Everything You Need to Know About Mainland Company Formation

When starting a business in the UAE, one of the first steps you'll face is deciding on the type of company to establish. Mainland Company Formation is an attractive option for many entrepreneurs due to its flexibility and access to a wide range of business activities. This type of business setup allows owners to trade directly with the UAE market and operate anywhere within the country, unlike free zone companies that are limited in their operations. If you're considering launching a mainland business, it's important to understand the key benefits and requirements involved in the process.

Mainland Company Formation refers to the process of setting up a company in the UAE's mainland. This is the area outside of the free zones, where businesses have the legal right to trade and operate across the entire UAE market, including local Emirati clients. To set up a mainland company, a business owner must obtain a license from the UAE government, which involves fulfilling certain legal and administrative requirements. This process includes registering the company with the Department of Economic Development (DED) and selecting a local sponsor, unless the business is 100% foreign-owned, which has become possible in some sectors in recent years.

1. Access to the Local Market One of the biggest advantages of Mainland Company Formation is the ability to trade within the entire UAE market. With a mainland business setup, you are not restricted to a specific region, as is the case with free zone companies. This gives you the flexibility to serve local Emirati clients, which is a huge benefit for many industries, especially retail and service-oriented businesses.
2. No Restrictions on Business Activities Mainland companies are not restricted in terms of the type of business they can conduct. While free zone companies are often limited to certain sectors, mainland businesses enjoy greater freedom. Whether you're looking to offer consultancy services, retail products, or establish a manufacturing plant, mainland company formation opens doors to a wider range of business opportunities.
3. Ability to Bid for Government Contracts Mainland companies are eligible to bid for government contracts, which can be a significant advantage in the UAE's thriving public sector. Many businesses look to secure government projects as a reliable source of revenue, and with a mainland setup, your business can access these lucrative opportunities.
4. More Flexibility with Office Locations Mainland companies are not restricted to specific areas, unlike businesses in free zones, which must be based within designated zones. This flexibility means you can choose an office location that best suits your business needs, whether it's close to the central business districts or in a more affordable area.
5. No Currency Restrictions Operating a mainland company also means that there are no restrictions on currency or capital repatriation. This makes it easier for foreign investors to bring in capital from abroad and repatriate profits without facing complications.

1. Local Sponsor In most cases, mainland companies require a local sponsor who is a UAE national. The sponsor holds a 51% share in the company, while the foreign investor retains the remaining 49%. However, in certain sectors, 100% foreign ownership is allowed, thanks to recent legal reforms. These changes have made it easier for foreign entrepreneurs to set up and own businesses in the UAE.
2. Business License To legally operate in the UAE, mainland companies must obtain a business license from the Department of Economic Development (DED). The type of license depends on the nature of your business—whether you're running a commercial, industrial, or professional company. The application process includes submitting a range of documents, such as proof of identity and residence for the business owner, a memorandum of association, and details about the business activities.
3. Office Space A physical office space is mandatory for mainland company formation. This is a requirement for all mainland businesses, and the office must meet the specifications set out by the DED. The size and location of the office will depend on the nature of your business and its operational needs.
4. Shareholder Agreement If you're setting up a partnership with a local sponsor or other investors, you'll need a shareholder agreement. This document outlines the ownership structure, roles and responsibilities, and other key terms to ensure a clear understanding between all parties involved.
5. Visa and Employment Permits After establishing a mainland company, you'll also need to apply for employee visas and permits if you plan to hire staff. The number of visas you can obtain is typically linked to the size of your office space and the nature of your business activities.

1. Choose Your Business Activity Decide on the type of business you want to set up. This will determine the kind of license you will need.
2. Select a Business Name Choose a name for your company that adheres to the naming conventions of the UAE, and get approval from the DED.
3. Choose a Local Sponsor or Partner If required, select a UAE national to act as your local sponsor, or if applicable, opt for a 100% foreign ownership structure.
4. Register Your Company Submit your application to the DED along with the necessary documents for approval. You will then receive your trade license.
5. Set Up Your Office Secure an office space that meets the regulations and complete the lease agreement.
6. Apply for Visas Apply for the necessary employee and investor visas to begin operations.

Mainland Company Formation in the UAE is an appealing choice for entrepreneurs who want to access the full scope of the UAE market and operate without many restrictions. While the process may seem complex at first, understanding the requirements and advantages of a mainland setup can make the journey smoother. By setting up a mainland company, you not only get a broader reach and flexibility but also position your business for long-term success in one of the world's most dynamic economies.