How to Start a Civil Company in the UAE?

The United Arab Emirates (UAE) offers a dynamic environment for global professionals. Its business-friendly policies attract doctors, engineers, consultants, and lawyers from around the world. For these recognized professionals, one business structure stands out: the civil company. This setup allows professionals to start a civil company and legally practice their profession while maintaining full ownership of their business.    

A civil company, under UAE Federal Decree-Law No. 32 of 2021 on Commercial Companies, is a business established by two or more partners to provide professional services. These partners use their educational qualifications, intellectual skills, or artistic talents to conduct business. The primary focus is on professional activities rather than commercial trade. For example, a group of architects or consultants may form a civil company to offer design or advisory services in the UAE mainland.

For those wondering what is a civil company or how to start a civil construction company, this setup allows professionals in construction-related fields, such as engineers or project managers, to operate under the same framework.

The UAE government recognizes the value of these services, creating a legal framework that supports their growth. Professionals often opt for this structure in mainland jurisdictions, such as Dubai and Abu Dhabi, due to its direct ownership model and operational flexibility.

Professions Eligible to Form Civil Companies

The UAE permits a wide array of professionals to form a company. If your profession relies on specialized knowledge and qualifications, this structure is likely available to you. Common examples include:

• Doctors and Medical Practitioners (Clinics)
• Engineers and Engineering Consultants
• Lawyers and Legal Consultants
• Financial and Management Consultants
• IT and Tech Consultants
• Educational Tutors and Trainers
• Designers and Artists
• Accountants and Auditors
• Marketing & Advertising Consultants
• Business Setup Advisors
• Medical Laboratories
• Architectural & Interior Design Firms
• Translation and Legal Documentation Services

Since June 2021, under Cabinet Resolution No. 16 of 2020 and Decree-Law No. 32 of 2021, some professional activities still require a Local Service Agent (LSA) but now allow 100% expatriate ownership. This means that foreign professionals can fully own their civil companies, even though they need to appoint an LSA for certain tasks.

Legal Framework and Licensing Authority

The Department of Economic Development (DED) in each emirate serves as the primary authority for licensing and regulating civil companies. For example, in Abu Dhabi, the Abu Dhabi Department of Economic Development (ADDED) handles the licensing and legal processes for civil companies. Similar to Dubai, they manage everything from initial approval to the final license issuance.

While the federal laws provide the main framework, each emirate may have minor variations in its application process or documentation needs. It is always wise to check the specific guidelines of the emirate where the business will operate.

In Sharjah, professionals can take advantage of flexible licensing through the SPC Free Zone company formation model. It allows for multiple business activities under one license and offers complete foreign ownership similar to civil companies.

Ownership and Shareholding Rules

One of the most attractive features of a civil company is its ownership structure. Expatriate professionals can own 100% of the company. This complete ownership gives them full control over business operations, finances, and strategic direction.

However, there is one key requirement: the appointment of a Local Service Agent (LSA).

• Role of the Local Service Agent (LSA): An LSA must be a UAE national or a 100% UAE-owned company. The LSA’s role is purely administrative. They act as a liaison between the company and government departments, facilitating license renewals, visas, and other regulatory tasks.
• No Equity Stake: A common misconception is that the LSA holds shares in the company. This is incorrect. The LSA does not have any equity, voting rights, or involvement in the management of the business. Their role is defined in a formal LSA agreement, and they receive an annual fixed fee for their services.

Professionals looking to operate in a global business district may also consider DMCC company formation. DMCC (Dubai Multi Commodities Centre) offers international credibility, networking benefits, and 100% foreign ownership within a thriving business hub.

The process of setting up a civil company is straightforward. Following these steps ensures a smooth and efficient registration. 

1. Choose a Business Activity and Trade Name: First, select the specific professional activity the company will undertake from the DET’s approved list. Then, choose a unique trade name that complies with UAE naming conventions. The trade name must not violate public morals or order.
2. Obtain Initial Approval: Submit an application to the DET for initial approval. This step confirms that the chosen activity and trade name are acceptable. The DET provides a form for this purpose.
3. Draft and Notarize the Civil Company Agreement: Partners must draft a Civil Company Agreement, also known as a Memorandum of Association (MOA). This legal document outlines the partners’ shares, roles, responsibilities, and profit/loss distribution. A public notary in the UAE must attest to this agreement.
4. Secure Office Space: A registered physical office address is mandatory. Secure a tenancy contract for an office space and register it with Ejari, the online registration system for tenancy contracts in Dubai. For other emirates, similar agreements are required. In Abu Dhabi, for example, the office space must be registered with the Abu Dhabi Systems & Information Centre (ADSIC) or follow the respective emirate’s tenancy registration system.
5. Submit Final Application and Pay Fees: Gather all required documents, including the notarized agreement, tenancy contract, and initial approval. Submit the final application to the DET and pay the necessary license fees. Once approved, the DET will issue the professional license.

Note: The process typically takes 7-15 days to complete, and it’s recommended to seek professional assistance for a smoother and quicker setup. While many professionals choose to set up their civil companies in Dubai Mainland under the Department of Economic Development (DED), those seeking tax exemptions, 100% repatriation of profits, and simplified licensing may prefer a Dubai Free Zone company setup

To avoid delays, prepare the following documents in advance:

• Completed the application form from the DET.
• Passport copies for all partners.
• UAE residence visa and Emirates ID copies for partners (if applicable).
• Attested educational and professional qualification certificates for all partners.
• A comprehensive Civil Company Agreement (MOA).
• The trade name reservation certificate.
• The initial approval certificate from the DET.
• A valid tenancy contract and Ejari certificate for the office space.
• A No Objection Certificate (NOC) from the current sponsor if a partner is on an employment visa.

Key Differences from Other Structures

Understanding the difference between a civil company and a Limited Liability Company or Sole Proprietorship is crucial for making the right choice. The main distinctions lie in ownership and liability.

• Civil Company vs. Limited Liability Company (LLC):
  • Ownership: A civil company allows 100% ownership for expatriate partners. In many mainland commercial activities, an LLC may require a UAE national to hold a majority stake (although recent laws have changed this requirement for certain sectors).
  • Liability: Partners in a civil company have unlimited liability. This means their personal assets could be at risk to cover business debts. In an LLC, liability is limited to the capital invested in the company.
  • Activity Scope: Civil companies are restricted to professional services. LLCs can conduct a wide range of commercial and industrial activities.
• Civil Company vs. Sole Proprietorship:
  • Partners: A civil company requires a minimum of two partners. A sole proprietorship is owned by a single individual.
  • Liability: Both structures generally involve unlimited liability for the owners.

Understanding the financial requirements is essential. Here is a clear breakdown of the expected costs for 2025.

• Initial Setup Cost: A civil company license typically costs between AED 8,000 and AED 15,000, covering:

• Trade name reservation & initial approval
• Professional license issuance by DED
• MoA notarization
• LSA agreement attestation (if applicable)

Note: The exact cost may vary depending on the specific approvals required from authorities like the Dubai Health Authority (DHA), Legal Affairs Department, or Municipality. If additional approvals are needed, they may increase the overall setup cost. 

• Annual Renewal Cost: Yearly renewal costs are lower, generally ranging from AED 4,000 to AED 8,000. This covers the renewal of the professional license and other related permits.
• Cost Comparison: Civil companies offer significant savings. They save business owners AED 3,000 to AED 8,000 annually compared to structures that require a paid Local Service Agent. This makes them a highly cost-effective option for qualified professionals.
• Cost Variations: The final cost depends on several factors. Professional activities requiring external approvals from bodies like the Health Authority or Legal Affairs Department will incur higher fees. The office location also influences the total setup cost.

Operating a civil company involves ongoing compliance with UAE regulations.

• Annual License Renewal: The professional license must be renewed annually through the DET. This process requires submitting a renewed tenancy contract and paying the renewal fees.
• VAT Registration: If the company’s annual revenue exceeds the mandatory registration threshold of AED 375,000, it must register for Value Added Tax (VAT) with the Federal Tax Authority (FTA).
• Professional Indemnity Insurance: For certain professions like medicine, engineering, and law, professional indemnity insurance is mandatory. This insurance protects the business against claims of negligence or malpractice.

Choosing a civil company structure offers several distinct advantages for professionals.

• Full Professional Control: With 100% foreign ownership, partners retain complete control over their business, ensuring their professional vision is realized without external interference.
• Tax Efficiency: The UAE currently does not levy corporate tax on most professional service incomes, making it a financially attractive model. Partners are only subject to personal income tax in their home countries. However, businesses offering consulting or professional services may need to check if they fall under the Corporate Tax Law (Federal Decree-Law No. 47 of 2022), which applies if their annual profits exceed AED 375,000.
• Flexibility and Credibility: This structure provides operational flexibility and enhances the business’s credibility, as it is officially recognized as a professional service provider.
• Simple Setup: The formation process is relatively simpler and quicker compared to setting up more complex corporate structures.

For professionals or businesses that require global connectivity or logistics support, Dubai Airport Free Zone company formation can be an ideal alternative. It offers strategic access to international markets and advanced infrastructure near Dubai International Airport.

Entrepreneurs should be aware of potential pitfalls to ensure a seamless setup process.

• Misunderstanding the LSA’s Role: Clearly define the LSA’s duties and fees in a legal agreement. Remember, their role is purely administrative.
• Choosing Incorrect Activity Codes: Selecting the wrong business activity code from the DET list can lead to rejection or operational issues later. Verify the exact code for the intenDET professional services.
• Incomplete Documentation: Any missing or incorrectly attested document can cause significant delays. Create a checklist and double-check every requirement before submission.

Note: Ensure all documents are correctly attested and translated into Arabic, where necessary. Use a checklist to double-check everything before submission to avoid mistakes.

Starting a civil company in the UAE is an excellent opportunity for qualified professionals seeking autonomy and financial benefits. This structure uniquely combines 100% foreign ownership with a straightforward setup on the mainland. 

By understanding the legal framework, following the registration steps carefully, and preparing for the associated costs, entrepreneurs can successfully establish their professional practice in one of the world’s most vibrant economies. For entrepreneurs seeking lower setup costs and faster registration, Ajman Free Zone company formation provides an attractive alternative. It’s ideal for startups and consultants who want to establish operations quickly with full ownership benefits.

Contact us today to get expert assistance with civil company registration and set up your business the right way!