As an entrepreneur or business owner in the UAE, it’s essential to understand the legal structures available for your business. The UAE offers a diverse range of legal forms, each catering to different business models and expansion strategies.
Here’s a concise guide to help you understand the key features of these structures:
An FZ-LLC is an independent legal entity within the UAE Free Zone, which allows for 100% full foreign ownership, eliminating the need for local partners, which can be appealing to international investors.
Tax Benefits: It’s ideal for entrepreneurs and businesses that want to take advantage of tax exemptions (on corporate and income taxes) and no currency restrictions.
Liability is limited to the company’s capital, protecting personal assets.
A Non-Free Zone Single Person Company is a business structure established in the mainland area of the United Arab Emirates (UAE) by a single individual who holds 100% ownership and control.
Benefits: It’s suitable for solo entrepreneurs who prefer the operational flexibility of a mainland setup, allowing direct trade within the UAE market.
It can be a good starting point for solo entrepreneurs seeking a simple and cost-effective way to establish their business in the UAE mainland.
Like a Single Person Company, an Individual Establishment is owned and operated by a single person within the UAE mainland. However, unlike an FZ-LLC, an FZE likely does not offer limited liability protection. This means the owner’s personal assets remain at risk in case of business debts or liabilities.
Ease of Setup: FZE structures offer a relatively simple and streamlined set-up process, making them an attractive option for low-risk, small-scale businesses seeking a cost-effective way to enter the UAE market.
This legal structure is ideal for businesses aiming to operate within the UAE Mainland while engaging with the local market.
Requirement: Non-Free Zone LLCs requires one or more UAE nationals as shareholders holding at least 51% ownership of the company (though recent updates allow for 100% foreign ownership in specific sectors, subject to approval).
We will advise on the suitability of such a formation based on the feedback about your companies’ ambitions.
Benefits:
Limited Liability Protection: This offers financial security for its members (owners) by shielding their personal assets from debts and liabilities incurred by the business.
Flexibility in structure allows for multiple members with varying ownership percentages.
Establishing a branch of an existing UAE-based company allows for an extension of business activities into the Free Zone or mainland areas under UAE jurisdiction. It operates under the legal identity of the parent company, suitable for business expansion without forming a new separate legal entity.
Foreign companies can extend their operations into the UAE by setting up a branch office. This allows for 100% foreign ownership while the branch operates as an extension of the parent company, maintaining its brand and business activities within the UAE framework.
Whether you are a solo entrepreneur, an established UAE business venturing into Free Zones, or an international company aiming to expand your reach, the UAE offers diverse legal structures to meet your specific needs.
For further information and tailored advice on selecting the best legal structure for your business objectives, feel free to contact Theta 7.
