Types of Companies in the UAE

The UAE offers a diverse range of legal structures, each designed to meet different business needs. Understanding these different types of companies in the UAE is essential for aligning the legal framework with strategic goals.

• Sole Proprietorship

A Sole Proprietorship is an establishment owned and operated by a single individual. The owner is personally responsible for all the company’s profits and liabilities.

• Key Features:
  • It is simple and inexpensive to set up.
  • The owner makes all business decisions.
  • No limited liability; personal assets are at risk.
  • Commercial and industrial proprietorships are usually limited to UAE and GCC nationals.
  • Expatriates can set up a sole proprietorship for professional services with a UAE national as a Local Service Agent (LSA).
  • Rules and requirements can differ across Emirates, so it’s important to check local regulations before setting up.

• Civil Company / Professional Company

A Civil Company is a business partnership for professionals in recognized fields such as medicine, law, engineering, and consulting. It allows professionals to offer their expertise to the public.

• Key Features:
  • Can be fully owned (100%) by foreign nationals.
  • Requires a UAE national as a Local Service Agent (LSA) who only helps with licensing and has no ownership or control.
  • The partners are jointly and severally liable for the obligations of the firm, meaning their personal assets could be used to cover business debts.

Furthermore, this structure is popular for consulting firms, clinics, and law firms. It is one of the most important types of companies in the UAE for service-based businesses.        

• Limited Liability Company (LLC)

A Limited Liability Company (LLC) is the most common and flexible business structure in the UAE. It is a legal entity that is separate from its owners.

• Key Features:
  • It provides limited liability, meaning shareholders’ personal assets are protected from business debts.
  • Following recent reforms, an LLC can now be 100% owned by foreign investors for most commercial and industrial activities.
  • It can be formed by a minimum of one shareholder (a sole-shareholder LLC) and a maximum of 50.
  • An LLC has the freedom to trade anywhere in the UAE and internationally. 

This flexibility makes it one of the most popular types of companies in the UAE.

• Partnership (General / Limited)

A partnership is a business owned by two or more partners. The UAE offers two main types: General Partnerships, where all partners have unlimited liability, and Limited Partnerships, which include both general partners (unlimited liability) and limited partners (liability limited to their investment).

• Key Features:
  • In a General Partnership, all partners must be UAE nationals. On the other hand, in a Limited Partnership, only the general partners must be UAE nationals. Limited partners can be foreign investors.   
  • It is relatively easy to establish.
  • Partners share profits, losses, and management duties according to the partnership agreement.

• Private Shareholding Company

Also known as a Private Joint-Stock Company (PrJSC), this is a company where the capital is divided into shares, but the shares cannot be offered to the general public.

• Key Features:
  • It requires a minimum of two and a maximum of 200 shareholders.
  • Shareholders must fully pay a minimum capital of AED 5 million.
  • The liability of the shareholders is limited to the value of their shares.
  • The shares cannot be offered to the general public or listed on the stock exchange.
  • It is suitable for larger family businesses or joint ventures that do not require public funding.

• Public Shareholding Company (PJSC)

A Public Joint-Stock Company (PJSC) is a business that can offer its shares to the public for subscription. Its shares are typically listed on a stock exchange like the Dubai Financial Market (DFM).

• Key Features:
  • Requires a high minimum share capital, typically AED 30 million.
  • Must have at least 5 founders (previously 10), depending on the project.
  • Shares are negotiable; founders subscribe to part of the capital, and the rest is offered to the public.
  • Regulated strictly by the Securities and Commodities Authority (SCA).
  • Ideal for large-scale projects in banking, insurance, and major industries.

Hence, a PJSC is one of the most complex types of companies in the UAE.

• Branch of Foreign Company

An established foreign company can open a branch in the UAE to conduct business locally. The branch is considered a legal extension of the parent company, not a separate entity.

• Key Features:
  • It is 100% owned by the parent company.
  • The branch can only engage in activities similar to those of its parent company.
  • A UAE national must be appointed as a Local Service Agent (LSA).
  • The parent company is fully liable for the actions and debts of its branch office.

• Representative Office

A Representative Office is a limited setup that promotes and markets the products or services of its parent company in the UAE.

• Key Features:
  • Generally, it cannot make sales, issue invoices, or carry out commercial transactions, although some Emirates or Free Zones allow limited activities under specific conditions.
  • Fully owned by the parent company.
  • Requires a UAE national as a Local Service Agent (LSA).
  • This setup is ideal for foreign companies that want to explore the UAE market before making a larger investment.

• Branch of Free Zone Company

This structure allows a company registered in one of the UAE’s free zones to open a branch on the mainland. It is a popular way to bridge the gap between free zone and mainland operations.

• Key Features:
  • It allows free zone companies to directly access the local UAE market.
  • The branch must obtain a license from the mainland’s Department of Economy and Tourism (DET).
  • The permitted activities of the branch are typically a subset of the activities on its parent free zone license. 

This is one of the most strategic types of companies in the UAE.

Before choosing a legal structure, it is crucial to understand the three main jurisdictions in the UAE, as each has its own set of rules and benefits.

• Mainland (Onshore)

The mainland is the primary economic area of the UAE, governed by federal and emirate-level laws and regulated by the Department of Economy and Tourism. A UAE Mainland Business Setup allows companies to trade freely anywhere in the UAE and bid for government contracts.

• Free Zones

These are special economic zones with their own independent governing authorities. There are over 40 free zones in the UAE, often themed around specific industries like media, tech, or finance. A Freezone Business Setup in the UAE is popular for offering 100% foreign ownership, tax exemptions, and streamlined processes. 

However, they are typically restricted from trading directly with the mainland market. There are many types of free zone companies in the UAE.

• Offshore

An offshore company setup, also known as an International Business Company (IBC), is a legal entity registered in the UAE but not permitted to conduct business within the country. The main types of offshore companies in the UAE are used for international invoicing, asset protection, and holding property.

All mainland, free zone, and offshore companies must obtain a valid registration number. Learn more about obtaining your Company Registration Number in the UAE.

Jurisdiction vs. Legal Form Matrix

The availability of a legal structure depends on the chosen jurisdiction. This table provides a quick reference.

Understanding the interplay between jurisdictions and the different types of companies in the UAE is fundamental to making the right choice.

The UAE’s business landscape is constantly evolving. Staying informed about recent changes is vital.

• 100% Foreign Ownership Reforms: The landmark amendment to the Commercial Companies Law now permits 100% foreign ownership for most LLCs on the mainland, removing the long-standing need for a 51% Emirati sponsor. This has made the mainland significantly more attractive to foreign investors.
• New Commercial Companies Law: The law continues to be updated to enhance corporate governance, protect shareholder rights, and make the business environment more competitive globally.
• Free Zone Licensing Trends: Many free zones now offer dual licenses, freelance permits, and flexible office solutions to cater to the growing gig economy and startup culture.
• Corporate Tax and VAT Implications: All UAE companies must comply with 5% Value Added Tax (VAT). The new 9% Federal Corporate Tax, effective from 1 June 2023, applies to all UAE entities except qualifying Free Zone entities, which may enjoy 0% tax on qualifying income. Compliance is required across all jurisdictions.
• Updated Visit Visa Rules: Recent changes in UAE visit visas simplify entry for foreign investors, business travelers, and tourists. These updates include extended eligibility, faster processing, and flexible stay options. Learn more about the new rules, eligibility, and application process by reading the blog: New Visit Visa Rules in the UAE.

Selecting the right structure involves a strategic assessment of business goals. Consider the following factors:

• Business Activity: The nature of the business (e.g., trading, consulting, manufacturing) will often determine the most suitable license and legal form.
• Market Scope: Will the business primarily target the local UAE market (favoring mainland) or international clients (favoring a free zone)?
• Ownership Preferences: Is 100% foreign ownership a non-negotiable requirement? While now available on the mainland, free zones have offered this from the start.

To understand whether 100% foreign ownership is a non-negotiable requirement, learn the step-by-step process for foreign entrepreneurs in How to Start a Business in the UAE as a Foreigner.

• Capital and Funding Needs: A Public Shareholding Company is designed for raising public funds, while an LLC is preferred by venture capitalists and private investors.
• Compliance and Audit Requirements: Structures like PJSCs have very high compliance burdens, whereas a Sole Proprietorship is much simpler.
• Setup and Maintenance Costs: Costs vary significantly depending on the jurisdiction and office requirements. 

You can get a detailed breakdown by reviewing the UAE Business Setup Cost blog.

• Exit Strategy and Flexibility: How easy is it to transfer ownership or liquidate the company? An LLC offers straightforward share transfers.

Navigating the complexities of the different types of companies in the UAE and their respective regulations can be challenging. This is where expert help becomes invaluable.

Why expert help matters?

Professional advisors guide you on legal, compliance, and accounting matters. They help avoid common mistakes, ensure all regulations are met, and structure your company for tax efficiency and long-term growth. 

They also ensure compliance continuity, including license renewals, tax filing, Economic Substance Regulations (ESR) reporting, and audits. Their support saves time, reduces costs, and prevents future legal issues.

How firms like SafeLedger assist

Firms like SafeLedger specialize in company formation and ongoing compliance. They assist clients by:

• Advising on the best jurisdiction and company type, including a customized comparison of Free Zones based on costs, permitted activities, and business needs.
• Managing the entire registration process, from name approval to license issuance.
• Handling visa processing, bank account opening, and other administrative tasks.
• Providing ongoing support for accounting, VAT, Corporate Tax, and annual renewals.

A consultation with an expert firm can provide a clear path forward. Contact us today to get expert assistance for your UAE business setup and compliance needs.

The UAE offers a rich and diverse array of business structures, each with unique features and benefits. From the simplicity of a Sole Proprietorship to the robust framework of an LLC and the global reach of a free zone entity, there is a solution for every business ambition.

The key to success lies in conducting thorough research and aligning the chosen company type with specific business activities, market goals, and ownership preferences. Understanding the different types of companies in the UAE is the first and most important step on the path to building a successful enterprise in this dynamic region.