Starting a Business in a UAE Free Zone: A Step-by-Step Guide
Establishing a business in a free zone is an attractive option for many entrepreneurs in the UAE due to its simpler and quicker process. If you’re considering starting a business in a free zone, here are the key steps to follow:
- Determine the Type of Legal Entity The first step is to determine the type of legal entity your business will take. There are two types of companies you can set up in a free zone:
- Free Zone Limited Liability Company (FZ LLC) or Free Zone Company (FZ Co.)
- Free Zone Establishment (FZE)
The difference lies in the number of shareholders and whether the shareholder is a natural person or a legal person. Note that not all free zones register both types of companies, so you’ll need to check with individual free zone authorities to see which types of companies they can register.
Note: Check out the list of free zones and their respective authorities to learn more.
- Choose a Trade Name While you’re deciding on the legal entity type, you should also choose a trade name. Check with the respective free zone authority or the Department of Economic Development to see which trade names are permitted and whether your intended name has already been registered. For example, you cannot use ‘Abu Dhabi’ and/or ‘United Arab Emirates’ in the name of the FZ-LLC or branch at twofour54. Also, make sure that the proposed trade name:
- does not violate the public morals or order of the country
- is followed by the legal form of the company (e.g., LLC, FZE, DMCC)
- has not been previously registered
- is compatible with the required type of activity and legal status
- does not contain names of any religion or governing authority, nor names or logos of any external bodies.
Note: Refer to DMCC’s list of restricted trade names for more information.
- Apply for a Business License Once you have determined the legal entity type and chosen a trade name, you can apply for a business license. This process is usually straightforward and can be done online or in person.
- Choose an Office Space Next, you’ll need to choose an office space for your business. Most free zones offer a variety of options, from flexi-desks to fully equipped offices. Make sure to choose a space that meets your business needs and budget.
- Get Pre-Approvals, Register Your Business, and Obtain Your License After selecting an office space, you’ll need to obtain pre-approvals, register your business, and obtain your license. This process usually takes a few days to a few weeks, depending on the free zone and legal entity type you’ve chosen.
Capital Requirements Finally, note that there are minimum capital requirements for some free zones. For example:
- twofour54 Abu Dhabi has no minimum capital requirement
- KIZAD requires a minimum paid-up capital of AED 150,000 for an LLC
- Dubai Airport Free Zone requires a minimum share capital of AED 1,000 per share for an FZ Co.
- DMCC requires a minimum share capital of AED 50,000 per company and AED 10,000 per shareholder for a free zone company. A minimum of AED 1 million share capital is required for a company to be issued a General Trading License.
- Hamriya Free Zone requires a share capital of AED 150,000 for an FZE.
In summary, setting up a business in a free zone in the UAE is relatively straightforward, with minimum paperwork and duration. By following these key steps, you can establish a successful business in a free zone and take advantage of the many benefits it offers.