The UAE offers different corporate structures, ranging from sole proprietorships to public companies. When deciding which structure is suitable for your business, you have to consider various factors, such as the number and nationalities of owners, the nature of business, the type of license required for the particular activity, etc.
Before we outline the main business structures, it is important to understand the following:
- Professional licenses are granted to individuals and businesses that conduct professional or service-based activities, such as consulting or public relations.
- Commercial licenses are issued for different types of commercial activities, such as trading and retail sales.
- Industrial licenses are issued for manufacturing and industry-related activities.
Most company structures in the UAE mainland require some element of local ownership or involvement. In a limited liability company (LLC), for instance, at least 51 percent of the business should be owned by UAE national/s, known as local partner/s.
Meanwhile, sole establishments operating on a professional license can have 100 percent foreign ownership as long as a local service agent is appointed. Unlike a local partner, this agent has no ownership rights but is paid an annual fee to manage licensing, visas and other government-related activities.
UAE free zones also offer options to incorporate as establishments, limited liability companies, branches, representative offices and offshore companies.
Company type (mainland)
[Related: Partnering with a local sponsor]
Type | Ownership + licenses | Number of owners/ shareholders | Note | Example |
Sole Proprietorship |
|
1 | Owner can be accountable to the extent of his/ her personal assets for the company’s liabilities. | La Poupee Comestics Trading Establishment |
Civil Company |
|
2 or more | For engineering civil companies, one UAE national partner is required (51% ownership). | Afridi & Angell (legal consultants) |
Limited Liability Company |
|
2 to 50 |
|
Sharaf DG |
Public Shareholding/ Joint-Stock Company |
|
At least 10 founding members, owning 20% – 40% shares |
|
Emaar Properties PJSC |
Private Shareholding/ Joint-Stock Company | Commercial and industrial licenses. Professional license not allowed. Only UAE/ GCC nationals. Foreign partners allowed as long as UAE national partners own at least 51%. | 3 or more | Shares cannot be offered to the public. Liability limited to the extent of share in the capital. | Manazel Real Estate |
Simple Limited Partnership | UAE nationals as general partners with unlimited liability. Other nationalities as limited partners with limited liability. | 2 or more | At least one general and limited partner. | Orient Financial Brokers |
General Partnership | Only UAE nationals. | 2 or more | Liability extends to personal assets of partners. | Mohd. & Sultan Ahmed Lootah Contracting Co |
Branch of a foreign/ UAE/ GCC/ free zone company or representative office | 100% ownership by the parent company. Local service agent often required | * | No separate legal identity from the parent company. | Brookfield Multiplex |
* Parent company is the owner of the branch – so technically no individual owner.
Company type (free zone)
[Related: Finding the right UAE free zones]
Type | Ownership | No. of owners | Notes | Example |
Free Zone LLC/ Company | 100% ownership. | 2 or more | Liability limited to the extent of the partners’ share in capital. | Active FZ-LLC |
Free Zone Establishment | 100% ownership. | 1 | Liability limited to the extent of the owner’s share in capital. | BR Communications FZE |
Branch/ Representative Office | 100% ownership by the parent company. | * | A legal entity of the parent company. | LinkedIn Middle East FZ-LLC |
* Parent company is the owner of the branch – so technically no individual owner.
Foreign structures not available in UAE
The UAE doesn’t directly offer ‘S’ and ‘C’ corporation models that exist in markets such as the US. These often differ from LLCs in terms of structure and taxation requirements, among other factors.
A ‘C’ corporation is a structure where the company is a separate entity from the owner (so there is limited liability) and the company is taxed separately. ‘S’ corporations offers some tax benefits, in that the company is not taxed separately (even though there is limited liability). Shareholders/ owners get taxed on their individual returns after the profits have passed through from the company.