Mainland companies in the U.A.E. have a long history. Referred to as mainland, local, onshore and even colloquially “LLCs”, these companies have long been used by investors and entrepreneurs in Dubai and other emirates.
Some ten years back, one would see many differences between mainland and free zone companies. However, with the introduction of the new legal framework for mainland companies, allowing 100% foreign ownership for many business activities and eliminating citizen service agents for branches of foreign companies, mainland entities are rapidly becoming as attractive as free zone companies.
Regulatory and Legal Framework
Each emirate in the U.A.E. has a respective government body entrusted to develop and regulate its business sector. Such government bodies are commonly referred to as Departments of Economic Development (“DED”) but may also bear different names. For example, DED in the emirate of Dubai is branded as Dubai Economy.
Company registration functions are often carried out by special designated semi-government or specially authorized organizations.
Unlike free zone companies, mainland companies may choose to have a legal form different from limited liability, such as Public Joint Stock Company, Joint Liability Company, Private Joint Stock Company, Simple Commandite Company.
Conduct of business activities is regulated by Federal Law No. 2 of 2015 on Commercial Companies and its amendments and Federal Decree by Law No. (26) of 2020 amending specific provisions of Federal Law No. 2 of 2015 on Commercial Companies.
A citizen partner is not required for conducting all economic activities, except for activities with a strategic impact.
Additionally, a citizen services agent is not required to establish branches of foreign companies.
How Mainland Companies Are Used
Entrepreneurs use a mainland company in the U.A.E. to:
- be able to distribute goods themselves;
- put kiosks in malls and various shopping centers;
- have an opportunity to participate in state tenders;
- open and operate clinics, saloons, and other service facilities in prime locations in the emirate, which are often based in the mainland and not a free zone;
- be able to provide services from the company’s premises and visit customers in various locations in the emirate.
Benefits of a Mainland Company Registration
- Company’s office can be anywhere in the emirate of registration (except for the small territory of some free zones).
- Company will be allowed to deliver goods directly to the customer without needing a middle-man transportation provider (such as logistics or courier companies).
- Company may be potentially allowed to deliver services at the customer’s location.
- Company will be allowed to participate in the state tenders.
- Potentially, faster corporate account opening process.
How Mainland Companies in Various U.A.E. Emirates Differ
As mentioned previously, mainland companies are regulated by Departments of Economic Development of those respective emirates, where they are established.
Departments of Economic Development have been established in different emirates based on various laws and decrees.
This is why processes in all emirates have different structures, and government fees related to company formation vary; activity lists are slightly different, and external approvals required for some of the activities in mainland differ from emirate to emirate.