How To Start a 100% Foreign-Owned DED Mainland Company
Wednesday August 19, 2020
Before applying for a DED license in Dubai, a business owner must first decide where to establish the business – Mainland Dubai or a Free Zone. If you want to set up your business in Mainland Dubai, only then you will need to apply for a license with DED Dubai. To start a 100% owned business in Mainland Dubai, you need in-depth knowledge and understanding of the current policies and procedures set by DED Dubai. Here’s what you need to know:
Top Considerations in DED Mainland Company Setup:
Local Partner / Local Service Agent: Mainland Dubai companies require the presence of a UAE national, who is either a Local Partner (with at least 51% shareholding) or a Local Service Agent (without any shareholding). The signature of a local partner/service agent is essential in matters related to government applications and liaising with the government authorities. The foreign investor can solely control business operations without any involvement of the local partner/service agent unless agreed otherwise.
Special Approvals for Specialized Licences: A Mainland company is allowed to conduct a variety of business activities. However, some business activities are regulated by respective government authorities, and therefore, require prior approvals. For example, real estate licenses require approval from Real Estate Regulatory Authority (RERA), educational licenses require approval from Knowledge and Human Development Authority (KHDA), hospitals/clinics/medical-related licenses require Dubai Health Authority (DHA) approval, and so on.
Types of DED Licenses:
Industrial License for manufacture and sale of finished products using raw materials.
Commercial License for trading all legally-tradable goods without territorial restrictions.
Professional License for individuals or groups engaged in consultancy services, engineering services, accounting services, administrative services, training, education, etc.
Starting a 100% foreign-owned DED Mainland Company:
Setting up of a 100% foreign-owned DED Mainland company is possible under three circumstances:
Setting up a Professional Services Company:
Foreigners can fully own a professional company. So, the professional company only requires a Local Service Agent, who can either be a person (a UAE national) or a corporation (a UAE company where all its partners are UAE nationals).
The local service agent does not hold any shares in the company. However, the local service agent receives a fixed annual fee for facilitating local government services.
An expat can also opt to obtain a power of attorney from the local service agent to execute all government functions if required.
Setting up a Branch of an Overseas Company:
If you already have an active company in your home country, then opening a branch company could be the best solution to expand your business in the UAE while retaining 100% ownership.
Opening a branch company does not require a local national as a shareholder. So, you can opt for a Local Service Agent, just like a professional company. However, the branch must engage in the same line of business as the parent company.
If the parent company can engage in multiple activities, then the branch company can undertake either all or a few in the UAE.
Setting up a Branch of a Free Zone Company:
Just like the case of a foreign branch, you can set up a branch of your Free Zone Company through a Local Service Agent.
This setup results in you running two entities in two UAE sites and paying twice the renewal fees. That is why many SMEs do not find this option sustainable.
Alternatively, you can choose to run the Free Zone company with a local distributor, which works out cheaper than the cost of running two UAE entities.
Understanding the prevailing DED laws and procedures is not easy and requires considerable time. So, it is best to seek professional help. Professional business setup consultants like Creative Zone can help you start a DED Mainland Company with 100% foreign ownership. Call 800 LICENSE (5423673) to speak to one of our Mainland Business Setup Consultants today!