, facilitating connections with customers, suppliers, and partners.
  • Enhanced credibility: Being a registered LLC strengthens your company’s credibility and reputation. This inspires confidence in customers, investors, and stakeholders, potentially boosting your business prospects.

Requirements for setting up an LLC in the United Arab Emirates

The United Arab Emirates offers a welcoming environment for businesses, and forming a limited liability company there is a relatively straightforward process. However, to ensure compliance with local regulations, there are some key requirements you will need to meet:

Ownership structure

An LLC in the UAE requires a minimum of two shareholders to get started, with a maximum of fifty in most emirates. This provides flexibility in structuring your ownership.

Local sponsorship

If you are a non-UAE national looking to establish an LLC in the UAE mainland and your business activity falls under the strategic activities list, you will need a local sponsor. This sponsor is typically a UAE citizen or a company wholly owned by UAE nationals. They act as your representative and hold a majority ownership stake (usually 51%). As a foreign investor, you would hold the remaining share (49%). This requirement doesn’t apply to businesses operating in free zones.

Minimum capital contribution

There is no legal obligation for a minimum capital contribution when forming an LLC in the UAE. However, your company needs to have sufficient capital to function effectively. This capital is divided into shares of equal value. While previously a common minimum capital amount of AED 150,000 (around USD $40,800) was suggested, this is not a strict rule.

Physical office space

Having a physical office address within the UAE mainland is mandatory. This address serves as your registered business location.

The UAE LLC set-up process

The process of establishing a UAE LLC includes the following steps:

Define your business activity

Carefully research the DED’s approved business activity list and choose activities that accurately reflect your company’s operations. Some activities may require additional approvals from specific government entities.

Obtain initial approval from the DED

The DED conducts an initial assessment to ensure your chosen business activities comply with regulations. Submit the required documents, which may include a feasibility study and a business plan depending on the activity.

Select and reserve your trade name

Check for name availability and submit a reservation request for your desired company name.

Draft the Memorandum of Association (MOA)

Work with your local service agent or a legal professional to draft a comprehensive MoA outlining the company’s formation details, ownership structure, profit-sharing arrangements, and management roles.

Secure a physical office space

To secure an office in the UAE mainland, identify options that align with your budget and business needs. Evaluate factors like client proximity, employee access to transportation, and required permits before finalising a legally compliant lease agreement with the landlord that reflects all agreed-upon terms.

Register the company and obtain a trade license

Submit the completed application form, MoA, lease agreement, and other required documents to the DED for company registration. Pay the necessary registration fees. Once approved, you will receive a trade license, which authorises your company to operate in the UAE mainland for specific business activities.

Open a corporate bank account

Open a corporate bank account in the UAE with your chosen bank. This account will be used for all business transactions.

Apply for visas (if required) for employees and yourself

Depending on your nationality and business needs, you may require visas for yourself and your employees. Your local service agent can assist with the visa application process.

Post-registration compliance requirements for UAE LLC

Once the LLC is established, it must adhere to various post-registration requirements and compliance obligations, including:

  • Annual financial statements: Prepare and submit annual financial statements in compliance with UAE accounting standards and regulations.
  • Renewal of business licences: Renew business licenses and permits as required by UAE authorities to ensure continuous operations.
  • Tax compliance: Fulfil tax obligations, including VAT registration and filings, Corporate Tax registration and filings , in accordance with UAE tax laws.
  • Corporate governance: Maintain proper corporate governance practices and comply with reporting requirements stipulated by UAE authorities.

How Acclime can help

Establishing an LLC in the UAE provides overseas businesses with limited liability and flexibility. Key benefits include access to local markets and recent amendments allowing greater foreign ownership. The process involves defining activities, obtaining approvals, and complying with post-registration obligations. Navigate these steps seamlessly with Acclime. We offer tailored services to simplify your entry into the market, from company incorporation to compliance support. With our deep understanding of local regulations, we ensure a smooth experience at every step.