The United Arab Emirates (UAE) is a popular place to setup a business, especially in free zones which allow 100% foreign ownership of companies. The UAE economy is stable and business-friendly, with excellent infrastructure and connectivity to global markets.
So can you really own 100% share capital of a company in UAE? What are the requirements and procedures involved? What are the advantages and legal implications? This definitive guide answers all such questions in depth.
Overview of UAE Company Ownership Laws
The UAE has clear laws regarding company ownership determined by the company’s legal structure and shareholder nationality. Some key principles are:
- UAE nationals can fully own companies registered in mainland UAE under Commercial Companies Law.
- Foreign nationals can own 100% of free zone companies under specific free zone regulations.
- Foreigners cannot own more than 49% shares in mainland UAE companies outside free zones. The 51% control must be held by a local shareholder.
- Public joint stock companies listed on UAE financial markets allow up to 100% foreign ownership as per Securities and Commodities Authority (SCA) rules.
Thus, full ownership of corporate entities in UAE depends on factors like legal structure, jurisdiction, shareholder residency status and the issuing authority’s ownership policies.
Types of Companies for 100% Foreign Ownership
Foreign investors have two main options for fully owning a company in UAE:
- UAE Free Zone Company
All major UAE free zones like Dubai Silicon Oasis (DSO), Dubai Airport Free Zone (DAFZA), Abu Dhabi Global Market (ADGM) etc. permit setting up various types of business entities with 100% foreign ownership as per their framework and regulations.
This includes limited liability companies (LLC), sole establishments, subsidiaries, holding companies or offshore companies depending on the free zone. A free zone company is legally considered an ‘offshore’ entity, isolated from the UAE mainland commercial licensing system.
- Mainland Company with Exempt Status
Select professional service sectors (like law, management consultancy, design, advertising, education etc.) can secure 100% foreign ownership approval in mainland UAE under the ‘Exempt’ category. The activities should match the Federal list of exempted activities. Approval is managed directly by the UAE Ministry of Economy.
Besides these, foreign investors can also own 100% of a UAE public joint stock company listed in the local financial markets. Approval comes from Securities and Commodities Authority (SCA) in coordination with local departments. However, such entities have more complex compliance requirements.
Rules for Locals Regarding 100% Ownership in UAE
There are no restrictions on company ownership percentage applicable to UAE nationals setting up companies on the mainland. They can fully own and control companies under various structures like:
- Sole Proprietorship Company
- Civil Company
- Private Shareholding Company
- Public Shareholding Company
- Limited Liability Company (LLC)
Emiratis need to follow all rules, procedures and documentation formalities based on the legal structure they choose for such mainland entities. This is defined under UAE’s Commercial Companies Law No. 2 of 2015.
Sole Proprietorship vs. Limited Liability Company
Sole Proprietorship
A sole proprietorship is the simplest business structure where one individual (local or foreign) fully owns the company directly themselves in their personal name. The owner undertakes unlimited liability for all financial and legal aspects of the business.
UAE mainland licensing authorities allow sole proprietorships for certain sectors only. These are typically professional or small-scale retail/trading activities.
Limited Liability Company
A LLC is the most common type of onshore company structure preferred even for 100% ownership in UAE. Here the company (not owner directly) incurs all financial obligations and legal liabilities limited to the capital amount defined in the Memorandum of Association.
Owners thus enjoy protection from personal assets loss if the LLC goes into debt or faces lawsuits. The LLC however needs appointed shareholders and directors to manage its business and regulatory compliance.
Both sole proprietorships and LLCs require appointing local service agents to complete business setup formalities as per mainland company laws.
Tax and Benefits for 100% Owned UAE Companies
Let us examine the financial implications of owning an entire company (vs. partial stakes) in UAE:
- No Income Tax – UAE has zero tax on personal and corporate income. Full owners can enjoy all post-expense profits without any tax cuts.
- Capital Repatriation – Fully owned companies face no foreign equity conditions or capital flow restrictions. Owners can easily repatriate their invested capital and profits entirely out of the country anytime.
- Visa Ownership – Owners can obtain renewable 3-year investor/partner visas sponsored by their fully owned mainland or free zone companies in UAE.
- Branding Flexibility – No local partners means ability to operate under your own preferred company names and branding themes without interference.
However, all regulatory compliance and associated government fees applicable as per share capital, sector, legal structure etc. still need to be adhered and paid by owners annually.
Step-by-step Process for Establishing 100% Company
Here is an overview of the standard procedure to setup your own fully-owned company in UAE mainland or free zone areas:
- Choose Legal Entity Type
Decide between mainland LLC, sole proprietorship or offshore free zone company based on business activity, shareholder residency and ownership goals.
- Select Location
Choose an emirate/free zone that best suits your operations in terms of infrastructure, connectivity, government services and target customer markets.
- Pick Business Activity
Carefully select your economic activity to align with UAE laws around foreign ownership and reserved sectors for locals. Certain fields can have restrictions.
- Prepare Documents
Government departments will scrutinize shareholder Emirates ID (for locals), valid passports/visas (for expatriates) and other credentials of owners/partners that need to be readied upfront.
- Appoint a Local Service Agent
Onshore companies require appointing a UAE national agent legally authorized to finish administrative procedures with government authorities for a yearly fee. They provide POA certified documents and other guarantees about investors and the business. Free zone firms do not need local agents.
- Get Initial Approvals
The concerned free zone, authority or department will review your application and provide initial consent to go ahead with company registration.
- Notarize Documents
UAE requires establishing companies to notarize their Moat, share transfer deeds and other agreements registered under the Notary Public after paying prescribed charges.
- Obtain Trade License
The respective free zone or economic/municipal department in each emirate issues the final company trade license to formally begin operations and apply for visas.
- Arrange Visas
Once licensed, the company can sponsor work residence permits for owners, staff and eligible family dependents with the Immigration department.
Thus with strategic planning, you can structure full ownership of your UAE business while leveraging the country’s world-class infrastructure, economic incentives and ease of doing business.
Key Takeaways
- Foreign investors can own 100% of UAE free zone companies only. Onshore they are limited to 49% shares.
- UAE citizens face no restrictions owning companies fully across all structures in mainland areas.
- Sole proprietorship offers full control but with unlimited liability risks personally to the owner.
- LLC offers owners limited liability but requires appointing shareholder-directors and local sponsors to manage compliance.
- Zero taxes, unlimited capital repatriation and flexible branding are some ownership benefits in UAE.
- Proper due diligence across sectors, activities, compliance burdens and associated costs is vital before incorporation.
Conclusion
In summary, full foreign ownership of UAE companies is an attractive prospect but subject to picking the right legal entity and jurisdiction based on the investor’s nationality and sector of interest. With adequate research and preparation using professional consultancies, both Emiratis and expatriates can successfully register and operate their own fully-owned corporate establishments in the UAE.
This brings long term residency privileges and robust pathways for secure expansion in one of the planet’s most investor-friendly economies. UAE offers the unique advantage of accessing billion-dollar consumer markets conveniently straddling between the Middle East, Africa and South Asia. Leveraging these prospects via 100% owned companies can boost profitability and sustainability.
Frequently Asked Questions:
Q1. Can I own a company 100% in Dubai mainland?
No, in Dubai mainland, foreign shareholders can own up to 49% only. 100% ownership is allowed in Dubai’s free zones.
Q2. Can an Indian own a full company in Abu Dhabi?
No, Indians cannot own 100% firms in Abu Dhabi mainland. Approval for 100% ownership is possible in Abu Dhabi Global Market (ADGM) free zone.
Q3. What documents are needed to establish my own firm in Sharjah free zone?
Documents like shareholder passports/Emirates IDs, initial approval, Moat, POAs, business plan may be needed initially to apply at a Sharjah free zone for owning 100% of a company.
Q4. Can I buy an existing company and own it fully in Dubai?
Yes, you can fully acquire or buy shares of an existing mainland or free zone company in Dubai from current owners after amending ownership with approval from authorities.
Q5. I am in Fujairah free zone now but want 100% onshore – is it possible?
Unfortunately no, because you are already in a free zone. 100% ownership onshore is only possible directly while incorporating for the first time.
Q6. If I setup a new company in RAK free zone, can I apply for investors visa?
Yes, most free zones in Ras Al Khaimah allow shareholders or partners to apply for UAE residence visas for themselves and families under full ownership of companies.
Q7. Is local sponsor mandatory for my 100% owned LLC onshore?
Yes, mainland commercial licensing needs appointing a local service agent for completing documentation, guarantees, paperwork, facilitating processes locally on behalf of foreign investors.
Q8. Can a sole proprietor establish branches across multiple emirates?
UAE sole proprietorships are not allowed to open branches across emirates, as they must operate from one licensed location only.
Q9. I have 49% onshore but want to increase to 100% – what is the procedure?
Authorities consider it a new company. You’d need to close current entity, cancel existing visas, and apply to setup afresh for 100% ownership with a different license.
Q10. For 100% E-commerce company in mainland, do I require local shareholder?
For e-commerce trading in UAE mainland, even with 100% ownership, appointing a local service agent (individual/company) is mandatory as part of the license.
Q11. What fees are payable annually for maintaining my offshore company?
Annual costs to maintain a free zone company with 100% ownership could include license renewal fee, visas, registered agent, office rentals, accounting, VAT registration charges.
Q12. Can Emiratis also setup companies in Creative City free zone Fujairah?
Yes, UAE citizens can also explore opportunities to establish various types of fully-owned companies, including startups eligible for incentives, under the Creative City Fujairah free zone.
Q13. I have a mainland restaurant with local partner holding 51%. Can I buy back 2% from him?
Unfortunately, no you cannot buy back shares from the local partner in mainland UAE restaurants or tourism activities at any point, as it always requires minimum 51% ownership by a UAE national.
Q14. My friend owns an LLC fully in Dubai. Can I also open its branch separately?
No, for limited liability companies (LLCs), separate branch licenses are not issued in Dubai. The existing LLC itself can apply to open branches with the same trade name and legal status.
Q15. Do all free zones allow labor accommodation to be provided for staff of full owned companies?
No, currently rules for staff or labor accommodation facilities inside free zone premises vary across different emirates, authorities and economic zones. Some allow while others prohibit it.
Q16. I am a doctor seeking to open my 100% clinic in Abu Dhabi Global Market?
Doctors can explore opportunities to setup fully owned medical facilities in Abu Dhabi Global Market free zone based on their specialization, experience levels and availability of viable commercial space.
Q17. Can a Muslim expatriate invest without loans and fully own a travel agency in UAQ free zone?
Yes, Muslim foreigners can explore Sharia-compliant investment options to fully finance and establish travel agencies or tourism firms in Umm Al Quwain free zone if their visas are valid in UAE.
Q18. What are the visa costs for a 100% owned trading company with 2 partners and a manager?
Estimated visa costs for a fully owned trading firm onshore/offshore with 2 partners and a manager could be AED 6,000 for each entry permit plus AED 5,500 per residence visa submission fee (3 years validity).
Q19. Can GCC citizens also own 100% of companies in Dubai Academic City free zone?
Yes, GCC nationals can also fully own and invest into private academic institutions, colleges, schools, training centers, EdTech startups etc. under Dubai Academic City free zone jurisdictions and ownership frameworks.
Q20. What risks can arise during ownership transfer of an existing LLC I purchased fully in Sharjah from original local owners?
Main risks can be if previous dues/fees/fines/bounced cheques/loans directly/indirectly associated with old shareholders of the Sharjah mainland LLC have still not been settled with clearing letters from government departments before the transfer.
