The United Arab Emirates (UAE) remains one of the most attractive places for entrepreneurs and investors. With its pro-business laws, free zones, strategic location, and 100% foreign ownership in many sectors, it provides many advantages. However, starting a business in the UAE still requires understanding legal, regulatory, and administrative steps. This article outlines the key steps needed to follow to establish a business in the UAE, whether on the mainland or in a free zone.
Key Steps to Establish a Business in the UAE
Below are the typical steps to go through to establish a business in the UAE:
1. Decide on Jurisdiction: Mainland vs Free Zone
Mainland: Gives you the freedom to trade anywhere in the UAE, work on government projects, and have a broad client base. Under recent reforms, many sectors now allow 100% foreign ownership in the mainland. However, Free Zone: Ideal if you want simplified regulations, potential tax incentives, import/export privileges, full ownership, and focused support services. Free Zones are governed by their respective Free Zone Authorities. Choosing the right jurisdiction will affect licensing, ownership, costs, and operational scope.
2. Identify Your Business Activity & License Type
Determine exactly what kind of activity your business will do (e.g. consultancy, trading, industrial, professional). The nature of activity dictates the type of license needed. The UAE offers different license categories: commercial, industrial, professional, agricultural, tourism etc.
3. Choose Legal Form & Ownership Structure
Select the legal form (e.g. Limited Liability Company (LLC), partnership, branch of a foreign company, free zone company / establishment). Decide on shareholding and ownership. Check whether your activity allows full foreign ownership or whether certain local partner or agent arrangements are required.
4. Reserve Trade Name
Choose a trade name that is unique, aligns with business activity, respects UAE naming rules (no offensive words, etc.), includes the legal form (e.g. LLC) where required. Submit name reservation application via the Department of Economic Development (DED) or relevant authority.
5. Initial Approvals and External Permissions
Apply for initial approval from the relevant economic department or authority. This indicates the government has no objection to the proposed business activity, trade name, etc. Depending on the business activity, there may be other approvals needed (e.g. for health, education, legal, financial sectors) from the respective regulatory bodies.
6. Memorandum of Association (MOA) / Local Service Agent Agreement
Draft and sign the MOA (if applicable), which defines the shareholder structure, roles, rights, responsibilities, capital etc. If required by law or for certain legal forms, appoint a Local Service Agent (LSA) (for non-GCC owner entities) or use required local sponsorship arrangements.
7. Select Business Location & Lease / Office Requirements and submit documents, pay fees, and obtain license
There must be a physical address for the business (even if a virtual office in some free zones). Ensure the premises comply with zoning, municipality, or Free Zone regulatory requirements. Sign a lease, register the premises if needed (e.g., some Emirates require Ejari registration in Dubai). Submit all required documents: passport copies, MOA, lease agreement, approvals, etc. Pay license and registration fees. Once approved, the commercial license will be issued. For many cases, this can be done through online platforms like Basher (or “Bashr”) which can issue licenses very quickly (minutes to a few hours) depending on the emirate.
8. Registration with Chamber of Commerce and Other Authorities and open bank account
After granted the license, many Emirates require registration with the local Chamber of Commerce. This helps with official recognition, trade facilitation, and may be necessary for certain business activities. Open a corporate bank account using the properly licensed entity, license, lease, MOA, and required IDs of shareholders/directors. If visa(s) are needed (for owners, employees), begin the immigration/residency visa application process. Depending on license type and jurisdiction, visa eligibility differs.
Conclusion
Starting a business in the UAE is more streamlined now than ever. Recent reforms have made foreign ownership easier, trade licensing quicker using digital platforms, and business setup more transparent.
Written by Roaa Abdelrahman
Source:
- Establishing Companies – United Arab Emirates Ministry of Economy & Tourism
- Starting A Business – Embassy of the United Arab Emirates
